Economic Sociology of Capitalist Development
Edited by Yuichi Shionoya and Tamotsu Nishizawa
Chapter 5: Marshall, Schumpeter and the Shifting Boundaries of Economics and Sociology
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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