Cycles, Crises and Innovation

Cycles, Crises and Innovation

Path to Sustainable Development – a Kaleckian-Schumpeterian Synthesis

Jerry Courvisanos

Cycles, crises and innovation are the major economic forces that shape capitalist economies. Using a critical realist political economy approach, the analysis in this fine work is based on the works of Michał Kalecki and Joseph Schumpeter – both of whom identify these three dynamic forces as plotting the path of economic development. Jerry Courvisanos’ thought-provoking book examines how the rise of capital through investment enshrines innovation in profit and power which in turn determines the course of cycles and crises. The author concludes by arguing for strategic intervention by transformative eco-innovation as a public policy path to ecologically sustainable development.

Chapter 3: Entrepreneurship and Innovation

Jerry Courvisanos

Subjects: economics and finance, economic psychology, economics of innovation, history of economic thought, innovation and technology, economics of innovation


The entrepreneur is at the same time one of the most intriguing and one of the most elusive characters in the cast that constitutes the subject of economic analysis. He has long been recognized as the apex of the hierarchy that determines the behavior of the firm and thereby bears a heavy responsibility for the vitality of the free enterprise society. In the writings of the classical economist his appearance was frequent, though he remained a shadowy entity without clearly defined form and function. (Baumol, 1968, p.1) Introduction The focus of this chapter is to provide a Kaleckian-Schumpeterian schema for examining the role of the entrepreneur in the innovation process and the consequent macroeconomic outcomes. As the quotation by Baumol (1968) notes, the role of the entrepreneur has proved difficult to formalize within the innovation process. Schumpeter reintroduced the endogeneity of innovation in the capitalist process after the absorption of classical economics into the neoclassical mainstream placed innovation firmly into the ‘black box’, making the entrepreneur invisible. Schumpeter provided a specific personification of innovation in his 1912 book through the explicit role of the entrepreneur in taking on leadership in five tasks. These can be summarized as: 1. new products unfamiliar to consumers; 2. new methods of production or new ways of handling commodities (processes); 3. opening up new markets not entered into previously; 4. new sources of supply of raw materials or part-manufactured goods; and 5. new organization of the competitive structure of an industry (Schumpeter, 1934, p.66). In...

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