Works
Das Wesen und der Hauptinhalt der theoretischen Nationalokonomie (1908)
This work combines a grandiose programmatic architecture including foundational methodological considerations with a service part: it makes accessible what JAS calls the Magna Carta of economics (that is, the multi-equational Walrasian system of general market equilibrium) to a German-language audience in a non-technical way.
The foundational considerations include perceptive passages implying an encompassing vision of the social sciences, emphasizing in particular the division of labour between empirical-historical and theoretical research. However, they also include passages written in a provocative tone, in which he attempts to express as crisply as possible some principles pertinent to the scientific logic of pure, exact economics: he resolutely anticipates the increasing role of mathematics in economics (cf. also Schumpeter 1906) as well as Friedman’s instrumentalist methodology (cf. Schumpeter 1908: 93-4), emphatically denying the relevance of questions as to whether some model premises adequately capture “the nature” of the economic process. He proclaims “a kind of Monroe doctrine” (ibid.: 536), referring to the epistemological independence of pure economics from disciplines such as psychology, biology, philosophy or other kinds of social theory. Economics is a body of knowledge that increasingly adopts methods and procedures typical for modern natural science and on that basis increases its explanatory and predictive power. The programmatic outlook of the book emphasizes dynamic theory as the Promised Land for future research.Basic tenets and core features of JAS’s scientific style already find expression in this book, not least the air of “cool, scientific detachment” (Haberler 1951: 338) with which he is stressing the relative autonomy of economic science vis-a-vis economic policy, and with which he is judging the relative merits of the various kinds of scholarly endeavours while consistently resisting any adherence to a particular school.
“I have come to the conviction that almost every orientation (Richtung) and each individual writer are right in their propositions: as they are meant, from the standpoint of the purposes for which they are intended” (Schumpeter 1908: v-vi). This quotation could be taken as a prelude to boring eclecticism which is somehow attempting to give everybody his due. However, throughout his career, JAS offered something quite different: Apart from the integrative architecture across the various levels and “purposes” which was already indicated in that statement, he developed bold new combinations, such as that between Walrasian equilibrium analysis and a dynamic perspective on capitalist development a la Marx. Sometimes such combinations come closer to a chemical synthesis of heterogeneous theoretical elements which are amalgamated without too much ado: an example in case is the introduction of Austrian elements (cf. Streissler 1983) in the Walrasian system. All this is complemented by provocation as a didactic device for stressing the logic of some specific argument related to a specific theoretical context.Theorie der wirtschaftlichen Entwicklung (1912)
Here Schumpeter’s grand overarching goal as a scientist is clearly brought to the fore: contributing to the explanation of the modern “social process” which “is really one indivisible whole” (Schumpeter 1934: 3) by developing an economic theory of economic change, which (in modified ways and complemented by other elements) may also be helpful for the understanding of social, cultural or political change. He attempts to approach that goal by means of a bold new combination, including (1) the representation of the circular flow according to Walrasian equilibrium analysis complemented by some Austrian elements, (2) Marxian emphasis on restless change and power asymmetries (including morally arbitrary re-distribution processes) as crucial features of capital(ism), and (3) a theorization of the entrepreneur as an agent of change who is upsetting the equilibrium of the circular flow, conceptualized in a way reminiscent of early twentieth-century literature emphasizing leadership, elite-mass distinctions, and notions of energetic action reminiscent of Henri Bergson’s elan vital.
Towards the end of the book, JAS discusses possible extensions of the sketched theory of change to spheres outside economics.JAS is relating his analysis of dynamism to the core economic concepts of capital, interest, and to the financial system. He claims that his new theory is required (1) for an adequate “dynamic” rejection of Marxist exploitation theory and (2) for a proper understanding of capital and interest as essentially dynamic phenomena and as core elements of the capitalist process of change. His critical point of reference is Bohm-Bawerk’s (1889) theory of capital and interest developed in a static setting, which also had been employed in criticizing Marx. In the subsequent debate, Bohm-Bawerk (1913a, 1913b) argued that JAS’s new paradigm (including the provocative claim that the rate of interest must be zero under static conditions) was fatally flawed. In a rejoinder, JAS (Schumpeter 1913) attempted to minimize the differences: he emphasized his understanding of Bohm- Bawerk’s tenets and their context, while arguing that Bohm-Bawerk’s critique was almost entirely beside the point, as it missed the implications of the dynamic framework (Kurz and Sturn 2012: 161-9).
Epochen der Dogmen- und Methodengeschichte (1914; English: Economic Doctrine and Method 1954b) and Vergangenheit und Zukunft (1915)
Both books (which in a sense complement each other) clarify some of the reasons why JAS held the history of the subject important for the latter’s current development. Unlike the posthumously published History of Economic Analysis (1954a), Epochen (1914) tends to highlight the character of classical economics as a distinct paradigm and generally pursues a broader approach to the history of economic thought. Notice, though, that the evolution of economic analysis as a narrower and specifically modern phenomenon within the history of knowledge systems is present from early on (Schumpeter 1908, 1915).
Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle (1926, 1934)
The revised and shortened second edition of Entwicklung (1912) is the basis for the English translation.
In addition to removing the final passages on change outside the sphere of economics, more emphasis is put on the economic functions of entrepreneurs and bankers, whereas the strongly personalized drama of creative destruction in Entwicklung (1912) is presented in a somewhat more neutral tone in Economic Development. Moreover, there are some terminological adjustments: “in deference to Professor (Ragnar) Frisch” (Schumpeter 1934: lxiii), the notions “static” and “dynamic” are substituted by the concepts “circular flow” and “development”.Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process (1939)
This is the first of the three main works of the Harvard period. Seen together, they are a comprehensive effort to deal with processes of modernization and rationalization in the very long period, with the evolution of modern capitalism at its core. In Business Cycles he wishes to demonstrate that this multifaceted process can be studied by means of modern science: the more than 1000 pages of the book represent JAS’s attempt to deal with the complex phenomenon of change by means of a combination of the tools of modern economics (theory plus historical and statistical empirics). This endeavour gets close to the attempt of squaring the circle, in particular when one keeps in mind the following aspects: (1) capitalist development is a unique historical process, even though we observe cyclical patterns; (2) change and innovation are endogenous phenomena; (3) JAS emphasizes heterogeneity of agents and goods, rendering the work with statistical aggregates problematic; and (4) JAS emphasizes discontinuity in keeping with Austrian views on the limited usefulness of continuous functions. Anyway, JAS reconstructs the wave-like secular development of modern capitalism since its beginnings on the basis of the entrepreneurial model of economic change. This account includes the famous model which superimposes long Kondratieff waves on medium Juglar and short Kitchin waves and the story of railroadization with its pervasive effects on the economy as “our standard example by which to illustrate the working of our model” (Schumpeter 1939: 304).
Capitalism, Socialism, and Democracy (1942)
As indicated by the title, this work provides an encompassing panorama of modern social development. It resumes ideas pursued from early on, notably the integration of explanatory approaches to political, cultural and economic development within a comprehensive theory of the modern social process (cf. Schumpeter 1934: 3), conceived of as a process of ubiquitous rationalization in the sense of Max Weber. Pertinent earlier work includes an essay on the sociology of imperialism written at the end of World War I (see Schumpeter 1955). Imperialism (and war as a mode of conflict solution) is insolubly linked to “atavistic structures and dispositions”. In contrast to Lenin’s or Rosa Luxemburg’s theories, JAS’s specific focus of analysis implies that imperialism is not a product of mature capitalism and rational modernity, whatever its economic consequences may be under particular historic circumstances. In Capitalism (1942), he argues that pre-modern values and dispositions are extremely important in the history of capitalist modernization. In this book, provocative and paradoxical claims according to which capitalism cannot survive as a consequence of its pervasive economic success, are employed to sharpen our understanding of characteristic features of modern capitalist development. (Remember that in earlier works provocations were primarily employed in order to sharpen our understanding of theoretical and meta-theoretical issues, including the character of economics which proceeds by using abstractive assumptions that strike the layman as odd.) Beyond the provocative thesis absorbing much of the attention of most commentators, the book includes in-depth considerations on: (1) the co-evolution of economic and non-economic rationalization - some aspects of rationalization turn out to be inimical to the core of the entrepreneurial mechanism of creative destruction as conceptualized in earlier works (Schumpeter 1912, 1934, 1939), which is called Schumpeter Mark I in the secondary literature; (2) concomitant tendencies of the routinization and managerialization of innovation processes in big firms (called Schumpeter Mark II), making innovation independent of the heroic entrepreneur and the birth and decay of firms; (3) the culmination of those developments in the form of socialist tendencies which according to JAS are promoted more by the “Carnegies and Rockefellers” than by socialist agitators; (4) the logic of democratic politics in its relation to capitalist and socialist regimes, and (5) a rich and inspired characterization of Marx, highlighting his intellectual debts to Marx as the theorist of capitalist change.
After the mixed success of his business cycles, where he made a remarkable attempt to deal with the multifaceted and complex phenomenon of capitalistic development by means of theory-guided “statistical analysis”, the discussion is not supported by the use of technical tools.History of Economic Analysis (1954a)
This book is based on manuscripts assembled and systematized by the editorial effort of Elizabeth Boody. History is an intellectually much more ambitious work than it may appear at first sight. JAS reconstructs the history of economic analysis as an account of the modernization and rationalization process of economic knowledge. In that process, economic analysis (understood as a box of tools developed in close analogy to the natural sciences) assumes a prominent place, always keeping in mind that the subject matter of this specific field of analytical work is itself evolving in history, including the evolution of the cultural setting, of policy issues and of the agents of policy. In the context of JAS’s other work, this project is to be seen in two perspectives: (1) History of modern knowledge represents a part of the overall rationalization within the modern “social process” which “is really one indivisible whole” (Schumpeter 1934: 3), and (2) the conditions that must be met in order to transform pre-analytic visions of economic thought into “economic analysis” come to the fore. This view of economic analysis as embedded in a broader context of knowledge and practices is especially relevant for innovation processes in economics: despite a well-understood emphasis on economics as a technical subject, progress in economics cannot be reduced to the perfection of tools and techniques. Nonetheless, some of the provocative and questionable judgements in History may to a certain extent be related to the emphasis of the toolbox-aspect. A case in point is Adam Smith, whose status is no doubt unjustly minimized. Yet it may be argued that Smith was not excelling in the provision of new tools, notwithstanding his overall importance in summarizing and combining pieces of knowledge and analysis.
There is no comprehensive edition of Schumpeter’s works, either in English or in German. This may reflect the fact that there is no such thing as a Schumpeter school.
In fact, a number of economists with multifarious backgrounds have done editorial work, including Elizabeth Boody and Wolfgang Stolper. Schumpeter’s students and Schumpeterian economists are a minority among them. Unpublished manuscripts and interesting biographical details have been made available in recent years by Ulrich Hedtke (see http://www.schumpeter.info).