Economic Sociology of Capitalist Development
Edited by Yuichi Shionoya and Tamotsu Nishizawa
Chapter 10: Schumpeter in the Harvard Yard: Inventions, Innovations and Growth
Kiichiro Yagi 10.1 SCHUMPETER’S TWO DISTINCTIONS Joseph A. Schumpeter is generally considered one of the most inﬂuential originators of contemporary evolutionary economics. Although he competes with Thorstein Veblen, Friedrich Hayek, Alfred Marshall and others for this position, a group of evolutionary economists are proud to call themselves neo-Schumpeterians.1 The main concern of this group is technological and institutional innovation as the driving forces of economic development. Their interests cover not only theoretical investigation but also a wide range of research, from historical analyses of innovations to science and research policy. Indeed, Schumpeter reformulated his theory in a chapter of Business Cycles (Schumpeter, 1939), under the title, ‘How the economic system generates evolution’. In this chapter, Schumpeter limits the source of ‘economic evolution’ exclusively to ‘innovation’ in the sense of ‘the setting up of a new production function’ (ibid.: 87). To reach this conclusion, he maintains two distinctions, upon which not all contemporary evolutionary economists agree. The ﬁrst is the distinction between economic growth and economic evolution (development), and the second is that between invention and innovation. The ﬁrst distinction is well known, since discerning qualitative change from quantitative change is a logically necessary step to grounding economic evolution (that is, development) in innovation. It is the theoretical position that Schumpeter manifests ﬁrst in Theorie der wirtschaftlichen Entwicklung (1911), whose English edition, Theory of Economic Development (1934), was published several years prior to Business Cycles. As Schumpeter considers that an economic system has the inherent tendency to move to a...
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