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Welfare Creation and Destruction in a Schumpeterian World

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  • Christian Schubert

Abstract

Economic change, while promoting innovation and growth, at the same time generates "gales of creative destruction". It is still largely unclear what this concept implies for the task of assessing welfare (and, correspondingly, the need for and scope of policy-making) in a novelty-generating, knowledge-based economy. Is novelty desirable per se? Is a rise of living standards due to innovation always worth the risks involved? Standard welfare economics is inherently incapable of answering these questions. By examining Joseph Schumpeter's explicit and implicit reasoning on welfare and linking his thoughts to recent ideas, within normative economics, on how to redefine "well-being" when preferences are variable and inconsistent, we argue that in an evolving economy, well-being should not be conceptualized in static preference-satisfaction terms, but rather in partly procedural terms of "effective preference learning".

Suggested Citation

  • Christian Schubert, 2009. "Welfare Creation and Destruction in a Schumpeterian World," Papers on Economics and Evolution 2009-14, Philipps University Marburg, Department of Geography.
    • Handle: RePEc:esi:evopap:2009-14
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    Cited by:

    1. Christian Schubert, 2013. "Is Novelty Always a Good Thing? Towards an Evolutionary Welfare Economics," Economic Complexity and Evolution, in: Guido Buenstorf & Uwe Cantner & Horst Hanusch & Michael Hutter & Hans-Walter Lorenz & Fritz Rahmeyer (ed.), The Two Sides of Innovation, edition 127, pages 209-242, Springer.

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    More about this item

    Keywords

    Joseph Schumpeter; Creative Destruction; Endogenous Preferences; Welfare Economics Length 41 pages;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School

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