Marshall and Schumpeter on Evolution
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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.
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Chapter 11: Schumpeter on Development

Harald Hagemann

Extract

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...

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