Schumpeter’s Review of Frank A. Fetter’s Principles of Economics

This review of Frank Fetter's textbook by Joseph A. Schumpeter was brought to my attention by Dr. Matthew McCaffrey of the University of Manchester, who suggested a translation. It was originally published in German in volume 17 of the leading Austrian journal in economics in the early 20th century: Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung (Journal of Economics, Social Policy and Administration). The journal was edited by some of the most eminent economists of Austria at that time, namely, Eugen von Böhm-Bawerk (1851–1914), Theodor von Inama-Sternegg (1843–1908), who had passed away shortly before the publication of volume 17, as well as Eugen von Philippovich (1858–1917), Ernst von Plener (1841–1923) and Friedrich Freiherr von Wieser (1851–1926). The discussion of Fetter's text is part of a series of nine book reviews by Schumpeter contained in this volume. In them, he discussed new publications in the English, French and German literatures, including E. R. A. Seligman's Principles of Economics , William Stanley Jevons's unfinished, posthumously published Principles of Economics, A Fragment of a Treatise on the industrial mechanism of Society and other Papers , Léon Polier's L'idée du juste salaire (The Idea of the Just Wage) , and H. von Leesen's German language biography of Frédéric Bastiat. The review of Fetter's Principles is the last one of this series, and is also the most laudatory. Schumpeter emphasizes that the book is more than merely a textbook, and he highlights the close connection between Fetter's theory and the economics of the Austrian school. The review is therefore of interest from the vantage point of the history of economic thought. In particular, Schumpeter recognizes the importance of Fetter's classification of entrepreneurial activity—the "enterpriser's function" in Fetter's words—as just another form of labor. Without going into any detail, Schumpeter hints at the extremely important social implications suggested by this view, but then proceeds to provide a brief rejection of this position from the perspective of pure economic theory. Karl-Friedrich Israel