Marshall and Schumpeter on Evolution

Marshall and Schumpeter on Evolution

Economic Sociology of Capitalist Development

Edited by Yuichi Shionoya and Tamotsu Nishizawa

This unique and original work contends that, despite the differences between Marshallian and Schumpeterian thinking, they both present formidable challenges to a broad type of social science beyond economics, particularly under the influence of the German historical school. In a departure from the received view on the nature of the works of Marshall and Schumpeter, the contributors explore their themes in terms of an evolutionary vision and method of evolution; social science and evolution; conceptions of evolution; and evolution and capitalism.

Chapter 5: Marshall, Schumpeter and the Shifting Boundaries of Economics and Sociology

Geoffrey M. Hodgson

Subjects: economics and finance, economic psychology, evolutionary economics, history of economic thought


Geoffrey M. Hodgson Alfred Marshall and Joseph Schumpeter rank as two of the most important economists of all time.1 They both had a major impact on the development of the discipline. Their writings have several common characteristics, including minimal explicit reliance on mathematics, a rich knowledge of the social and behavioural sciences, a methodological and philosophical awareness, fluently engaging styles of writing, and a primary aim to explain the world rather than to exhibit knowledge or technique for their own sake. Marshall played a crucial role by synthesizing the paradigm that Thorstein Veblen (1900: 261) was later to describe as ‘neoclassical’ (Ekelund and Hébert, 2002). Marshall was the main systematizer of the partial equilibrium variant of neoclassical theory, which held sway in Britain, the USA and elsewhere, until it began to be displaced by the Walrasian general equilibrium approach at around the time of the Second World War. Both Schumpeter and John Maynard Keynes were born in 1883. Marshall died in 1924, leaving his former pupil and the Austrian economist to tackle the catastrophic global events of the Great Depression in the 1930s. Schumpeter and Keynes took very different views on this topic. Schumpeter (1931) initially proposed that the downturn was the unfortunate but unavoidable outcome of the coincidence of the three troughs of the 50-year Kondratieff cycle, with the shorter Juglar and Kitchin cycles. By contrast Keynes (1936) saw the fall in ‘effective demand’ as the key explanatory factor, and promoted government expenditure to increase...

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