Schumpeter’s Market
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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.
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Chapter 2: Schumpeter’s Vision

David Reisman


Malthus means population. Marx means revolution. Keynes means unemployment. Schumpeter means entrepreneurship. Wolfgang Stolper is right to warn against such context-less selectivity that tears the piece from the puzzle that alone gives it sense: ‘What matters is not merely the one or the other idea, however great, however significant. What matters is the place of the idea in the “vision” of the genius, the theory in the literal sense: the view of things as a whole.’ (Stolper, 1951:102). Schumpeter’s Weltanschauung is Schumpeter’s Gedankengebäude. It is not one brick in the Colosseum. It is the sui generis of the overarching Colosseum itself. Schumpeter’s vision is not a sequence of higgledy-piggledy ad hocs. Instead it is a single story that its author released in instalments in the space of four decades and more. It is the envelope of two concentric circles. The inner circle is the system, made up in market capitalism of ‘independent quantities ... mutually determining one another’ (Schumpeter, 1928:50). The outer circle is the order, the ‘cultural complement’ (Schumpeter, 1942a:121) of ideas, values, polity, society that in present-day conditions may be called the ‘civilization of capitalism’ (Schumpeter, 1928:49). A downswing is a crisis in the system: temporary, passing, it is not a threat to the survival of the process but the precondition for it to succeed. Rationality, democracy, ‘Gladstonian liberalism’ (Schumpeter, 1942a:126), individualism are the real enemy at the gate: a crisis in the order and not in the Walrasianism, it is institutional factors...

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