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 6: The Sociology of Capitalism

David Reisman

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


Schumpeter was an interdisciplinary social scientist who wanted to understand the structures and conventions as well as the purchases and sales. Section 3.3 above explained that he made economic sociology one of the four pillars of his comprehensive economic science. Schumpeter recognised that the age of business and shopping had invested more heavily in impersonal rationality than it had in meaningful patterning: ‘The building faces toward the economic side of life.’ (Schumpeter, 1942a:73). Even so, he believed, the stable framework remains the precondition for the innovative break. The entrepreneur is dependent upon pre-existent values like rationality, social institutions like credit, social bequests like routine even as he constructs the new road along which future convoys will have to travel. Schumpeter was convinced that pattern maintenance and calculative catallactics pervade one another. He therefore proposed that capitalism be examined not just in terms of allocation and dynamism but also in terms of the classes and customs within which the economic processes were embedded. The market mechanism could not be understood on its own. Schumpeter was an economist who believed that it would be unwise to wander too far from his home: ‘The modern man has no choice but to specialize. We have got to do it.’ (Schumpeter, 1931a:285). Yet he was also a social economist who knew that other people are as much his topic as are the things that they buy and sell. Schumpeter situates the entrepreneurial breach in the context of learned procedures and group understandings. He...

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