Steeped in Two Mind-Sets: Schumpeter in the Context of the Two Canons of Economics

In the first section of the paper, we point to Marx and Schumpeter as being the only well known economists from a long and distinguished tradition in economics. In section two we outline a potentially significant ‘blind spot’ in Schumpeter’s History of Economic Analysis (1954). In part three we discuss Schumpeter’s apparently different approach to that of traditional German economics as regards economics as a theory of practical action, and find that early in his life Schumpeter held a different view. In part four we discuss Schumpeter’s theoretical duality in the context of a typology of economic theories. Section five outlines the contrasting basic assumptions of the two types of economic theory. While biographical analyses of Schumpeter’s Harvard years have focused on his work in the Economics department, in section six of this paper we emphasize his activities at Harvard Business School and at the Research Center in Entrepreneurial History. In section seven we briefly discuss Schumpeter’s ‘failed’ attempt to produce a work in the German historical tradition. Business Cycles (1939). Section eight provides the conclusion by putting Schumpeter’s merited ascent as an economic theorist in a context where his thoughts are not as original as they appear today, but rather that the less understood part of Schumpeter was a logical extension of a long and noble economic tradition which has fallen into oblivion.