by Schumpeter
[Front Matter and Table of Contents]: Title page, publication details from 1951, and a comprehensive table of contents listing 25 essays by Joseph A. Schumpeter, covering topics from social value and business cycles to capitalism and the history of economic analysis. [Preface and Acknowledgements]: Editor Richard V. Clemence explains the origins of this collection, noting Schumpeter's initial lack of interest in his earlier work while focused on his history of economic analysis. It details the selection criteria—including all major English articles before 1950 except biographies—and acknowledges contributors like Mrs. Schumpeter and Harvard colleagues. [On the Concept of Social Value: Introduction and Individualistic Methods]: Schumpeter introduces the methodological inquiry into 'social value,' contrasting it with the individualistic foundations of modern economic theory. He argues that because only individuals feel wants, utility and marginal utility are fundamentally individualistic concepts, and the distribution of wealth among individuals is a necessary datum for determining values and production. [On the Concept of Social Value: Communism vs. Competitive Society]: The author distinguishes between individualistic demand and strictly social wants. He posits that while 'social value' is a functional reality in a communistic society where a central authority controls production and distribution, in a non-communistic society, social curves are merely aggregates of individual wants influenced by a specific distribution of wealth. [On the Concept of Social Value: Social Influence and Exchange Value]: Schumpeter examines the claim that society sets values, acknowledging social influences like fashion and barter on individual utility curves. He critiques the Rodbertus view that exchange-value equals social value-in-use, arguing this analogy fails because market prices are inextricably linked to the existing distribution of wealth and private ownership of production factors. [On the Concept of Social Value: Distribution and the Optimistic View]: Schumpeter discusses how the concept of social value is used to support an optimistic view of capitalism, suggesting competition leads to the same distributive results as a benevolent ruler. He critiques the works of Clark and Wieser, arguing that applying communistic social value theorems to competitive societies ignores the fundamental role of private property and individual price determination. [On the Concept of Social Value: Prices, Equilibrium, and Conclusion]: In the final section, Schumpeter asserts that distribution is governed by prices rather than abstract social values. He argues that 'social marginal utility' in a market is merely the utility of the marginal buyer, not a reflection of total social welfare. He concludes that while social value is a useful fiction for certain analogies, a full explanation of economic life requires the theory of prices based on individual values and their mutual interdependence. [Methodological Individualism and Social Value: Summary]: Schumpeter concludes his discussion on methodological individualism, arguing it is a valid scientific procedure that avoids misconceptions. He maintains that 'social value' is a fiction in non-communistic states but remains a necessary concept for studying communistic societies and as a scientific tool for understanding how society influences individual economic values. [The Explanation of the Business Cycle: Introduction and Historical Context]: Schumpeter introduces the problem of the business cycle, noting that while economics is moving toward scientific maturity and convergence, it still struggles with the phraseology of 'schools.' He credits Clément Juglar with shifting the focus from isolated 'crises' to the study of deeper cyclical movements and highlights the importance of modern descriptive studies in providing the data necessary for analytic explanation. [Types of Cycle Theory and Pigou's Contribution]: The author evaluates Professor Pigou's work on industrial fluctuations, distinguishing between three types of cycle theories: historical analysis of single cycles, general theories of all contributing elements, and theories of fundamental causes. While praising Pigou's comprehensive survey (the second type), Schumpeter argues that a focus on fundamental causation is necessary to avoid hiding analytic sins behind the complexity of detail. [The Seven Propositions of Cyclical Causation]: Schumpeter outlines his core theory of the business cycle through seven propositions. He argues that cycles do not arise from 'static' equilibrium or mere growth, but from 'innovations'—discontinuous changes in production methods or organization. He distinguishes his view from Pigou's by asserting that the economic system itself generates these impulses through the leadership of entrepreneurs whose success breaks the routine and draws a 'crowd' of followers, creating the boom. [Verification and the Role of Credit in the Cycle]: Schumpeter examines the essential role of the banking system in facilitating the business cycle. He defines 'credit creation' as the manufacture of purchasing power beyond existing savings or commodities, which allows entrepreneurs to withdraw productive forces from the circular flow. This process leads to a 'primary wave' of inflation followed by 'self-deflation' as new products enter the market and loans are repaid. He critiques the 'purely monetary' view of Hawtrey while acknowledging that banks influence the pace and secondary waves of the cycle. [The Instability of Capitalism: Defining Stability and the Static System]: In this section, Schumpeter begins an inquiry into whether capitalism is inherently stable. He distinguishes between 'political,' 'social,' and 'economic' stability, focusing on the latter. He defines the capitalist system by private property, market production, and credit. Using Marshallian and Walrasian frameworks, he argues that the economic system is theoretically stable under static conditions, where a determined equilibrium exists despite growth in population or capital. [Stability and Progress: The Mechanism of Innovation]: Schumpeter distinguishes between mere economic growth (passive adaptation) and true economic evolution driven by innovation. He defines innovation as the 'new combination' of productive factors, typically embodied in new firms and plants. This process is inherently discontinuous and disrupts existing equilibria. He argues that innovation is a feat of leadership and will, performed by the entrepreneur, and is the primary source of profit, interest, and the cyclical nature of capitalist progress. He concludes that while the system experiences instability during these shifts, the underlying order remains stable as new equilibria emerge to absorb the results of innovation. [Competitive vs. Trustified Capitalism]: Schumpeter compares the mechanism of innovation in competitive capitalism versus 'trustified' (monopolistic) capitalism. In the former, innovation arises through new firms and individual leadership, often causing significant social disturbance. In the latter, innovation becomes 'automatized' within large units, reducing friction and individual initiative. He predicts that capitalism's success in rationalizing the mind will eventually create a social atmosphere and mentality incompatible with its own institutions, leading to a transition toward an order resembling socialism, even if not driven by purely economic necessity. [Review of Wesley Clair Mitchell's Business Cycles]: A comprehensive review of Mitchell's 1927 work on business cycles. Schumpeter compares Mitchell's 'experimentalist' and quantitative approach with the theoretical engine of Alfred Marshall. He discusses the role of institutional factors, the necessity of theoretical 'spectacles' to interpret statistical data, and the problem of secular trends. Schumpeter argues that while Mitchell's factual wealth is immense, the lack of a rigorous theoretical framework for 'innovation' makes it difficult to distinguish between the generating forces of cycles and mere secondary fluctuations. He also critiques the use of business annals without a guiding principle for identifying recessions. [The Present World Depression: A Tentative Diagnosis]: Schumpeter provides a diagnosis of the 1930s depression, attributing it to the simultaneous trough of three distinct cycles: the 'long wave' (Kondratieff), the Juglar cycle, and the forty-month cycle. He identifies several 'outside factors' that intensified the downturn, including an independent agrarian crisis, post-war monetary deflation, reparations, and rigid wage structures. He argues that while economics can diagnose the situation, the 'patient' (society) is often unwilling to accept the necessary adjustments, and that artificial stimuli may delay the emergence of a new equilibrium. [The Common Sense of Econometrics]: Written for the inaugural issue of Econometrica, Schumpeter defines the field as the explicit recognition of the quantitative nature of economic life. He traces the lineage of econometric thought from Petty and King through Cournot, Walras, and Marshall. He argues that econometrics is not a 'school' but a necessary coordination of theoretical, statistical, and factual research. The goal is to move beyond acrimonious methodological debates toward positive achievement through exact proof and numerical verification, ultimately providing a scientific basis for economic policy. [Depressions—Can We Learn from Past Experience?]: Schumpeter examines historical depressions (1825, 1873, 1896) to extract lessons for the 1930s. He distinguishes between the 'primary' process of adjustment to innovation and 'secondary' phenomena like speculation and panic. He argues that recovery must come 'of itself' to be sound, as artificial stimuli like inflation prevent necessary liquidations and create new maladjustments. He critiques the 'Ricardian Vice' of offering simplified advice and emphasizes that while relief is a moral imperative, fundamental economic cures require allowing the system to find a new equilibrium. [The Nature and Necessity of a Price System]: Schumpeter defends the price system as a fundamental 'coefficient of choice' necessary for any rational economic organization, including socialism. He argues that prices are not merely tolls for private profit but essential indicators of scarcity and preference that guide the 'what' and 'how' of production. He acknowledges the wastes of 'imperfect' or monopolistic competition (referencing Chamberlin) but maintains that the competitive equilibrium model remains a vital diagnostic tool for identifying external disturbances and institutional instabilities. [Review of Joan Robinson’s Economics of Imperfect Competition]: A review of Joan Robinson's landmark work. Schumpeter praises the introduction of 'marginal revenue' as a master key that unifies the analysis of competition and monopoly. He notes the book's Marshallian roots and its pedagogical excellence. However, he critiques its limitations, such as the avoidance of general equilibrium (Walrasian) analysis, the lack of a dynamic time element, and the 'Ricardian' tendency toward premature practical application. He suggests that the next steps for theory involve incorporating money, chronic disequilibria, and the business cycle into the imperfect competition framework. [The Analysis of Economic Change]: Schumpeter outlines his multi-cycle schema for analyzing economic change. He distinguishes between 'outside factors' (wars, harvests), 'growth' (continuous changes like population), and 'innovation' (discontinuous changes in production functions). He proposes a three-cycle model: the 50-60 year Kondratieff (industrial revolutions), the 9-10 year Juglar, and the 40-month Kitchin cycle. He explains 'secondary waves' as induced phenomena that intensify cycles. He calls for a research program that integrates historical industrial monographs with quantitative 'systematic' series to understand how the system responds to innovation. [Professor Taussig on Wages and Capital]: An appreciation of F.W. Taussig's contributions to economic theory, specifically his work on 'Wages and Capital'. Schumpeter discusses the logic of theoretical evolution, tracing the path from the 'classics' to the marginalist revolution. He credits Taussig (alongside Böhm-Bawerk) with providing a rigorous theory of the structure of capital and the time-relations of production, which effectively replaced the flawed 'wages fund' doctrine. He highlights Taussig's role in establishing high scientific standards in American economics and his ability to bridge pure theory with international trade and tariff history. [Review of Keynes’s General Theory]: A critical review of Keynes's 'General Theory'. Schumpeter accuses Keynes of the 'Ricardian Vice'—offering specific policy advice for a unique historical situation (post-war England) under the guise of general scientific truth. He critiques the use of social aggregates, the assumption of invariant production functions (which ignores the essence of capitalism: innovation), and the 'deus ex machina' concepts like 'propensity to consume' and 'liquidity preference'. Schumpeter argues that Keynes's world is stationary and fails to capture the dynamic process of industrial change that drives actual investment and employment. [Preface to the Japanese Edition of The Theory of Economic Development]: In this preface, Schumpeter explains the core aim of his 'Theorie der Wirtschaftlichen Entwicklung': to create a model of economic change generated from within the system. He contrasts his approach with Walras's stationary equilibrium and notes his affinity with Marx's vision of economic evolution. He discusses how newer developments like the theory of imperfect competition and dynamic functional calculus (Volterra) complement his principle of innovation without replacing it as the primary force of change. [The Influence of Protective Tariffs on the Industrial Development of the United States]: Schumpeter analyzes American protectionism as a political necessity for national independence rather than a purely economic calculation. He argues that tariffs facilitated the growth of infant industries and accelerated a development that might have happened anyway, but at a slower pace. While acknowledging the costs of protection (high-cost industries, potential distortions), he maintains that for a large, resource-rich country, protectionism helped create a balanced industrial organism and remains a vital tool for safeguarding the domestic structure in a mercantilist world. [Capitalism in the Postwar World]: Schumpeter examines the prospects for capitalism after WWII. He defines capitalism by private property, profit/loss responsibility, and private credit creation. He critiques the 'Vanishing Investment Opportunity' theory, suggesting instead that capitalism's decay is sociological: the system produces a rationalist mentality and a bureaucratic class that are hostile to its own foundations. He predicts that the postwar world will likely see 'capitalism in the oxygen tent'—a system managed by a permanent federal bureaucracy using income-generating expenditure and strict regulation, effectively transitioning toward socialism. [The Transition to State Management and Guided Capitalism]: Schumpeter argues that the decline of private saving and the rise of government financing will inevitably lead to state management of banking and investment. He introduces the concept of 'Guided Capitalism,' where the state directs national goals while potentially delegating specific tasks to private firms, and 'State Capitalism,' characterized by government ownership of key industries and control over labor and capital markets. [The Definition of Socialism and the Amphibial State]: The author discusses the semantic and tactical difficulties in defining socialism, noting that the term is often used or avoided based on political strategy. He suggests that the most probable future is an 'amphibial state'—a hybrid system that, while economically less efficient than pure capitalism or pure socialism, preserves certain human values and avoids violent revolution. [Capitalism: Definition and Early Historical Development]: In this reprint from the Encyclopaedia Britannica, Schumpeter defines capitalism through private ownership, production for profit, and the essential role of bank credit. He traces its origins not to a sudden break or a 'Protestant ethic' as Max Weber suggested, but to a slow, continuous transformation from the medieval world, where fortified towns and trade companies laid the groundwork for capitalist institutions. [Mercantilist Capitalism and the Symbiosis of Social Worlds]: Schumpeter analyzes the mercantilist era as a symbiosis between the rising bourgeoisie and the surviving feudal aristocracy. He argues that mercantilist aggressiveness and economic nationalism were not inherent to capitalism itself, but rather a result of the business class serving the power interests of a non-bourgeois ruling stratum. [Intact Capitalism: The Era of Liberalism and Expansion]: This section describes 'Intact Capitalism' (19th century), characterized by laissez-faire, free trade, and the gold standard. Schumpeter highlights the fiscal policy of Gladstone and the rationalist spirit of the businessman as the era's defining features, noting that even Marx admired the system's productive performance during this period of unprecedented expansion. [The Modern Phase: Maturity, Imperialism, and Big Business]: Schumpeter examines the reversal of liberal tendencies after 1898, discussing two major doctrines: the 'maturity of capitalism' (vanishing investment opportunities) and the Marxist theory of 'imperialism' (the final stage of capitalism). He critiques these views while acknowledging the reality of industrial combination and the rise of giant concerns. [The Economics of Capitalism: Innovation and Competition]: Schumpeter outlines the economic engine of capitalism, emphasizing the role of the entrepreneur in creating new plant and equipment through 'evolutionary' change. He contrasts the theoretical model of perfect competition with the reality of big business, arguing that large-scale concerns often drive technological progress and lower costs in ways that smaller, perfectly competitive firms cannot. [The Class Structure of Capitalist Society]: Schumpeter critiques the Marxist two-class model of capitalists and proletarians as an analytical distortion, proposing instead a more nuanced structure including large/medium/small business owners, farmers, rentiers, professionals, white-collar workers, and skilled/unskilled labor. He argues that capitalist classes are not self-perpetuating family dynasties but are characterized by incessant 'rise and fall' across generations. He also explores whether business success acts as a form of positive social selection based on personal ability and will power. [Exploitation and Inequality]: This section examines the concepts of exploitation and income inequality. Schumpeter deconstructs the Marxist labor theory of value and surplus value, noting its rejection by most modern economists. He discusses the economic functions of inequality, arguing that the 'lure of big prizes' provides a unique motivation for entrepreneurial performance and that the concentration of wealth in higher income brackets historically facilitated the saving necessary for capital formation, though he acknowledges the 1930s shift toward viewing saving as potentially depressing to the economy. [Unemployment and Waste]: Schumpeter addresses the 'indictment' of capitalism regarding unemployment and systemic waste. While admitting that central planning might mitigate cyclical unemployment, he argues that unemployment is often the price of labor's freedom in a capitalist society, contrasting this with the compulsory labor of a planned state (citing Trotsky). He defends capitalism against charges of waste by noting that 'excess capacity' can be a guarantee of service excellence and that much perceived waste is an inherent byproduct of a rapidly progressive, evolutionary economy. [The Future of Capitalism]: Schumpeter analyzes the inherent tendencies leading toward the eventual replacement of capitalism by socialism. He argues that the success of capitalism undermines its own foundations by mechanizing the entrepreneurial function, eroding protective social traditions (like the family), and empowering hostile political groups. He distinguishes between the desirability of capitalism and its likelihood of survival, suggesting that the transition may result in a 'guided' or 'fettered' capitalism that is functionally indistinguishable from socialism. [Bibliography for Capitalism Essay]: A list of recommended historical and theoretical works on capitalism, including texts by Mantoux, Clapham, Sombart, Weber, Tawney, Marx, Sweezy, Hayek, and Schumpeter himself. [The Decade of the Twenties: Facts and Interpretation]: Schumpeter begins an analysis of the U.S. economy in the 1920s, focusing on the utility of economic analysis in interpreting history. He lists fundamental statistical series (output, employment, prices, interest) and discusses methodological disagreements regarding the definition of savings and the nature of time deposits. He posits that the 1920s represented the manifestation of an 'industrial revolution' rooted in technological changes from the late 19th century, which created a depressive undertone despite surface prosperity. [Prices and Production in the 1920s]: Schumpeter analyzes the relationship between price levels and production during the 1920s, arguing that the period's prosperity occurred despite a falling price trend. He highlights the massive increase in manufacturing output and industrial efficiency, suggesting these real factors were more significant than monetary fluctuations. [Profits, Wages, and Employment in the Pre-Depression Era]: An examination of the labor market and corporate profitability in the 1920s. Schumpeter challenges the notion of high profitability by citing low earnings ratios and notes that the economy successfully absorbed labor despite technological improvements, refuting the idea that unemployment was caused by an excessive propensity to save. [Explaining the 1929 Crisis: Depression vs. Disaster]: Schumpeter defends economic theory's ability to explain the 1929 crisis by distinguishing between a 'normal' depression and the 'disaster' caused by specific historical accidents. He identifies three primary causes for the severity of the U.S. collapse: the speculative mania of 1927-29, the structural weakness of the American banking system, and the precarious urban and rural mortgage situation. [The Creative Response in Economic History]: Schumpeter introduces the fundamental distinction between 'adaptive response' (standard economic adjustment) and 'creative response' (innovation). He argues that creative response, driven by the entrepreneur, is the primary mechanism of economic change in capitalist society, shaping the long-run course of history in ways that cannot be predicted ex ante. [The Function and Classification of the Entrepreneur]: A detailed conceptualization of the entrepreneurial function, distinguishing it from management, capital ownership, and invention. Schumpeter provides various classifications for entrepreneurs based on institutional forms, fields of activity, and sociological origins, noting how the role has evolved from the 19th-century owner-manager to the modern corporate executive. [Entrepreneurial Gains and the Process of Creative Destruction]: Schumpeter analyzes the nature of entrepreneurial profit, describing it as a temporary surplus gain that eventually dissipates as innovations are adopted by competitors. He discusses the impact of innovation on the wider economy, including the destruction of old capital and the potential for negative aggregate returns for entrepreneurs as a group despite spectacular individual successes. [The Obsolescence of the Entrepreneurial Function]: Schumpeter explores the hypothesis that the entrepreneurial function is declining as innovation becomes routinized and bureaucratized. He examines the sociological implications of this shift, particularly regarding the stability of the capitalist class structure and the role of industrial families in maintaining economic leadership. [Theoretical Problems of Economic Growth]: Schumpeter discusses the methodological challenges in defining and measuring economic growth. He emphasizes that 'theory' should be used as an instrumental tool for research rather than a metaphysical framework, and proposes a working definition of growth based on the increase in trend values of per capita total output. [Factors and Interdependencies of Economic Growth]: Schumpeter analyzes the various non-autonomous factors adduced to explain economic growth, including social organization, politics, technology, and the 'national spirit.' He rejects the Marxist hypothesis of economic evolution as the sole prime mover, arguing instead for a system of interdependent factors where economic growth is both a cause and an effect. He notes the difficulty of quantifying these factors and emphasizes that no single-factor theory can be satisfactory for historical reality. [The Mechanism of Growth and the Role of Entrepreneurship]: This section distinguishes between 'factors of growth' and the 'describing mechanism' or modus operandi of those factors, using the 16th-century Spanish inflation as an illustration. Schumpeter critiques the classical 'tree-like' growth theories of Smith, Mill, and Marshall for their impersonal automatism. He introduces the crucial distinction between 'adaptive' and 'creative' responses, defining the latter as entrepreneurship—the combination of resources in new ways—which introduces an element of indeterminateness into economic analysis. [There is Still Time to Stop Inflation: Historical Context]: Schumpeter reflects on his observations of post-WWI European inflations in Austria, Germany, Italy, and France. He argues that these inflations were not economically mysterious but were the result of a lack of political stamina and the prioritization of short-term interests over permanent stability. He notes that while some leaders like Mussolini stopped inflation through sheer will, others pussy-footed the issue until catastrophe occurred. [The Three Phases of Inflation and the Role of Incomes]: Schumpeter defines inflation as means of payment increasing faster than output, primarily driven by government borrowing. He categorizes the process into three phases: Incipient (latent effects), Advanced (full employment, rising prices, and secondary credit expansion), and Wild (flight into real values and currency collapse). He emphasizes that the national payroll is the most important conductor of inflationary effects because wage incomes are spent promptly. [Remedies for Advanced Inflation]: Schumpeter evaluates potential remedies for the 'Advanced Inflation' stage, including direct controls, volume reduction, credit restrictions, and public finance. He dismisses direct price controls as ineffective symptom-suppression and warns that stopping inflation will inevitably cause a temporary depression. He advocates for credit restrictions, particularly in consumer and mortgage credit, and suggests that increasing production through more hours of work is the best long-term remedy. [Public Finance and Anti-Inflationary Policy]: Schumpeter discusses the role of public finance in combating inflation, emphasizing that while curtailing public expenditure is orthodox, it is politically difficult. He argues that a budgetary surplus should be used for pro-saving tax reforms rather than simple tax remission for consumers, as investing these sums into industrial requirements exerts a non-inflationary effect. He concludes that while inflation cannot be stopped instantly without a depression, it can be phased out through credit restriction and fiscal discipline, noting that inflation fundamentally undermines the social system. [Economic Theory and Entrepreneurial History: Part I]: Schumpeter provides a historical survey of the concept of the entrepreneur in economic literature. He traces the term from Cantillon and J.B. Say—who recognized the entrepreneur as a distinct agent of combination—through the English classics like Smith and Ricardo, who often conflated the entrepreneur with the capitalist. Schumpeter defines the entrepreneurial function as 'innovation' or 'creative response'—doing things outside the pale of routine. He distinguishes this from mere management and discusses the nature of entrepreneurial gain as a temporary monopoly return. He also addresses the 'stagnationist thesis' and the role of the entrepreneur in driving economic change beyond the 'stationary state'. [Economic Theory and Entrepreneurial History: Parts II and III]: Schumpeter explores the practical application of entrepreneurial definitions to historical data. He challenges the view that entrepreneurs merely exploit independent technological progress, arguing instead that they are the agents who get new things done. He examines the sources of 'original accumulation,' including credit creation and self-financing from earnings. In Part III, he analyzes the social location of entrepreneurs, noting they hail from all social classes but eventually merge into the capitalist class. He critiques the notion that entrepreneurs hold direct political power, using the Fugger family as an example of wealth without corresponding policy control. [Science and Ideology: The Nature of Scientific Vision]: Schumpeter distinguishes between scientific technique and 'ideology,' which he defines as a pre-scientific 'vision' or intuition of the economic process. While scientific analysis (model building) is subject to objective tests, the initial vision is socially conditioned and often contains delusions based on a researcher's social location. He argues that while value judgments are distinct from analysis, ideologies are more dangerous because they are sincere rationalizations that the researcher is unaware of. However, he concludes that this 'vision' is also the necessary prerequisite for all scientific work, providing the material for analysis to operate upon. [The Communist Manifesto in Sociology and Economics: Introduction]: Schumpeter begins a centenary appraisal of the Communist Manifesto, focusing on its scientific sociology and economics rather than its political impact. He reviews Engels' 1888 Preface, noting the document's origins in the small Communist League and the tactical reasons for the 'Communist' label. Schumpeter argues that the Manifesto's claim to reflect the modal workman's attitude is a 'Marxist saga,' as the actual working-class movement was driven more by increasing real wages than by the class-struggle philosophy imposed by intellectuals. [The Economic Interpretation of History]: Schumpeter analyzes Marx's economic interpretation of history as presented in the Communist Manifesto and later works. He defines it as the proposition that social, political, and cultural structures derive from autonomous economic processes. While acknowledging precursors like Saint-Simon, Schumpeter defends Marx's originality, comparing his contribution to Darwin's. He evaluates the theory as a working hypothesis that explains 19th-century bourgeois society well but fails to account for other historical shifts like the rise of feudalism, which he argues was driven by military and political factors rather than production relations. [Marxist Historiography and Social Existence]: Schumpeter highlights two additional merits of the Marxist historical framework: its successful challenge to the 18th-century doctrine of 'general progress of the human mind' (represented by thinkers like Comte and Mill) and its psychological insight that social existence determines conscious thought. He credits Marx with moving sociology away from uncritical individualism and providing a necessary 'objective' economic counterweight in historiography, particularly within the German tradition. [The Marxist Theory of Social Classes]: Schumpeter analyzes the Marxist theory of social classes, beginning with the Manifesto's claim that history is a history of class struggles. He critiques Marx's exclusively economic definition of class, arguing that the causal link between production structure and social weight is often reversed or more complex than Marx allowed. Schumpeter highlights the emergence of a 'new' middle class as a challenge to Marx's binary 'hostile camps' model and critiques the ideological postulate that class relations are exclusively antagonistic and exploitative. [The Marxist Theory of the State]: Schumpeter credits Marx with bringing the theory of the state down from metaphysical 'clouds' into the realm of realistic analysis, treating policy as politics driven by group interests. However, he critiques Marx's utopian vision of the state 'withering away' under the proletariat as replacing one ideology with another. He argues that Marx's view of the state as merely a committee for the bourgeoisie is inadequate for modern democracy, yet maintains Marx's status as a founder of modern political science. [The Economics of the Communist Manifesto]: Schumpeter examines the 'economics proper' of the Communist Manifesto, noting Marx's surprising panegyric on bourgeois achievement and the creative role of the business class. He identifies three key economic features: the tendency toward giant concerns, the periodicity of crises, and the (later abandoned) theory of the 'deterioration' of the proletariat's condition. Schumpeter argues that in 1847, Marx was not yet a technical economist, and the Manifesto represents a social vision that preceded his rigorous economic research in the 1850s. [English Economists and the State-Managed Economy: Introduction and Socialism]: Schumpeter introduces an analysis of post-war British economic policy, distinguishing between 'socialism' (central control of production) and 'laborism' (reformism where labor is the ruling class). He reviews contemporary works by Baster, Franks, Harrod, Jewkes, Meade, and Robbins. He specifically discusses Jewkes's defense of free enterprise and critiques the lack of attention given to the pivotal role of taxation in making socialism inevitable. [Laborism and Postwar Readjustment in England]: Schumpeter defines 'laborism' as a system where the wage contract is a political datum and taxation aims to maximize public expenditure for labor while minimizing other incomes. He critiques the English economists' focus on domestic adjustment and their disapproval of government investment. He argues that England's situation requires mercantilist maneuvering and direct controls rather than simple Ricardian or Keynesian measures, noting that the Labour government's planning has been successful from the trade-union standpoint of maintaining employment and real wages. [The Historical Approach to the Analysis of Business Cycles]: Schumpeter argues for the necessity of a historical approach to business cycles to complement theoretical and statistical work. He contends that the most severe aspects of depressions (like the 1929 crash) are often due to 'adventitious' and avoidable circumstances—such as banking instability and speculative manias—rather than the cyclical mechanism itself. He calls for a collection of industrial and locational monographs to understand how changes in production functions and the rise and fall of individual firms drive the underlying cyclical process. [Bibliography of the Writings of Joseph A. Schumpeter]: The beginning of a comprehensive bibliography of Joseph Schumpeter's works, categorized into books, pamphlets, articles, and book reviews. [Bibliography of Joseph Schumpeter: Books and Pamphlets]: A comprehensive list of books and pamphlets authored by Joseph Schumpeter, including various editions and translations (Japanese, Italian, English, French, Spanish, German). Key works listed include 'Theorie der wirtschaftlichen Entwicklung', 'Business Cycles', 'Capitalism, Socialism and Democracy', and posthumous publications like 'History of Economic Analysis'. [Bibliography of Joseph Schumpeter: Articles (1905–1932)]: A chronological bibliography of Schumpeter's academic articles and reports published between 1905 and 1932. It covers topics such as statistical methods, social value, business cycles, interest rates, and sociological analyses of imperialism and social classes. Includes tributes to economists like Walras, Böhm-Bawerk, Menger, and Weber. [Bibliography of Joseph Schumpeter: Articles (1933–1950)]: A chronological bibliography of Schumpeter's articles from 1933 until his death in 1950. Highlights include his work on econometrics, appraisals of Keynes, Marshall, and Pareto, and his final address 'March into Socialism'. It also lists prefaces to works by other economists and contributions to encyclopedias. [Book Reviews and Review Articles (1906–1950)]: A chronological list of book reviews and review articles authored by Schumpeter between 1906 and 1950. It covers major works by economists such as Irving Fisher, J.M. Keynes, F.A. Hayek, Joan Robinson, and Vilfredo Pareto, published in journals like the Economic Journal and Zeitschrift für Volkswirtschaft. [Notes and Footnotes (1-207)]: Comprehensive collection of 207 footnotes and endnotes corresponding to the preceding essays. These notes provide critical technical elaborations on topics including social value, the mechanics of credit creation, the definition of the entrepreneur, critiques of Keynesian and Marxist doctrines, and the methodology of economic history. It includes specific mathematical clarifications on price levels and detailed commentary on the works of contemporaries like Pigou, Marshall, and Mitchell.
Title page, publication details from 1951, and a comprehensive table of contents listing 25 essays by Joseph A. Schumpeter, covering topics from social value and business cycles to capitalism and the history of economic analysis.
Read full textEditor Richard V. Clemence explains the origins of this collection, noting Schumpeter's initial lack of interest in his earlier work while focused on his history of economic analysis. It details the selection criteria—including all major English articles before 1950 except biographies—and acknowledges contributors like Mrs. Schumpeter and Harvard colleagues.
Read full textSchumpeter introduces the methodological inquiry into 'social value,' contrasting it with the individualistic foundations of modern economic theory. He argues that because only individuals feel wants, utility and marginal utility are fundamentally individualistic concepts, and the distribution of wealth among individuals is a necessary datum for determining values and production.
Read full textThe author distinguishes between individualistic demand and strictly social wants. He posits that while 'social value' is a functional reality in a communistic society where a central authority controls production and distribution, in a non-communistic society, social curves are merely aggregates of individual wants influenced by a specific distribution of wealth.
Read full textSchumpeter examines the claim that society sets values, acknowledging social influences like fashion and barter on individual utility curves. He critiques the Rodbertus view that exchange-value equals social value-in-use, arguing this analogy fails because market prices are inextricably linked to the existing distribution of wealth and private ownership of production factors.
Read full textSchumpeter discusses how the concept of social value is used to support an optimistic view of capitalism, suggesting competition leads to the same distributive results as a benevolent ruler. He critiques the works of Clark and Wieser, arguing that applying communistic social value theorems to competitive societies ignores the fundamental role of private property and individual price determination.
Read full textIn the final section, Schumpeter asserts that distribution is governed by prices rather than abstract social values. He argues that 'social marginal utility' in a market is merely the utility of the marginal buyer, not a reflection of total social welfare. He concludes that while social value is a useful fiction for certain analogies, a full explanation of economic life requires the theory of prices based on individual values and their mutual interdependence.
Read full textSchumpeter concludes his discussion on methodological individualism, arguing it is a valid scientific procedure that avoids misconceptions. He maintains that 'social value' is a fiction in non-communistic states but remains a necessary concept for studying communistic societies and as a scientific tool for understanding how society influences individual economic values.
Read full textSchumpeter introduces the problem of the business cycle, noting that while economics is moving toward scientific maturity and convergence, it still struggles with the phraseology of 'schools.' He credits Clément Juglar with shifting the focus from isolated 'crises' to the study of deeper cyclical movements and highlights the importance of modern descriptive studies in providing the data necessary for analytic explanation.
Read full textThe author evaluates Professor Pigou's work on industrial fluctuations, distinguishing between three types of cycle theories: historical analysis of single cycles, general theories of all contributing elements, and theories of fundamental causes. While praising Pigou's comprehensive survey (the second type), Schumpeter argues that a focus on fundamental causation is necessary to avoid hiding analytic sins behind the complexity of detail.
Read full textSchumpeter outlines his core theory of the business cycle through seven propositions. He argues that cycles do not arise from 'static' equilibrium or mere growth, but from 'innovations'—discontinuous changes in production methods or organization. He distinguishes his view from Pigou's by asserting that the economic system itself generates these impulses through the leadership of entrepreneurs whose success breaks the routine and draws a 'crowd' of followers, creating the boom.
Read full textSchumpeter examines the essential role of the banking system in facilitating the business cycle. He defines 'credit creation' as the manufacture of purchasing power beyond existing savings or commodities, which allows entrepreneurs to withdraw productive forces from the circular flow. This process leads to a 'primary wave' of inflation followed by 'self-deflation' as new products enter the market and loans are repaid. He critiques the 'purely monetary' view of Hawtrey while acknowledging that banks influence the pace and secondary waves of the cycle.
Read full textIn this section, Schumpeter begins an inquiry into whether capitalism is inherently stable. He distinguishes between 'political,' 'social,' and 'economic' stability, focusing on the latter. He defines the capitalist system by private property, market production, and credit. Using Marshallian and Walrasian frameworks, he argues that the economic system is theoretically stable under static conditions, where a determined equilibrium exists despite growth in population or capital.
Read full textSchumpeter distinguishes between mere economic growth (passive adaptation) and true economic evolution driven by innovation. He defines innovation as the 'new combination' of productive factors, typically embodied in new firms and plants. This process is inherently discontinuous and disrupts existing equilibria. He argues that innovation is a feat of leadership and will, performed by the entrepreneur, and is the primary source of profit, interest, and the cyclical nature of capitalist progress. He concludes that while the system experiences instability during these shifts, the underlying order remains stable as new equilibria emerge to absorb the results of innovation.
Read full textSchumpeter compares the mechanism of innovation in competitive capitalism versus 'trustified' (monopolistic) capitalism. In the former, innovation arises through new firms and individual leadership, often causing significant social disturbance. In the latter, innovation becomes 'automatized' within large units, reducing friction and individual initiative. He predicts that capitalism's success in rationalizing the mind will eventually create a social atmosphere and mentality incompatible with its own institutions, leading to a transition toward an order resembling socialism, even if not driven by purely economic necessity.
Read full textA comprehensive review of Mitchell's 1927 work on business cycles. Schumpeter compares Mitchell's 'experimentalist' and quantitative approach with the theoretical engine of Alfred Marshall. He discusses the role of institutional factors, the necessity of theoretical 'spectacles' to interpret statistical data, and the problem of secular trends. Schumpeter argues that while Mitchell's factual wealth is immense, the lack of a rigorous theoretical framework for 'innovation' makes it difficult to distinguish between the generating forces of cycles and mere secondary fluctuations. He also critiques the use of business annals without a guiding principle for identifying recessions.
Read full textSchumpeter provides a diagnosis of the 1930s depression, attributing it to the simultaneous trough of three distinct cycles: the 'long wave' (Kondratieff), the Juglar cycle, and the forty-month cycle. He identifies several 'outside factors' that intensified the downturn, including an independent agrarian crisis, post-war monetary deflation, reparations, and rigid wage structures. He argues that while economics can diagnose the situation, the 'patient' (society) is often unwilling to accept the necessary adjustments, and that artificial stimuli may delay the emergence of a new equilibrium.
Read full textWritten for the inaugural issue of Econometrica, Schumpeter defines the field as the explicit recognition of the quantitative nature of economic life. He traces the lineage of econometric thought from Petty and King through Cournot, Walras, and Marshall. He argues that econometrics is not a 'school' but a necessary coordination of theoretical, statistical, and factual research. The goal is to move beyond acrimonious methodological debates toward positive achievement through exact proof and numerical verification, ultimately providing a scientific basis for economic policy.
Read full textSchumpeter examines historical depressions (1825, 1873, 1896) to extract lessons for the 1930s. He distinguishes between the 'primary' process of adjustment to innovation and 'secondary' phenomena like speculation and panic. He argues that recovery must come 'of itself' to be sound, as artificial stimuli like inflation prevent necessary liquidations and create new maladjustments. He critiques the 'Ricardian Vice' of offering simplified advice and emphasizes that while relief is a moral imperative, fundamental economic cures require allowing the system to find a new equilibrium.
Read full textSchumpeter defends the price system as a fundamental 'coefficient of choice' necessary for any rational economic organization, including socialism. He argues that prices are not merely tolls for private profit but essential indicators of scarcity and preference that guide the 'what' and 'how' of production. He acknowledges the wastes of 'imperfect' or monopolistic competition (referencing Chamberlin) but maintains that the competitive equilibrium model remains a vital diagnostic tool for identifying external disturbances and institutional instabilities.
Read full textA review of Joan Robinson's landmark work. Schumpeter praises the introduction of 'marginal revenue' as a master key that unifies the analysis of competition and monopoly. He notes the book's Marshallian roots and its pedagogical excellence. However, he critiques its limitations, such as the avoidance of general equilibrium (Walrasian) analysis, the lack of a dynamic time element, and the 'Ricardian' tendency toward premature practical application. He suggests that the next steps for theory involve incorporating money, chronic disequilibria, and the business cycle into the imperfect competition framework.
Read full textSchumpeter outlines his multi-cycle schema for analyzing economic change. He distinguishes between 'outside factors' (wars, harvests), 'growth' (continuous changes like population), and 'innovation' (discontinuous changes in production functions). He proposes a three-cycle model: the 50-60 year Kondratieff (industrial revolutions), the 9-10 year Juglar, and the 40-month Kitchin cycle. He explains 'secondary waves' as induced phenomena that intensify cycles. He calls for a research program that integrates historical industrial monographs with quantitative 'systematic' series to understand how the system responds to innovation.
Read full textAn appreciation of F.W. Taussig's contributions to economic theory, specifically his work on 'Wages and Capital'. Schumpeter discusses the logic of theoretical evolution, tracing the path from the 'classics' to the marginalist revolution. He credits Taussig (alongside Böhm-Bawerk) with providing a rigorous theory of the structure of capital and the time-relations of production, which effectively replaced the flawed 'wages fund' doctrine. He highlights Taussig's role in establishing high scientific standards in American economics and his ability to bridge pure theory with international trade and tariff history.
Read full textA critical review of Keynes's 'General Theory'. Schumpeter accuses Keynes of the 'Ricardian Vice'—offering specific policy advice for a unique historical situation (post-war England) under the guise of general scientific truth. He critiques the use of social aggregates, the assumption of invariant production functions (which ignores the essence of capitalism: innovation), and the 'deus ex machina' concepts like 'propensity to consume' and 'liquidity preference'. Schumpeter argues that Keynes's world is stationary and fails to capture the dynamic process of industrial change that drives actual investment and employment.
Read full textIn this preface, Schumpeter explains the core aim of his 'Theorie der Wirtschaftlichen Entwicklung': to create a model of economic change generated from within the system. He contrasts his approach with Walras's stationary equilibrium and notes his affinity with Marx's vision of economic evolution. He discusses how newer developments like the theory of imperfect competition and dynamic functional calculus (Volterra) complement his principle of innovation without replacing it as the primary force of change.
Read full textSchumpeter analyzes American protectionism as a political necessity for national independence rather than a purely economic calculation. He argues that tariffs facilitated the growth of infant industries and accelerated a development that might have happened anyway, but at a slower pace. While acknowledging the costs of protection (high-cost industries, potential distortions), he maintains that for a large, resource-rich country, protectionism helped create a balanced industrial organism and remains a vital tool for safeguarding the domestic structure in a mercantilist world.
Read full textSchumpeter examines the prospects for capitalism after WWII. He defines capitalism by private property, profit/loss responsibility, and private credit creation. He critiques the 'Vanishing Investment Opportunity' theory, suggesting instead that capitalism's decay is sociological: the system produces a rationalist mentality and a bureaucratic class that are hostile to its own foundations. He predicts that the postwar world will likely see 'capitalism in the oxygen tent'—a system managed by a permanent federal bureaucracy using income-generating expenditure and strict regulation, effectively transitioning toward socialism.
Read full textSchumpeter argues that the decline of private saving and the rise of government financing will inevitably lead to state management of banking and investment. He introduces the concept of 'Guided Capitalism,' where the state directs national goals while potentially delegating specific tasks to private firms, and 'State Capitalism,' characterized by government ownership of key industries and control over labor and capital markets.
Read full textThe author discusses the semantic and tactical difficulties in defining socialism, noting that the term is often used or avoided based on political strategy. He suggests that the most probable future is an 'amphibial state'—a hybrid system that, while economically less efficient than pure capitalism or pure socialism, preserves certain human values and avoids violent revolution.
Read full textIn this reprint from the Encyclopaedia Britannica, Schumpeter defines capitalism through private ownership, production for profit, and the essential role of bank credit. He traces its origins not to a sudden break or a 'Protestant ethic' as Max Weber suggested, but to a slow, continuous transformation from the medieval world, where fortified towns and trade companies laid the groundwork for capitalist institutions.
Read full textSchumpeter analyzes the mercantilist era as a symbiosis between the rising bourgeoisie and the surviving feudal aristocracy. He argues that mercantilist aggressiveness and economic nationalism were not inherent to capitalism itself, but rather a result of the business class serving the power interests of a non-bourgeois ruling stratum.
Read full textThis section describes 'Intact Capitalism' (19th century), characterized by laissez-faire, free trade, and the gold standard. Schumpeter highlights the fiscal policy of Gladstone and the rationalist spirit of the businessman as the era's defining features, noting that even Marx admired the system's productive performance during this period of unprecedented expansion.
Read full textSchumpeter examines the reversal of liberal tendencies after 1898, discussing two major doctrines: the 'maturity of capitalism' (vanishing investment opportunities) and the Marxist theory of 'imperialism' (the final stage of capitalism). He critiques these views while acknowledging the reality of industrial combination and the rise of giant concerns.
Read full textSchumpeter outlines the economic engine of capitalism, emphasizing the role of the entrepreneur in creating new plant and equipment through 'evolutionary' change. He contrasts the theoretical model of perfect competition with the reality of big business, arguing that large-scale concerns often drive technological progress and lower costs in ways that smaller, perfectly competitive firms cannot.
Read full textSchumpeter critiques the Marxist two-class model of capitalists and proletarians as an analytical distortion, proposing instead a more nuanced structure including large/medium/small business owners, farmers, rentiers, professionals, white-collar workers, and skilled/unskilled labor. He argues that capitalist classes are not self-perpetuating family dynasties but are characterized by incessant 'rise and fall' across generations. He also explores whether business success acts as a form of positive social selection based on personal ability and will power.
Read full textThis section examines the concepts of exploitation and income inequality. Schumpeter deconstructs the Marxist labor theory of value and surplus value, noting its rejection by most modern economists. He discusses the economic functions of inequality, arguing that the 'lure of big prizes' provides a unique motivation for entrepreneurial performance and that the concentration of wealth in higher income brackets historically facilitated the saving necessary for capital formation, though he acknowledges the 1930s shift toward viewing saving as potentially depressing to the economy.
Read full textSchumpeter addresses the 'indictment' of capitalism regarding unemployment and systemic waste. While admitting that central planning might mitigate cyclical unemployment, he argues that unemployment is often the price of labor's freedom in a capitalist society, contrasting this with the compulsory labor of a planned state (citing Trotsky). He defends capitalism against charges of waste by noting that 'excess capacity' can be a guarantee of service excellence and that much perceived waste is an inherent byproduct of a rapidly progressive, evolutionary economy.
Read full textSchumpeter analyzes the inherent tendencies leading toward the eventual replacement of capitalism by socialism. He argues that the success of capitalism undermines its own foundations by mechanizing the entrepreneurial function, eroding protective social traditions (like the family), and empowering hostile political groups. He distinguishes between the desirability of capitalism and its likelihood of survival, suggesting that the transition may result in a 'guided' or 'fettered' capitalism that is functionally indistinguishable from socialism.
Read full textA list of recommended historical and theoretical works on capitalism, including texts by Mantoux, Clapham, Sombart, Weber, Tawney, Marx, Sweezy, Hayek, and Schumpeter himself.
Read full textSchumpeter begins an analysis of the U.S. economy in the 1920s, focusing on the utility of economic analysis in interpreting history. He lists fundamental statistical series (output, employment, prices, interest) and discusses methodological disagreements regarding the definition of savings and the nature of time deposits. He posits that the 1920s represented the manifestation of an 'industrial revolution' rooted in technological changes from the late 19th century, which created a depressive undertone despite surface prosperity.
Read full textSchumpeter analyzes the relationship between price levels and production during the 1920s, arguing that the period's prosperity occurred despite a falling price trend. He highlights the massive increase in manufacturing output and industrial efficiency, suggesting these real factors were more significant than monetary fluctuations.
Read full textAn examination of the labor market and corporate profitability in the 1920s. Schumpeter challenges the notion of high profitability by citing low earnings ratios and notes that the economy successfully absorbed labor despite technological improvements, refuting the idea that unemployment was caused by an excessive propensity to save.
Read full textSchumpeter defends economic theory's ability to explain the 1929 crisis by distinguishing between a 'normal' depression and the 'disaster' caused by specific historical accidents. He identifies three primary causes for the severity of the U.S. collapse: the speculative mania of 1927-29, the structural weakness of the American banking system, and the precarious urban and rural mortgage situation.
Read full textSchumpeter introduces the fundamental distinction between 'adaptive response' (standard economic adjustment) and 'creative response' (innovation). He argues that creative response, driven by the entrepreneur, is the primary mechanism of economic change in capitalist society, shaping the long-run course of history in ways that cannot be predicted ex ante.
Read full textA detailed conceptualization of the entrepreneurial function, distinguishing it from management, capital ownership, and invention. Schumpeter provides various classifications for entrepreneurs based on institutional forms, fields of activity, and sociological origins, noting how the role has evolved from the 19th-century owner-manager to the modern corporate executive.
Read full textSchumpeter analyzes the nature of entrepreneurial profit, describing it as a temporary surplus gain that eventually dissipates as innovations are adopted by competitors. He discusses the impact of innovation on the wider economy, including the destruction of old capital and the potential for negative aggregate returns for entrepreneurs as a group despite spectacular individual successes.
Read full textSchumpeter explores the hypothesis that the entrepreneurial function is declining as innovation becomes routinized and bureaucratized. He examines the sociological implications of this shift, particularly regarding the stability of the capitalist class structure and the role of industrial families in maintaining economic leadership.
Read full textSchumpeter discusses the methodological challenges in defining and measuring economic growth. He emphasizes that 'theory' should be used as an instrumental tool for research rather than a metaphysical framework, and proposes a working definition of growth based on the increase in trend values of per capita total output.
Read full textSchumpeter analyzes the various non-autonomous factors adduced to explain economic growth, including social organization, politics, technology, and the 'national spirit.' He rejects the Marxist hypothesis of economic evolution as the sole prime mover, arguing instead for a system of interdependent factors where economic growth is both a cause and an effect. He notes the difficulty of quantifying these factors and emphasizes that no single-factor theory can be satisfactory for historical reality.
Read full textThis section distinguishes between 'factors of growth' and the 'describing mechanism' or modus operandi of those factors, using the 16th-century Spanish inflation as an illustration. Schumpeter critiques the classical 'tree-like' growth theories of Smith, Mill, and Marshall for their impersonal automatism. He introduces the crucial distinction between 'adaptive' and 'creative' responses, defining the latter as entrepreneurship—the combination of resources in new ways—which introduces an element of indeterminateness into economic analysis.
Read full textSchumpeter reflects on his observations of post-WWI European inflations in Austria, Germany, Italy, and France. He argues that these inflations were not economically mysterious but were the result of a lack of political stamina and the prioritization of short-term interests over permanent stability. He notes that while some leaders like Mussolini stopped inflation through sheer will, others pussy-footed the issue until catastrophe occurred.
Read full textSchumpeter defines inflation as means of payment increasing faster than output, primarily driven by government borrowing. He categorizes the process into three phases: Incipient (latent effects), Advanced (full employment, rising prices, and secondary credit expansion), and Wild (flight into real values and currency collapse). He emphasizes that the national payroll is the most important conductor of inflationary effects because wage incomes are spent promptly.
Read full textSchumpeter evaluates potential remedies for the 'Advanced Inflation' stage, including direct controls, volume reduction, credit restrictions, and public finance. He dismisses direct price controls as ineffective symptom-suppression and warns that stopping inflation will inevitably cause a temporary depression. He advocates for credit restrictions, particularly in consumer and mortgage credit, and suggests that increasing production through more hours of work is the best long-term remedy.
Read full textSchumpeter discusses the role of public finance in combating inflation, emphasizing that while curtailing public expenditure is orthodox, it is politically difficult. He argues that a budgetary surplus should be used for pro-saving tax reforms rather than simple tax remission for consumers, as investing these sums into industrial requirements exerts a non-inflationary effect. He concludes that while inflation cannot be stopped instantly without a depression, it can be phased out through credit restriction and fiscal discipline, noting that inflation fundamentally undermines the social system.
Read full textSchumpeter provides a historical survey of the concept of the entrepreneur in economic literature. He traces the term from Cantillon and J.B. Say—who recognized the entrepreneur as a distinct agent of combination—through the English classics like Smith and Ricardo, who often conflated the entrepreneur with the capitalist. Schumpeter defines the entrepreneurial function as 'innovation' or 'creative response'—doing things outside the pale of routine. He distinguishes this from mere management and discusses the nature of entrepreneurial gain as a temporary monopoly return. He also addresses the 'stagnationist thesis' and the role of the entrepreneur in driving economic change beyond the 'stationary state'.
Read full textSchumpeter explores the practical application of entrepreneurial definitions to historical data. He challenges the view that entrepreneurs merely exploit independent technological progress, arguing instead that they are the agents who get new things done. He examines the sources of 'original accumulation,' including credit creation and self-financing from earnings. In Part III, he analyzes the social location of entrepreneurs, noting they hail from all social classes but eventually merge into the capitalist class. He critiques the notion that entrepreneurs hold direct political power, using the Fugger family as an example of wealth without corresponding policy control.
Read full textSchumpeter distinguishes between scientific technique and 'ideology,' which he defines as a pre-scientific 'vision' or intuition of the economic process. While scientific analysis (model building) is subject to objective tests, the initial vision is socially conditioned and often contains delusions based on a researcher's social location. He argues that while value judgments are distinct from analysis, ideologies are more dangerous because they are sincere rationalizations that the researcher is unaware of. However, he concludes that this 'vision' is also the necessary prerequisite for all scientific work, providing the material for analysis to operate upon.
Read full textSchumpeter begins a centenary appraisal of the Communist Manifesto, focusing on its scientific sociology and economics rather than its political impact. He reviews Engels' 1888 Preface, noting the document's origins in the small Communist League and the tactical reasons for the 'Communist' label. Schumpeter argues that the Manifesto's claim to reflect the modal workman's attitude is a 'Marxist saga,' as the actual working-class movement was driven more by increasing real wages than by the class-struggle philosophy imposed by intellectuals.
Read full textSchumpeter analyzes Marx's economic interpretation of history as presented in the Communist Manifesto and later works. He defines it as the proposition that social, political, and cultural structures derive from autonomous economic processes. While acknowledging precursors like Saint-Simon, Schumpeter defends Marx's originality, comparing his contribution to Darwin's. He evaluates the theory as a working hypothesis that explains 19th-century bourgeois society well but fails to account for other historical shifts like the rise of feudalism, which he argues was driven by military and political factors rather than production relations.
Read full textSchumpeter highlights two additional merits of the Marxist historical framework: its successful challenge to the 18th-century doctrine of 'general progress of the human mind' (represented by thinkers like Comte and Mill) and its psychological insight that social existence determines conscious thought. He credits Marx with moving sociology away from uncritical individualism and providing a necessary 'objective' economic counterweight in historiography, particularly within the German tradition.
Read full textSchumpeter analyzes the Marxist theory of social classes, beginning with the Manifesto's claim that history is a history of class struggles. He critiques Marx's exclusively economic definition of class, arguing that the causal link between production structure and social weight is often reversed or more complex than Marx allowed. Schumpeter highlights the emergence of a 'new' middle class as a challenge to Marx's binary 'hostile camps' model and critiques the ideological postulate that class relations are exclusively antagonistic and exploitative.
Read full textSchumpeter credits Marx with bringing the theory of the state down from metaphysical 'clouds' into the realm of realistic analysis, treating policy as politics driven by group interests. However, he critiques Marx's utopian vision of the state 'withering away' under the proletariat as replacing one ideology with another. He argues that Marx's view of the state as merely a committee for the bourgeoisie is inadequate for modern democracy, yet maintains Marx's status as a founder of modern political science.
Read full textSchumpeter examines the 'economics proper' of the Communist Manifesto, noting Marx's surprising panegyric on bourgeois achievement and the creative role of the business class. He identifies three key economic features: the tendency toward giant concerns, the periodicity of crises, and the (later abandoned) theory of the 'deterioration' of the proletariat's condition. Schumpeter argues that in 1847, Marx was not yet a technical economist, and the Manifesto represents a social vision that preceded his rigorous economic research in the 1850s.
Read full textSchumpeter introduces an analysis of post-war British economic policy, distinguishing between 'socialism' (central control of production) and 'laborism' (reformism where labor is the ruling class). He reviews contemporary works by Baster, Franks, Harrod, Jewkes, Meade, and Robbins. He specifically discusses Jewkes's defense of free enterprise and critiques the lack of attention given to the pivotal role of taxation in making socialism inevitable.
Read full textSchumpeter defines 'laborism' as a system where the wage contract is a political datum and taxation aims to maximize public expenditure for labor while minimizing other incomes. He critiques the English economists' focus on domestic adjustment and their disapproval of government investment. He argues that England's situation requires mercantilist maneuvering and direct controls rather than simple Ricardian or Keynesian measures, noting that the Labour government's planning has been successful from the trade-union standpoint of maintaining employment and real wages.
Read full textSchumpeter argues for the necessity of a historical approach to business cycles to complement theoretical and statistical work. He contends that the most severe aspects of depressions (like the 1929 crash) are often due to 'adventitious' and avoidable circumstances—such as banking instability and speculative manias—rather than the cyclical mechanism itself. He calls for a collection of industrial and locational monographs to understand how changes in production functions and the rise and fall of individual firms drive the underlying cyclical process.
Read full textThe beginning of a comprehensive bibliography of Joseph Schumpeter's works, categorized into books, pamphlets, articles, and book reviews.
Read full textA comprehensive list of books and pamphlets authored by Joseph Schumpeter, including various editions and translations (Japanese, Italian, English, French, Spanish, German). Key works listed include 'Theorie der wirtschaftlichen Entwicklung', 'Business Cycles', 'Capitalism, Socialism and Democracy', and posthumous publications like 'History of Economic Analysis'.
Read full textA chronological bibliography of Schumpeter's academic articles and reports published between 1905 and 1932. It covers topics such as statistical methods, social value, business cycles, interest rates, and sociological analyses of imperialism and social classes. Includes tributes to economists like Walras, Böhm-Bawerk, Menger, and Weber.
Read full textA chronological bibliography of Schumpeter's articles from 1933 until his death in 1950. Highlights include his work on econometrics, appraisals of Keynes, Marshall, and Pareto, and his final address 'March into Socialism'. It also lists prefaces to works by other economists and contributions to encyclopedias.
Read full textA chronological list of book reviews and review articles authored by Schumpeter between 1906 and 1950. It covers major works by economists such as Irving Fisher, J.M. Keynes, F.A. Hayek, Joan Robinson, and Vilfredo Pareto, published in journals like the Economic Journal and Zeitschrift für Volkswirtschaft.
Read full textComprehensive collection of 207 footnotes and endnotes corresponding to the preceding essays. These notes provide critical technical elaborations on topics including social value, the mechanics of credit creation, the definition of the entrepreneur, critiques of Keynesian and Marxist doctrines, and the methodology of economic history. It includes specific mathematical clarifications on price levels and detailed commentary on the works of contemporaries like Pigou, Marshall, and Mitchell.
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