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 12: The Macroeconomics of Success

David Reisman

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


Marx’s macroeconomics is about unemployment and under-achievement, about capital accumulation that drives down the rate of profit and decennial crises, each one more severe than the crisis before. It is the macroeconomics of failure, the story of internal contradictions that must and will bring an illogical system to a close. It is a world away from Schumpeter’s repeated denial that it was the macroeconomic integument that would put an end to the capitalist interregnum: ‘There are no purely economic reasons why capitalism should not have another successful run.’ (Schumpeter, 1942a:163n). Robert Heilbroner was too quick to take Schumpeter’s ‘purely economic’ at face value. Heilbroner felt that socialism to Marx presupposed a complete breakdown in the system but that the transition to Schumpeter could only be the product of a social-philosophical choice: The socialist finale of Schumpeter’s drama therefore rests wholly on extraeconomic factors ... . There is no clear chain of causality or even of consistency leading from the economic to the political. Indeed, the very success that Schumpeter predicts for capitalism would seem to incline the outcome in another direction. ... This leaves unanswered why Schumpeter came to such a perverse conclusion. ... Assuredly it also makes clear that Schumpeter’s political economy does not emerge inexorably from his economics. (Heilbroner, 1984:258). The superstructure had all the answers. The economy by itself could not transform an economic order. Heilbroner, taking the economics to be the macroeconomics was, of course, forgetting that it was the microeconomics of stifled entrepreneurship that in Schumpeter’s perspective...

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