Schumpeter's Work Research Articles

История экономической мысли глазами структуралиста (Часть 2. Маршалл, «реориентация теории ценности» и аутсайдеры)

The article represents the second part of structuralist notes on the history of economic thought. The first part dealt with the classical school, and now the emphasis is on the history of marginalists and neoclassicism. It also characterizes outsider economists who believe that the development of science has gone the wrong way, ignoring unproductive economic activities and growth blocking mechanisms. The most significant discoveries pushed to the fringes of the mainstream by authoritative discourse are the variants of unequal exchange and different purchasing value of money considered by Chamberlin and Robinson, as well as the lack of a homogeneous relationship between costs, utility, and price, implicitly present in the works of Schumpeter. With regard to consumer goods and services, the absence of such existence a homogeneous relationship was discovered by Veblen, although it is still considered an exception. However, fund-saving scientific and technological progress makes it a rule to replace machines with new machines that are superior to the old ones both in quality and in price. More productive machines and technologies are also cheaper per unit of useful effect. The history of thought legitimizes many provisions of the modern mainstream, which are particular «marginal» cases. Considering the consequences of the crisis of 2008–2009, one should expect further fragmentation of the history of thought and the loss of its function of legitimizing the directions of modern theory.

How the Signified Went Missing in Twentieth-Century Economic Theory: Mises, Hayek and Schumpeter and the Abolition of Value

This article contributes to a growing literature on economic epistemologies by arguing that so-called “neoliberal” ways of thinking are characteristic of a trend in wider social theory to privilege epistemological problematics over ontological ones. It will approach the shared nature of these epistemological precepts through an interrogation of the formal approaches to economic value used in the work of Schumpeter, Mises and Hayek and compare this with Derrida and Saussure’s understanding of linguistic value. Using a Marxian understanding of use-value, it will be argued that the movement to abolish the transcendental signified in post-structural philosophy is homologous to the abolition of objective value in economics. It will be claimed that the impulse to abolish the Thing shared by economic theorists and post-structuralists follows from a shared, though necessarily differently constituted, anti-socialism. In both cases, undermining the Thing is seen as a means of undermining organized socialist politics. I will conclude by arguing that these similarities demonstrate the need for neoliberalism and critique of neoliberalism to be historicised as part of a wider account of the relationship between contemporary capitalism, politics and the production of knowledge.

An Evolutionary Perspective on the Endogenous Instability of Capitalist Dynamics

AbstractThis article is a theoretical and conceptual exploration into the study of the dynamics of financial innovations and their consequences in market economies. Drawing upon the works of Schumpeter and Minsky in an institutionalist and evolutionary tradition, the article puts forward the monetary and financial features of the 21st century economies and the recurrent systemic financial instabilities generated within the context of the financialization process. It then calls for alternative regulatory reforms capable of leading to sustainable economic development. The originality of the analysis lies in the fact that the micro-dynamics of innovations may result in both creative and destructive outcomes since there are some crucial differences between entrepreneurial innovations à la Schumpeter as the positive force in economic development, and financial innovations à la Minsky as the source of instabilities. The article then focuses on the weaknesses and inconsistencies of loosely regulated financial markets and suggests a few principles for relevant financial regulation in an endogenously unstable economy. The main contribution of the article is that financial stability must be regarded as a public good to be provided by an economy-wide regulatory framework under the supervision of a visible public hand. The study of the conditions of financial stability proves to be a matter of a specific social dilemma—opposition between private and public interests—that concerns the organisation and management of financial markets at the macroeconomic level. Such a dilemma leads to the ultimate regulatory issue of spurring the innovation dynamics of financial markets while ensuring systemic stability and sustainability through an appropriate regulatory and supervisory environment.

INNOVATIONS AND DYNAMISM OF ECONOMIC DEVELOPMENT: INNOVATIVENESS OF J.A. SHUMPETER

Purpose. The aim of the article is study of the evolutionary nature of the theoretical heritage of J.A. Schumpeter, its influence on the features of the formation of scientific thought regarding the main elements of innovation in the process of economic development. Methodology of research. To achieve this goal of the study, the following methods of scientific analysis were used: historical, systemic, structural-functional and comparative. The historical method made it possible to trace the leaks, genesis, main stages and features of the development of innovations, as well as to determine the prospects for the development of innovation activity in the third millennium. The system method allowed us to comprehensively consider innovations, identify essential elements and connections; structural-functional - to explain the parts and components of the innovation process; the comparative method reveals the features of the countries' innovative activity, its impact on the development of the information society. Findings. It has been established that the creation by J. Schumpeter of the theory of a qualitatively new innovative type of development is an outstanding contribution that radically changed the traditional ideas about economic development and economic growth. Schumpeter's ideas about the internal stimulating role of innovation and technological progress served as a kind of starting point for the further formation of various theories of the transformation of the capitalist system, its transition to a higher stage of development (industrial and post-industrial society). It is substantiated that in the modern world innovations are becoming a determining factor in the dynamic development, transformation and competitiveness of socio-economic systems throughout the world. Originality. The main approaches to the concept of innovation are summarized and their influence on the emergence of the term "new economy" is established, one of the main attributes of which is knowledge as a factor of production and wealth generation. The importance of Schumpeter's works at the present stage of reforming economic science after the global crisis is established, since, according to Schumpeter's theory, innovation is accompanied by the creative destruction of the economic system, causing its transition from one state to another. Practical value. Theoretical provisions, conclusions and recommendations are important for the scientific substantiation of the need for innovative activities, as well as the possibility of applying these results in the educational process. Key words: global information society, innovation, innovative activity, information and communication technologies, "knowledge-based economy", creative destruction.

Historical roots and influential publications in the area of innovation in the creative industries: A cited-references analysis using the Reference Publication Year Spectroscopy

ABSTRACT This study explores the historical roots of the relatively new topic of innovation in the creative industries. We are interested in the contributions of researchers that have proven to be important to the topic over the long term. To do so, we used the Reference Publication Year Spectroscopy method. This method is based on the analysis of the frequency with which references are cited in publications in a specific research area, in our case, innovation in the creative industries. The study is based on a corpus of articles rigorously selected through a systematic review method of empirical articles published between 1998 and 2019. The results reveal 4585 cited references (CR) with 9 clearly identifiable peaks, the first of which is caused by the work of Schumpeter (1934) and the last by the book of Miles & Green (2008). Each of the peaks marks a major contribution to the evolution of the understanding of innovation in these industries with one or more publications, the majority of which have an economic basis. In addition, the study reveals that the three most influential publications in this field are the economically oriented books by Florida (2002), Caves (2000), and Miles & Green (2008).

Profit and Innovation Strategies in Low-Tech Firms

The present article outlines the main developments of what may be called the ‘new innovation theory’. This theory is based on the work of Schumpeter and combines it with the profit strategy approach. The purpose of this combination is to show that innovation needs to be embedded in coherent profit strategies in order to be effective. Innovation capacity and economic performance are much more the result of the smooth interplay between the stake- holders of firms than of high-tech or the intensity of research and development. The argument is illustrated in a comparative case-study of two firms.

Real and Monetary Theories of the Interest Rate

The origin of most mainstream theories about interest rates goes back to Irving Fisher. Fisher’s concept of the equilibrium real rate of interest and the related Wicksellian concepts of “natural” or “neutral” rate are assumed to be essential for inflation-targeting frameworks. It is believed that this assumption explains the widely and confidently held conviction that monetary policy should focus on inflation expectations to keep real interest rates at a stable level to promote savings and investment. We argue that there are several problems with this approach, which relies on the principles of “real analysis” as opposed to the “monetary approach” reflected in the works of Schumpeter and Keynes. Post-Keynesian monetary theory offers a framework corroborated by central bank practices. We use some examples from the experience of the Magyar Nemzeti Bank (the central bank of Hungary) following the global financial crisis that may provide some hints for refocusing contemporary monetary policy and related theories.

Financing of innovation: national development banks in newly industrialized countries of East Asia

Contemporary literature on innovation tends to overlook the issue of financing, whereas financial history suggests that banks have been essential to financing of new industries. Emerging literature ondevelopment banking, although inspiring, remains focused on financing policies. The article aims to rearticulate a coevolutionary nature of industrial and financial interests, following the works of Schumpeter and Minsky, by looking at the 4 cases of national development banks, tasked with long-term financing of industries, from newly industrialized countries of East Asia—South Korea, Taiwan, Singapore, and Malaysia. The study suggests that innovation in finance, as well as organizational innovation in financial institutions, represent essential elements of financing of innovative activities. Further, organizational innovation in financial institutions, such as development banks, might signify a disposition to face uncertainty, which characterizes economic and technological unknowns inherent in financing of innovation.

The Financial Innovation Hypothesis: Schumpeter, Minsky and the sub-prime mortgage crisis

Neo-Schumpeterian economics inspired by the work of Schumpeter and the financial Keynesianism of Minsky are often regarded as unrelated theoretical strands. In this paper, we try to combine these two literatures building on a parallelism between non-financial and financial firms. We focus on recent financial innovations, highlighting how the evolution experienced by US financial institutions led them to transcend their traditional role of credit providers, shaping as 'producers' of financial products, through securitization. This allows on the one hand to broaden the application of Neo-Schumpeterian insights to the financial sector and, on the other, to provide an original explanation of the so-called sub-prime crisis by applying the Financial Instability Hypothesis of Minsky to the alternative context of financial production. We maintain that the 2007-8 crisis was not the result of an innovation in the real sector, but came from an innovation (or a series of innovations) intrinsic to the financial system itself, which fostered credit creation. We argue that this 'cluster of innovations' can be placed under the label 'securitization', defined as the business of packaging and reselling loans, with repo agreements as the main source of funds.

Retrospectives: Do Productive Recessions Show the Recuperative Powers of Capitalism? Schumpeter’s Analysis of the Cleansing Effect

Schumpeter has often been interpreted as a ”liquidationist,” someone who is convinced that economic crises are necessary and unavoidable, and thus that government noninterventionism is a sound policy in such crises. The first two sections of this paper discuss Schumpeter's views in greater detail and suggest that categorizing him as a “liquidationist” is an oversimplification and as an unrepentant “noninterventionist” is incorrect. Although Schumpeter was certainly not a strong supporter of public interventions, he did see a role for public expenditure programs in particular circumstances. During periods of recession, Schumpeter believed firmly in what he described as the “recuperative powers of capitalism.” However, when a depression becomes “pathological,” there could be a role for government to intervene. In order to understand the overall picture of Schumpeter's message, we will first try to explain Schumpeter's analysis of recessions, depressions, and the other stages of business cycles. We will also discuss how Schumpeter perceived the recuperative powers of capitalism, a core concept in Schumpeter's analysis that allows him to distinguish between physiological and pathological recessions. In the 1990s, an active line of research examined the possibility that recessions may have a productive character along with their more obvious negative outcomes, because recessions in some way might hasten the process of reallocating economic recourses from slower-growth to faster-growth sectors. Such models were sometimes referred to as “neo-Schumpeterian,” but given our analysis of Schumpeter's work, we will question whether this label is appropriate.

Entrepreneurship and country-level innovation: investigating the role of entrepreneurial opportunities

Since the work of Schumpeter, entrepreneurship has been regarded as a concept that is in close relation to innovation. However, recent country level investigations show that technology innovation and new business creation can be regarded as two separate phenomena. In this paper we provide an explanation for the above contradiction through the distinguishing between two types of entrepreneurship, necessity and opportunity entrepreneurship. Building on opportunity theory and rational choice theory, we investigate the influence of both types of entrepreneurship on country-level innovation, and furthermore, pay particular attention to the interaction between opportunity entrepreneurship and the amount of opportunities available. We find that necessity entrepreneurship is inversely related to country-level innovation, whereas opportunity entrepreneurship is positively linked to technological progress. The positive effect of opportunity entrepreneurship, however, diminishes with an increased amount of entrepreneurial opportunities. This interaction indicates that opportunity availability is an important element of a country’s entrepreneurship environment.

Term of Strategic Entrepreneurship and Schumpeter's Creative Destruction Theory

The literature of strategic entrepreneurship is one of the few areas of strategic management writing in which Joseph Schumpeter has argued that entrepreneurs create innovations in the face of competition and thereby generate economic growth. The fundamental question in the field of strategic management is how firms achieve and sustain competitive advantage especially in the work of Schumpeter [1934,1942] who argued that the main agents of economic growth are the entrepreneurs. The aim of this paper is to summarize and critically review the concept of the strategic entrepreneurship in the light of economics history by creating a better understanding of the intersection of the academic fields of entrepreneurship and strategic management.

Uncertainty as a Challenge for Leadership

Abstract This essay develops an entrepreneur-oriented theory of risk-taking and innovation that is used to examine the different leadership styles of family business owners. This theory is based on the works of Schumpeter, who mainly focussed on the potential of supply in the competition for innovation, and the works of Hayek, who emphasized the importance of demand in this competition. By combining these two theories, a comprehensive understanding of economic innovation processes is presented. In the subsequent empirical section of the essay, these theoretical ideals of supply-oriented and demand-oriented innovators will be examined for what they look like in practice. Data from India and Japan is analysed in this explorative empirical research to examine the influence of cultural, social and legal norms on entrepreneurial risk-taking and innovation behaviour. The perspectives on “foreign cultures” expand our understanding of management in a way that encourages innovation- friendly entrepreneurship.

Endogenous money and effective demand

Endogenous money is a core component of post-Keynesian economics, but it has not been fully integrated into its macroeconomics. To do so requires replacing the accounting truism that ex post expenditure equals ex post income with the endogenous money insight that ex post expenditure equals ex ante income plus the ex post turnover of new debt. This paper derives this result after exploring precedents to this concept in the work of Schumpeter, Minsky, Keynes and Pigou.

La radicalité de l'innovation et ses déterminants. Le cas des entreprises agroalimentaires du Languedoc Roussillon

L’innovation est un concept largement utilisé, mais encore assez mal défini, malgré des tentatives de formalisation. Le Manuel d’Oslo constitue la référence en la matière, et la plupart des enquêtes d’innovation dans les entreprises sont élaborées à partir des prescriptions de cet ouvrage qui, comme la plupart des travaux, analyse l’innovation à travers la typologie classique, issue des travaux pionniers de Schumpeter, fondée sur la « nature » de l’innovation : produit, procédé, organisationnelle. Dans cet article, à partir d’une enquête réalisé auprès de 322 entreprises agro-alimentaires du Languedoc-Roussillon, nous élaborons une typologie qualitative des entreprises innovantes, en nous intéressant à la nature des innovations réalisées et en prenant en compte le degré de nouveauté de ces innovations. Nous distinguons ainsi les innovations « majeures » (nouveauté pour la filière, le marché ou la région), les innovations mineures (nouveautés pour l’entreprise) et les « modernisations » (amélioration de l’outil existant dans l’entreprise). Puis, nous comparons ces 3 types d’entreprises innovantes aux non innovantes et identifions les déterminants de l’innovation et les performances financières pour chacun d’entre eux. Ce travail permet de constater que le secteur, la taille de l’entreprise, son mode de gouvernance, ainsi que certaines caractéristiques du dirigeant sont des facteurs discriminants de la « radicalité » de l’innovation et de la propension à innover. Enfin, la radicalité de l’innovation semble avoir un impact sur la croissance du chiffre d’affaires.

Joseph Schumpeter and Thorstein Veblen on technological determinism, individualism and institutions

This article investigates Joseph Schumpeter's affinities with Thorstein Veblen with respect to technological change and determinism, the future of capitalism, individualism and institutions. From a methodological point of view, a common point in their analysis is their anti-teleological view regarding economics as a discipline. Also, in the Schumpeterian system, technology is the cornerstone of economic evolution and appears as the making of new combinations. In the Veblenian theoretical framework, the bearer of change is to be found, inter alia, in technology, just like in Schumpeter's works, although not without differences. They also share the opinion that technology revolutionises capitalism and has serious implications for its future as a system. Furthermore, regarding individualism, in his work Schumpeter stresses the importance of the social milieu on individual action, a fact which bears strong resemblance to the Veblenian notion of evolution as ‘depersonalized evolution’. In this sense, Schumpeter is very close to Veblen, although Schumpeter's approach could be classified in what is called institutionalist individualism, whereas Veblen could be classified as holist. Undoubtedly, the role of institutions is of great importance in both Schumpeter and Veblen. Ιnstitutions in the Schumpeterian schema play a central role closely related to the future of capitalism. Institutional and non-institutional factors enter into complex forms of interaction just like in Veblen's approach. There, institutions are part of the social milieu and their underlying framework, much wider than mere economic and social. Of course, the theoretical analyses of Schumpeter and Veblen are not devoid of differences springing mainly from their methodological approach such as the role of the individual in the capitalist process which is probably the most significant difference regarding the importance attributed to it in Schumpeter's early works. Also, the way technical change appears constitutes another difference. However, his views are quite close to Veblen's. After all, Schumpeter began to write in a social, political, theoretical and ideological environment at a time when evolutionary ideas dominated social thought.

Marshall, Schumpeter and evolution

As Stan Metcalfe is the leading exponent of combining Marshallian and Schumpeterian conceptions of the evolution of economic systems, it is appropriate to explore the similarities and differences between Marshall's and Schumpeter's work, and in doing so, to draw particularly on major Companions to each and a conference volume, which is explicitly focused on such comparisons, to all of which he has contributed. Economic systems generate and diffuse novelty through the creation and application of knowledge, which is inherently unpredictable but which emerges from diverse forms of organization. This process of selective co-ordination relies on quasi-decomposability – which implies partial equilibrium, and therefore entails multiple failure and sometimes major disruption, both of which should be represented in economic theory and should inform economic policy.

Joseph Schumpeter and John Kenneth Galbraith: two sides of the same coin?

Joseph Schumpeter and John Kenneth Galbraith were two of the most influential scholars of the previous century addressing the most fundamental questions confronting society—what is the nature of economy and how is it shaping society? At the heart of their work was a concern about the gap between what they perceived to be the standard models in economics and the evolution of the actual economy. In particular, this meant abandoning the standard models of neoclassical economics and instead focusing on what both perceived to be an evolution towards a more managed economy. The purpose of this paper is to explain the relationship between the works of Schumpeter and Galbraith. Perhaps one of the enduring lessons that bonded Schumpeter and Galbraith is their keen focus on how the economy was evolving over time, and with it, the institutional landscape, that carried with it huge implications for public policy.

Editorial

Innovation is a journey that is full of challenges. It is demanding, but we need to keep inspirational aspects in mind, such as the ones President Kennedy expressed in his predestinated “sticky” (Heath and Heath, 2007) speech in 1962 about sending a man to the moon. Since the seminal works of Schumpeter (1934), innovation has been widely acknowledged as a key driver of competitiveness, economic growth and welfare. There is a wealth of empirical evidence supporting a positive relationship between innovation and firm-level performance in the academic literature (e.g. Crépon et al., 1998; Griffith et al., 2006; Lööf and Heshmati, 2002). At firm level, innovation has long been recognized as a competitive advantage and a key driver of economic performance (Schumpeter, 1934). Innovation also lies at the very heart of policy mechanisms to achieve a smart, inclusive and sustainable growth in economies, as envisioned by the Europe 2020 strategy (European Commission, 2013).(...)

Inventions shaping technological trajectories: do existing patent indicators provide a comprehensive picture?

Since Schumpeter's (The theory of economic development, 1934) seminal work on economic development, innovation is considered as one of the main drivers of firm performance and economic growth. At the same time, technological innovations vary considerably in terms of impact with only a minority of new inventions contributing significantly to technological progress and economic growth. More recently a number of indicators derived from patent documents have been advanced to capture the nature and impact of technological inventions. In this paper, we compare and validate these indicators within the field of biotechnology. An extensive analysis of the recent history of biotechnology allows us to identify the most important inventions (n = 214) that shaped the field of biotechnology in the time period 1976---2001. A considerable number of these inventions have been patented between 1976 and 2001 (n = 117, 55 %). For all USPTO biotech patents filed between 1976 and 2001 (n = 84,119), relevant indicators have been calculated. In a subsequent step, we assess which indicators allow us to distinguish between the most important patented inventions and their less influential counterparts by means of logistic regression models. Our findings show that the use of multiple, complementary indicators provides the most comprehensive picture. In addition, it is clear that ex-post indicators reflecting impact and value outperform ex-ante indicators reflecting the nature and novelty of the invention in terms of precision and recall.