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Innovations and profits: Schumpeter and the classical heritage

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  • Kurz, Heinz D.

Abstract

The paper discusses the problem of innovations and profits from a Schumpeterian perspective using the analytical tools of modern classical economics. The concept of "circular flow" is formalised and Schumpeter's zero-profits assumption investigated. Next a typology of process innovations is discussed using a simple two-sector framework. In Schumpeter profits are transitional phenomena. In the conditions contemplated, increases in labor productivity will lead to rising real wages. The argument is generalized to product-cum-process innovations in systems with joint production where a bad that is costly to dispose of is transformed into a good that can be marketed profitably.

Suggested Citation

  • Kurz, Heinz D., 2008. "Innovations and profits: Schumpeter and the classical heritage," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 263-278, July.
  • Handle: RePEc:eee:jeborg:v:67:y:2008:i:1:p:263-278
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    References listed on IDEAS

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    1. Heinz D. Kurz & Neri Salvadori, 2001. "Classical Economics and the Problem of Exhaustible Resources," Metroeconomica, Wiley Blackwell, vol. 52(3), pages 282-296, August.
    2. Coase, R H, 1976. "Adam Smith's Views of Man," Journal of Law and Economics, University of Chicago Press, vol. 19(3), pages 529-546, October.
    3. Martin L. Weitzman, 1998. "Recombinant Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 331-360.
    4. Burgstaller,Andre, 1994. "Property and Prices," Cambridge Books, Cambridge University Press, number 9780521419031.
    5. Christian Gehrke, 2003. "The Ricardo Effect: Its Meaning and Validity," Economica, London School of Economics and Political Science, vol. 70(277), pages 143-158, February.
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    Cited by:

    1. Rainer, A., 2012. "Technical change in a combined Classical - Evolutionary multi-sector economy: Causes, Effects and implications for economic and social policy," MPRA Paper 43298, University Library of Munich, Germany.
    2. Eiji Hosoda, 2016. "Interactive aspects of producers and waste-disposal firms out of a market boundary," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 5(1), pages 1-29, December.
    3. Heinz D. Kurz, 2017. "Is there a “Ricardian Vice”? And what is its relationship with economic policy ad“vice”?," Journal of Evolutionary Economics, Springer, vol. 27(1), pages 91-114, January.
    4. David Haas, 2015. "Diffusion Dynamics and Creative Destruction in a Simple Classical Model," Metroeconomica, Wiley Blackwell, vol. 66(4), pages 638-660, November.
    5. Heinz D. Kurz & Tamotsu Nishizawa & Keith Tribe (ed.), 2011. "The Dissemination of Economic Ideas," Books, Edward Elgar Publishing, number 14521, April.
    6. David Haas, 2016. "The evolutionary traverse: a causal analysis," Journal of Evolutionary Economics, Springer, vol. 26(5), pages 1173-1193, December.
    7. Heinz Kurz, 2015. "The beat of the economic heart," Journal of Evolutionary Economics, Springer, vol. 25(1), pages 147-162, January.
    8. Haas, David & Rainer, Andreas, 2014. "Diffusion in a simple classical model. Micro decisions and macro outcomes," Centro Sraffa Working Papers CSWP6, Centro di Ricerche e Documentazione "Piero Sraffa".
    9. Heinz Kurz, 2012. "Schumpeter’s new combinations," Journal of Evolutionary Economics, Springer, vol. 22(5), pages 871-899, November.
    10. Jamee K. Moudud, 2010. "Strategic Competition, Dynamics, and the Role of the State," Books, Edward Elgar Publishing, number 4241, April.
    11. Kurz, Heinz D., 2010. "The Beat of the Economic Heart: Joseph Schumpeter and Arthur Spiethoff on Business Cycles," MPRA Paper 20429, University Library of Munich, Germany.
    12. Kurz, Heinz D., 2010. "The Contributions of Two Eminent Japanese Scholars on the Development of Economic Theories: Michio Morishima and Takashi Negishi," MPRA Paper 20430, University Library of Munich, Germany.
    13. Heinz D. Kurz, 2011. "The Contributions of Two Eminent Japanese Scholars to the Development of Economic Theory: Michio Morishima and Takashi Negishi," Chapters,in: The Dissemination of Economic Ideas, chapter 13 Edward Elgar Publishing.

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