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Schumpeter and the essence of profit


  • Kakarot-Handtke, Egmont


Schumpeter had a clear vision of the developing economy, but he did not formalize it. The quest for a germane formal basis is in the following guided by the general question: what is the minimum set of foundational propositions for a consistent reconstruction of the evolving money economy? We start with three structural axioms. The claim of generality entails that it should be possible to free Schumpeter’s approach from its irksomeWalrasian legacy and to give a consistent formal account of the elementary circular flow that served him as a backdrop for the analysis of the entrepreneur-driven market system.

Suggested Citation

  • Kakarot-Handtke, Egmont, 2011. "Schumpeter and the essence of profit," MPRA Paper 31176, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:31176

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    References listed on IDEAS

    1. Frank Ackerman, 2001. "Still dead after all these years: interpreting the failure of general equilibrium theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 9(2), pages 119-139.
    2. Kirman, Alan, 1989. "The Intrinsic Limits of Modern Economic Theory: The Emperor Has No Clothes," Economic Journal, Royal Economic Society, vol. 99(395), pages 126-139, Supplemen.
    3. Kakarot-Handtke, Egmont, 2011. "The pure logic of value, profit, interest," MPRA Paper 30853, University Library of Munich, Germany.
    4. Kakarot-Handtke, Egmont, 2011. "Keynes’s missing axioms," MPRA Paper 32742, University Library of Munich, Germany, revised 11 Aug 2011.
    5. Keuzenkamp, Hugo A & McAleer, Michael, 1995. "Simplicity, Scientific Interference and Econometric Modelling," Economic Journal, Royal Economic Society, vol. 105(428), pages 1-21, January.
    6. Chick, Victoria, 1998. "On Knowing One's Place: The Role of Formalism in Economics," Economic Journal, Royal Economic Society, vol. 108(451), pages 1859-1869, November.
    7. T.A. Boylan & P.F. O'Gorman, 2007. "Axiomatization And Formalism In Economics," Journal of Economic Surveys, Wiley Blackwell, vol. 21(3), pages 426-446, July.
    8. de Marchi, Neil, 1980. "Classical and Neoclassical Theories of General Equilibrium: Historical Origins and Mathematical Structure. By Vivian Walsh and Harvey Gram. New York: Oxford University Press, 1980. Pp. xvi, 426. $18.9," The Journal of Economic History, Cambridge University Press, vol. 40(03), pages 673-675, September.
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    Cited by:

    1. Kakarot-Handtke, Egmont, 2011. "Exploitation and its unintended outcomes. An axiomatic obituary for Marx’s surplus value," MPRA Paper 31792, University Library of Munich, Germany.
    2. Kakarot-Handtke, Egmont, 2013. "Understanding Profit and the Markets: The Canonical Model," MPRA Paper 48691, University Library of Munich, Germany.
    3. Kakarot-Handtke, Egmont, 2011. "Reconstructing the Quantity Theory (I)," MPRA Paper 32421, University Library of Munich, Germany.
    4. Kakarot-Handtke, Egmont, 2013. "The Calculating Auctioneer, Enlightened Wage Setters, and the Fingers of the Invisible Hand," MPRA Paper 44977, University Library of Munich, Germany.
    5. Kakarot-Handtke, Egmont, 2011. "Beginning, crises, and end of the money economy in three consistent steps," MPRA Paper 31175, University Library of Munich, Germany.
    6. Kakarot-Handtke, Egmont, 2012. "Intertwined real and monetary stochastic business cycles," MPRA Paper 42793, University Library of Munich, Germany.
    7. Kakarot-Handtke, Egmont, 2011. "The wondrous effortlessness of unifying circuit-, money-, price- and distribution theory," MPRA Paper 31279, University Library of Munich, Germany.

    More about this item


    New framework of concepts; Structure-centric; Axiom set; Profit; Money; Credit; Structural stress; Catching-up process; Monopoly;

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

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