Schumpeter’s Market

Schumpeter’s Market

Enterprise and Evolution

David Reisman

Schumpeter was an interdisciplinary political economist who made institutional transformation the centrepiece of his theory of supply and demand. This comprehensive monograph reconstructs and assesses Schumpeter’s contribution to the restless economics of entrepreneurship, disequilibrium and search. Examining the evidence from all of Schumpeter’s published work, the book fills a significant gap in the literature of economic thought. Partly because Schumpeter was so prolific, partly because he touched on so many interrelated topics, there have been few books that have sought to span the whole of this important author's influential insights.

Chapter 3: The Prediction of Change

David Reisman

Subjects: business and management, entrepreneurship, economics and finance, methodology of economics


Matter is in motion. There is not a great deal the moral philosophers can do about that: ‘Things economic and social move by their own momentum ... . The ensuing situations compel individuals and groups to behave in certain ways whatever they may wish to do.’ (Schumpeter, 1942a:129). Schumpeter’s economics is in that sense not about optimality but about constraint: ‘Mankind is not free to choose.’ (Schumpeter, 1942a:129). It is not desirability but determinism that makes the productive sector what it is: ‘If this is the quintessence of Marxism then we all of us have got to be Marxists.’ (Schumpeter, 1942a:130). Things are taking their course. This chapter is about the meaning and significance of their history-to-come. Section 1, Tendencies and tendency laws, interprets the combinations and probabilities that light the way to the socialist plan. Section 2, Ideology and science, discusses the pre-empirical pre-judgements that steer the fact-finding and the forecasts by the compass of belief. Section 3, The social economy, shows that Schumpeter wanted to enrich his pure theory with statistics, with sociology and, linking together the sub-fields, with economic history in order to put changing disequilibrium back in. 3.1 TENDENCIES AND TENDENCY LAWS Schumpeter was much impressed by Marx’s attempt to use economics to map out the multi-period scheme: Through all that is faulty or even unscientific in his analysis runs a fundamental idea that is neither – the idea of a theory, not merely of an indefinite number of disjointed individual patterns or of the logic...

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