Economic Sociology of Capitalist Development
Edited by Yuichi Shionoya and Tamotsu Nishizawa
Chapter 11: Schumpeter on Development
Harald Hagemann 11.1 INTRODUCTION In the Preface to the ﬁrst German edition of The Theory of Economic Development Schumpeter (1911: VIII) points out that he had started his analysis with the concrete theoretical issues involved in the crisis problem in 1905. Furthermore, he makes clear that this book and his earlier one, Das Wesen und der Hauptinhalt der theoretischen Nationalökonomie (Schumpeter, 1908), form an entity, although the second book can be read independently of the ﬁrst. The division of labour between the two books can be understood best with regard to the two masters: Walras, whose theory comprises the pure logic of an interdependent system in economic equilibrium, and Marx, whose views on the long-run development of the capitalist economy form a lifelong challenge for Schumpeter. In Schumpeter’s view not only chapter 6 but in fact any page of his Theory of Economic Development (TED) is dedicated to the problem of the business cycle1 and ‘[a]nalyzing business cycles means neither more nor less than analyzing the economic process of the capitalist era’ as he states in the opening sentence of his monumental study Business Cycles three decades later (Schumpeter, 1939: V). Economic development in the sense of Schumpeter is endogenous, spontaneous and discontinuous. It is the task of dynamic theory to explain the origin and eﬀects of these transition processes, which essentially are a disturbance of equilibrium. In chapter 2, ‘The fundamental phenomenon of economic development’, Schumpeter gives a deﬁnition of development which he understands as...
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