Appraising Schumpeter's 'Essence' after 100 Years: From Walrasian Economics to Evolutionary Economics
AbstractSchumpeter’s unique type of evolutionary analysis can hardly be understood unless we recognise that he developed it in relation to a study of the strength and weaknesses of the Walrasian form of Neoclassical Economics. This development was largely performed in his first book Wesen und Hauptinhalt der theoretischen Nationalökonomie. This German-language book - which in English might be called ‘Essence and Scope of Theoretical Economics’ - was published a century ago (in 1908). Different readings of Wesen provide many clues about the emergence and structure of Schumpeter’s programme for teaching and research. This programme included a modernisation of static economic analysis but he concentrated on the difficult extension of economic analysis to cover economic evolution. Schumpeter thought that this extension required a break with basic neoclassical assumptions, but he tried to avoid controversy by presenting it as only requiring the introduction of innovative entrepreneurs into the set-up of the Walrasian System. Actually, he could easily define the function of his type of entrepreneurs in this manner, but the analysis of the overall process of evolution required a radical reinterpretation of the system of general economic equilibrium. He thus made clear that he could not accept the standard interpretation of the quick Walrasian process of adaptation (tâtonnement). Instead, he saw the innovative transformation of routine behaviour as a relatively slow and conflict-ridden process. This reinterpretation helped him to sketch out his theory of economic business cycles as reflecting the waveform process of economic evolution under capitalism.
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Bibliographic InfoPaper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 06-35.
Date of creation: 2006
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Economic statics; evolutionary dynamics; business cycles; Joseph A. Schumpeter; Léon Walras;
Find related papers by JEL classification:
- B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-17 (All new papers)
- NEP-ENT-2007-02-17 (Entrepreneurship)
- NEP-EVO-2007-02-17 (Evolutionary Economics)
- NEP-HIS-2007-02-17 (Business, Economic & Financial History)
- NEP-HPE-2007-02-17 (History & Philosophy of Economics)
- NEP-INO-2007-02-17 (Innovation)
- NEP-MAC-2007-02-17 (Macroeconomics)
- NEP-PKE-2007-02-17 (Post Keynesian Economics)
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