Book Description
Listen to a short interview with Thomas McCraw
Host: Chris Gondek | Producer: Heron & Crane
Pan Am, Gimbel's, Pullman, Douglas Aircraft, Digital Equipment Corporation, British Leyland--all once as strong as dinosaurs, all now just as extinct. Destruction of businesses, fortunes, products, and careers is the price of progress toward a better material life. No one understood this bedrock economic principle better than Joseph A. Schumpeter. "Creative destruction," he said, is the driving force of capitalism.
Described by John Kenneth Galbraith as "the most sophisticated conservative" of the twentieth century, Schumpeter made his mark as the prophet of incessant change. His vision was stark: Nearly all businesses fail, victims of innovation by their competitors. Businesspeople ignore this lesson at their peril--to survive, they must be entrepreneurial and think strategically. Yet in Schumpeter's view, the general prosperity produced by the "capitalist engine" far outweighs the wreckage it leaves behind.
During a tumultuous life spanning two world wars, the Great Depression, and the early Cold War, Schumpeter reinvented himself many times. From boy wonder in turn-of-the-century Vienna to captivating Harvard professor, he was stalked by tragedy and haunted by the specter of his rival, John Maynard Keynes. By 1983--the centennial of the birth of both men--Forbes christened Schumpeter, not Keynes, the best navigator through the turbulent seas of globalization. Time has proved that assessment accurate.
Prophet of Innovation is also the private story of a man rescued repeatedly by women who loved him and put his well-being above their own. Without them, he would likely have perished, so fierce were the conflicts between his reason and his emotions. Drawing on all of Schumpeter's writings, including many intimate diaries and letters never before used, this biography paints the full portrait of a magnetic figure who aspired to become the world's greatest economist, lover, and horseman--and admitted to failure only with the horses.
Customer Reviews:
A Great Work!.......2007-10-08
Schumpeter was an unusual man: both professionally and personally. This excellent biography captures both. Schumpeter sought fame, and the agonies he went through to achieve this obsession- mainly through the enormous amount of writing and research he undertook, which probably undermined his health and shortened his life- are well captured in this book.
Schumpeter sought to develop a 'system' of economics, yet his prolific reading and research lead him to discover that there is no such thing as a watertight system of economic theory. In fact, Schumpeter found, like most notable economists, that an understanding of economics comes from an understanding of history, psychology, sociology and many other areas of learning. And what a contrast to the emphasis of graduate economics courses taught in our schools today!
Having just read Greenspan's book, it comes as no surprise that Greenspan achnowleged Schumpeter as one of the greatest influences upon his outlook. Both men believe in the superiority of the capitalist system as a creator of wealth, yet not for any doctriare reasons, but because they are/were convinced that capitalism is part and parcel of the make up of humankind, and the way in which we organize themselves and cooperate to ensure our survival and progress.
Buy this book, and enjoy the read; you will find yourself coming back to it to reread sections over again.
Important.......2007-06-23
Free markets are hard to explain. It is even harder to explain why companies must fail and be replaced by new ones. In the U.S. we mostly let that happen but in Europe they try and prevent it. It seems that this issue will become even more important as the world becomes 100% "flat" and competition becomes more intense. Developments in Asia will make the levels of creative destruction we have seen in the past look mild by comparison.
This book gives a great introduction to one of the great economic minds. His insights, although proven over and over, are still not accepted my many.
Review of McCraw's book on Schumpeter.......2007-05-31
I have been impressed by this book, which is a good mix of the 'history' of Joseph Schumpeter and his ideas and contributions to economics. I think the author has obtained a very good balance between trying to understand this great economist, and presenting his work to the informed lay-person. Economists and non-economists alike will find a lot here, which is very relevant to today (perhaps even more so to economists working in academia!). Some of Schumpeter's major works (like Business Cycles published in 1939) are not easy to digest; but this book brings out enough to capture the essentials. Overall, this is the best book on Schumpeter I have seen.
BEST WRITTEN RECENT BIOGRAPHY; BUT TENOUS WHEN IT MOVES FROM HISTORY TO ECONOMICS.......2007-05-01
Thomas McCraw is one of the best business historians in the world and with this output, late in his career (he is an emeritus professor at Harvard now), he can lay claim to being one of the best historians in the world, not just a business historian. It is hard to imagine a political biography in recent years that comes close to matching the lucid style, perfect prose, excellent quotes and commentary about life as this book.
The subject is one of the most famous economists of the twentieth century, someone who along with Frederick Hayek, Ludwig Mises and others from the Austrian School came to anchor the philosophical basis for the success of economic and political freedom. The book covers in detail the personal life of Schumpeter, including a lot of material not commonly available. His biography of the deaths of his daughter mother and wife within months is an excellent if tragic basis to delineate the first part of Schumpeter's life, which the author suggests made him an Enfant Terrible, from the second, which the author calls made him an adult. The final segment is his becoming a Sage. Peppered throughout the book are some of the best quotations from some of the most famous persons in history, including legendary poets, yet ones the reader would never have read before.
For all those reasons, Thomas McCraw has delivered a book that is filling like a all-you-can-eat buffet, yet with each dish of the same quality as fine dining. IT IS A TOUR DE FORCE.
Yet there is a contextual flaw which weighs down the narrative. From the very first pages it is clear that Thomas McCraw is attempting to also make a comparative evaluation of economic systems, a task that quickly appears tenous, and to do that while crowning Schumpeter as the king of economics, past and present, at which point the narrative makes one cringe. Here is why this brilliant history turns into tenous economic analysis.
Firstly, as Thomas McCraw's colleagues across the Charles River should tell him, Schumpeter was his best not so much as a pure AUstrian-School economist but as a chronicler of the economy, almost a contemporary historian of the subject. In that sense he shared much with Karl Marx, who he studied extensively, for both really shined with words not with mathematics. So the author's repeated references to Schumpeter as a mathematical genius, or as a competitor in that regard with John Keynes, fails and fails obviously. Schumpeter was the least mathematical of all the great economists of the twentieth century.
Secondly, McCraw makes the error common to passionate biographers to make a sage out of their subject. Here too the book overreaches, for Schumpeter was among the worst at foretelling the future. Here again it was because he was more a historian, and less an economist. He predicted capitalism would collapse, a prediction that the author just glosses over. Yet the author pillories Karl Marx for the same error without realizing that Karl Marx wrote without the full benefit of the technological revolution, the telegraph and railroad barely underway by the 1840s. Yet by Schumpeter's time, not only were those revolutions done, but so was the telephone, electricity, the internal combustion engine and the airplane. As such, Schumpeter's pessimism was unforgivable while Karl Marx's was fully understandable.
Third, McCraw makes a shocking mistake by glossing over Schumpeter's lobbying for heavy reparations on the Germans after WW I. He did so by offering calculations that the German economy would easily recover, and therefore could support reparations. The point was fully opposed by John Keynes, who resigned as representative of Britain when the Schumpeterian perspective was used to devastate the Germans with debt burdens. If McCraw had not been at Harvard, or of such fame, it would easily have been a career ending mistake. After all, it is well known that those reparations led to Adolf Hitler and WW II, a point so well understood by 1945 that John Keynes was made the head of the entire postwar economic decisionmaking, precisely why he got to build the World Bank, IMF and Bretton Woods. Schumpeter by contrast was thoroughly discredited.
Fourth, for a business historian of unmatched credibility, McCraw makes a surprising contextual error with regard to Schumpeter's life. He seems to ignore the inevitability of progress, of the drivers of American growth in the early 20th century and absolute irrelevance of Schumpeter to that growth. Perhaps it is his bias as a biographer, or to make the layman buy the book, but it is fatal to the book. Here again, I point to the prior point that Schumpeter was more an economic historian than an economist in the sense that HAD SCHUMPETER NOT LIVED, NONE OF THE GREAT ECONOMIC ADVANCES OF THE 20TH CENTURY, INCLUDING THE VENTURE CAPITAL BUSINESS, WOULD HAVE BEEN HAMPERED. By contrast, without John Keynes, recovery after Sept. 11th, after WW II (when defense spending collapsed and social spending and reconstruction was increased to avoid a collapse of the economy) or in the midst of the Great Depression would have been hard to imagine. Precisely why comparative economic analysis undertaken by McCraw takes the tinge of conservative talk show simplicity. Harvard's economics department would likely have little of his business history about Schumpeter.
Finally, the book would have been a lot stronger had it left the idolization of Schumpeter to the jacket flaps and in the introduction. But repeated compliments only make the reader notice that the author has it wrong, especially when he summarily dismisses karl Marx or John Keynes the way a conservative talk show host would. All Schumpeter was was an immensely readable subject, and an inspiring prosaists who hungered for fame, and whose economic history was impressive, all reasons why you must buy the book and keep it prominently on your book shelf, but he was a flawed economist driven to the wrong conclusions (from reparations to the sustainability of capitalism). His grandiosity was Churchillian, as was his sense of history and society, but unlike Winston Churchill, fate never gave Schumpeter the chance to correct for a lifetime of grandiose errors.
The Basic Paradox of Capitalism.......2007-04-24
As I recently read Thomas K. McCraw's brilliant biography of Joseph Schumpeter (1883-1950), I was intrigued by the evolution of his career after he earned a Ph.D. at the University of Vienna (1906). At age 24, he served as a secretary of state for finance in the new Austrian republic (1919-1920), and later became chairman and president of a Vienna-based Biederman Bank (1920-1924) that collapsed. As a result of that and several substantial investments in companies which also failed, Schumpeter suffered major financial setbacks (both professional and personal) but eventually repaid his debts, then taught at the University of Bonn (1925-1932) before accepting an offer to join the Harvard faculty as a professor of economics where he continued to teach until his death in 1950. McCraw also examines Schumpeter's personal life that, understandably, reflected the successes and failures in his career. For example, Schumpeter fell deeply in love with Anna Josifina Reisinger and married her in 1925. The next year, his beloved mother died and within a month, his wife died in childbirth, as did their son. McCraw suggests that Schumpeter never fully recovered from these personal losses.
Of greatest interest to me is the context or frame-of-reference the biographical material provides for one of Schumpeter's most influential business concepts, "creative destruction," which he introduced in his most popular book, Capitalism, Socialism, and Democracy," first published in 1942. Scholars have divided opinions as to the influences on Schumpeter's development of this concept. They probably include Karl Marx, Friedrich Nietzsche, and Werner Sombart.
According to Schumpeter, there is a "process of industrial mutation-if I may use that biological term-that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in." He goes on to explain, "The first thing to go is the traditional conception of the modus operandi of competition. Economists are at long last emerging from the stage in which price competition was all they saw. As soon as quality competition and sales effort are admitted into the sacred precincts of theory, the price variable is ousted from its dominant position. However, it is still competition within a rigid pattern of invariant conditions, methods of production and forms of industrial organization in particular, that practically monopolizes attention. But in capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance) - competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives." (from "The Process of Creative Destruction," 1942) There are countless examples of applications of this concept, notably Jack Welch's determination to "blow up" GE after he succeeded Reginald Jones as CEO.
In his own review of Prophet of Innovation in the Wall Street Journal, Dan Seligman includes Schumpeter's widely quoted question-and-answer sequence: "Can capitalism survive? No, I do not think it can." Seligman then suggests that that answer "is hedged in later passages [in Capitalism, Socialism, and Democracy]. Even so, it will seem wildly counterintuitive to readers who have read Schumpeter on capitalism's huge successes." I agree. In fact, I presume to suggest that, from Schumpeter's perspective, no form of capitalism can survive and that continuous replacement of one form of capitalism by another confirms the enduring reality of creative destruction. Without it, there can be no innovation. In essence, that is the basic paradox of capitalism.
Customer Reviews:
A classic.......2007-03-08
For economy,political science, law and sociology students, this is the mandatory Schumpeter title.
Creative Destruction of Capitalism and the Emergence of Socialism.......2007-02-04
Like Marx, Schumpeter predicts the inevitable disintegration of the capitalist system. However, where Marx foresees the collapse as stemming from proletariat revolution, Schumpeter argues that the "actual and prospective performance" of capitalism is strong, and unlikely to fail. But, Schumpeter argues, it is these same successes which will ultimately destroy the social institutions, namely private property and free contracting, necessary for its continued survival. As such, new conditions will emerge which will not allow capitalism to continue and socialism will become the dominant economic system.
Capitalism is an evolutionary and dynamic process. This constant state of motion is driven by the emergence of new methods of production (and subsequently new consumer goods), the pursuit of new markets, and improved forms of industrial organization (83). As such, aspects of the internal capitalist system are constantly being revolutionized; old processes are being replaced with new processes in the name of progress and improvement. Schumpeter refers to this process as a state of creative destruction. "This process of creative destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has to live in" (83).
The theory of creative destruction is based on the classic feature of capitalism, competition. Traditionally, capitalism is characterized by competition stemming from price, methods of production, and organization. This competitive attributes help to ensure the market efficiency of firms. However, Schumpeter argues that the real feature of capitalism is destructive competition. Destructive competition includes the emergence of new commodities, technologies, sources of supply and new types of organizations (84). Where the traditional measures of competition allow for existing firms to evolve in a changing market, destructive competition tends to destroy those firms which become inefficient. It is this system of destructive competition that revolutionizes the internal capitalist structures.
Through the process of destructive competition, Schumpeter argues that the vital institutions of capitalism, ownership of property and freedom of choice in contracting, are destroyed. Schumpeter's sentiment is illustrated through a brief examination of the collapse of the feudal structure. During the feudal period, changes in production and mechanization overran and obliterated the artisan and small producer. Today, the same process can be observed in that larger, more efficient firms are eliminating their smaller, less efficient brethren. Stated simply, the capitalist process attacks its own institutional framework. The entrepreneurial class, which fuels the dynamic capitalist system, is being retarded, or as Schumpeter suggests, "economic progress tends to become depersonalized and automatized" (133).
This is exemplified by the emergence of mega-companies in which the firm is rarely owned by one individual but rather is composed of board members and stock holders. Schumpeter argues that none of these actors truly own the company and as such lack the drive of the entrepreneur who owns his or her company. What then emerges is capitalist stagnation. Individual choice is usurped by the interest of large corporations. Instead of relying on choice, corporations will come to agreements between themselves, thus creating a system of pseudo-monopoly. With this limited competition, laws and regulations are imposed on the corporations rather than left to individual firms (141). As such, we begin to see the emergence of socialist ideology in that competition and ownership are removed, and replaced by a centralized governmental system of control.
Of particular note, unlike Marx who sees the destruction of bourgeois entrepreneur as a necessary precondition to socialism, Schumpeter sees the same entrepreneur as integral to the success of the socialist transition. Socialism will only emerge when capitalism has reached its maturity, that point in time where capitalism has destroyed its own vital institutions of ownership and choice. Although these institutions are eliminated, socialism still reaps the benefits from the technology, knowledge, and resources developed by the entrepreneurial class in the earlier stages of capitalism. In order to be sustainable such inheritances are necessary condition for the success of socialism.
How so much Smartness Can Get it so Utterly Wrong.......2006-03-01
As to the best of my knowledge, there were two major intellectual responses to the seemingly endless and insuperable crisis which the capitalist system had got itself into after the Great Slump of 1929: Keynes`s "General Theory of Money, Interest and Employment" of 1936 and Schumpeter`s "Capitalism" which was first published in 1942. Like Marx before them, both Keynes and Schumpeter reject the "classic economists'" contention that what they called the market system wíll always automatically swing back to an ideal equilibrium - expecially one that implied full employment - provided only the state kept its hands off as much as possible.
However, that is just about where their concurrence ends. While Marx sees the only solution outside the system, in its bloody overthrow and its succession by a "dictatorship of the proletariat" introducing the next evolutionary step in human history, called socialism, Keynes considered the market system as basically viable. All that was needed, according to him, was governmental involvement by which the lacking demand in times of a slump would be lifted to more agreeable levels. Schumpeter, in contrast, agrees with Marx in that capitalism's days are counted and that it is about to be replaced by socialism, even though he doesn't share Marx`s more aggressive notions: according to him, the present day capitalists need not be dealt with by the guillotine alone, they may indeed have a useful function as entrepreneurs employed by his envisaged omnipotent and omniscient super agency that will ideally plan everybody's well-being in his imagined socialist system.
What to think of the book today?
First, it is hard to fathom how Schumpeter could have turned such an absolutely blind eye on the totalitarian tendencies necessarily inherent in a state that not only controlled the political field but also was quasi the monopolist employer and as such responsible for the economic side of peoples's lives as well, in particular when one considers the time when it came out: 1942!
Second, it is a fine example of how wrong you can get things even if (or: because?) you know so much as Schumpeter did - maybe that is the best argument of all against the establishment of such a super agency planning everybody's life to the extent envisaged by Schumpeter.
Finally, even if such an agency did not err - is it not a basic right - and half of the fun of life - to make mistakes - for oneself that is, not forcing them on others?
Provocative and Informative Analysis.......2005-12-14
Despite its age (published in 1942), Schumpeter's book remains a classic. If I have one dominant complaint, it's that he uses the Ubiquitous terms "rational" and "rationality" to refer to human calculus, not in its philosophical or logical senses.
Part One exposes some of the failures of Marxism, although Schumpeter is a thoroughly avowed Marxist. If the book had been written more recently, I am sure he could add some more. Surprisingly, the two major objections to Marxism, labor allocation and price determination, are not even mentioned.
Part Two gives Schumpeter's blueprint for a revised "socialism" along Marxist lines. That in itself is quite a feat, considering that there are at least 60 competing kinds. As I was examining each of his proposals, I could not help observe that to a detail they mirror the efforts of the former U.S.S.R. But the first caveat of Part Three disowns "Russian" socialism. For the life of me, I could not find a single distinction. Under his blueprint, the Board of Planning will, with utilitarian expertise, determine what the consumer wants, determine the price, and the supply. But based on what? Human calculus. But calculus based on what? Obviously, this means an extraordinary bureaucracy to "administer" such a state of affairs, but it'll save money in the long run. Even more troubling, what if something I "need" doesn't fit the calculus? For example, say I want a birth-control device, and the bureaucrats determine condoms are cheap and effective. No need for pills or IUDs under this scheme. What if I think I look better in baby-blue shirts, but drab is more economical and just as efficient? No baby-blue shirts. After all, a shirt is a shirt is a shirt.
Part Three is a "critique" of capitalism. Finally, an author who agrees with me that if capitalism "fails," it will be because of its successes, not because of its intrinsic weaknesses. Indeed, the central thesis of the book is that Marxist socialism can ONLY succeed once capitalism has reached full maturity. Perhaps the most apparent "maturity" will be the emergence of the monopoly, both governmental and commercial. Too bad Wal-mart did not exist at the time of his writing, for it is an example par excellence. It's a mega-business that destroys "smaller" competition by its low prices, volume purchases, and low wages. Beyond the obvious, one only has to observe all the mergers and acquisitions to see the increasing interests in mega-business, or call your "company" and go through a battlefield of menu options to get to a "specialist" who might be able to address your concerns. Good luck. Even more bizarre is the complicity of federal and municipal governments granting mega-businesses dispensations from the customary and usual ordinances (like the 2005 Energy Bill). In each and every case, capitalism has reached a "maturity" that in the end stifles the very thing it touts: competition.
So instead of playing "bourgeoisie" football, we'll all be playing "proletariat" football (this is directly from the book). Under this scheme, the most utilitarian scheme always wins. We don't need Fords, Chevrolets, Chryslers; we can all suffice on an extrapolated Volkswagen that the bureaucrats determine is "best" for all. You think the local DMV is a headache, just imagine it a hundred-fold more bureaucrats under the socialist paradigm. And to what purpose? Equalitarianism (today we'd use egalitarianism). The means of production and income will be uniform. Everyone would be given the same units of consumption to purchase their needs as the bureaucrats have determined a priori that consumers want. What if one wants a home with a view, another with a balcony, another with all-electric kitchen, etc.? If such needs exist, the bureaucrats will provide them. Right. Everyone under this scheme would be employed, even if "make work" programs need to be used. Plus, it really doesn't matter, because everyone - everyone - gets the same units of consumption (also known as "money"). So what about that "lazy" person who refuses to "carry his/her own weight?" Economic punishment by authoritarian rule. What about the one person in a hundred who performs extraordinary service? Personal fulfillment and human betterment are sufficient. What part of this scheme does not mirror the U.S.S.R.?
Schumpeter's critique of democracy in Part Four is on target. Like said: It's the worst form of government, save all others. But he makes a number of salient points. He favors the parliamentary system (as do I). The institution of the Senate is blatantly anti-democratic, and if nothing else, must be dissolved. He doesn't have much regard for constitutions, but they alone protect "minority" interests. He flatly rejects proportional representation, but it's obviously more democratic than what we have now: Majority Rule. His prescience did allow him to envision Rank Voting, but I think it's something he'd approve. But in the end, democracy is just a capitalist institution. Whether or not it survives the "revolution" will only be known at that time. Politics will be subordinate to economics anyway, so perhaps all "public policy" will be negated by socialism.
It's ironic that capitalism will, in time, become its own dissolution, but Schumpeter's alternative seems far worse than anything we have now, or can expect. Certainly a "mixed" economy with regulated capitalism is only part of the answer. After all, Wal-mart may be a socialist's worse nightmare, but at least one has alternatives: Target, K-mart, Kohl's, etc. And equally obvious, whatever the "market" cannot provide, the government must. Is it government's duty to provide ALL of Maslov's hierarchy of needs? No. But surely it must provide what the market does not: A Safety Net.
Obviously, Marxist socialism is thoroughly discredited. Read Hayek's "Road to Serfdom," and observe the fall of the U.S.S.R. Even socialists governments are on the wane, not on the increase. Yet, for all its obvious defects, it's great to have one book that explains the matters it does.
Excellent and accessible writing.
Historical Endnote.......2005-10-03
Like Hayek's Road to Serfdom, this book was written during the Secon World War when Keynes was busy crafting the post war peace. It is infused with the 1930s' corporatist ideas and tends to favour the Communist version more than the Nazi/Fascist version. Keynes is indisputably the 2oth century's most important economist but why does Schumpeter and his creative destruction occupy position #2? I put it down to the same reason as Marx' Theory of Alienation gained such sway. As there was little else to salvage from Marx' writings, they hit on that to make him apear relevant. Marx was a dangerous idiot and the fact that Schumeter heaps measured praise on him suggests that Schumpeter should also join him in the intellectual trash can of history. I see little relevant in his work which I feel has gained prominence simply because economics has lost its intellectual direction. Unlike Gary Becker and other recipients of the Nobel Prize, Schumpeter tackles big issues. But the big issues shrug him off. Nothing here to ponder over.
Book Description
At the time of his death in 1950, Joseph Schumpeter--one of the great economists of the first half of the 20th century--was working on his monumental History of Economic Analysis. A complete history of efforts to understand the subject of economics from ancient Greece to the present, this book is an important contribution to the history of ideas as well as to economics. Although never fully completed, it has gained recognition as a modern classic due to its broad scope and original examination of significant historical events. Complete with a new introduction by Mark Perlman, who outlines the structure of the book and puts Schumpeters work into current perspective, History of Economic Analysis remains a reflection of Schumpeters diverse interests in history, philosophy, sociology, and psychology. Major topics include the techniques of economic analysis, contemporaneous developments in other sciences, and the sociology of economics; economic writings from Plato and Aristotle up through the time of Adam Smith, including the medieval scholastics and natural-law philosophers; the work of Malthus, Mill, Ricardo, Marx, and the important European economists; the history, sociology, psychology, and economics of the period 1879-1914; and modern economic developments. Schumpeter perceived economics as a human science, and this lucid and insightful volume reflects that perception, creating a work that is of major importance to the history of economics.
Customer Reviews:
Economics for adults.......2004-07-05
This book is one of the greats. Written by a master of economic theory, it reflects his learning and insight. But have no mistake, Schumpeter expects you to meet him half-way, so if you like to be spoon-fed and prefer pictures to words, this is not the book for you. The book needs to be read together with the original material: Schumpeter is not a substitute for, but a guide to the material he writes about. To criticise this book for not being light reading is simply to misunderstand this: to understand important thoughts requires some thinking and if you are not prepared to do the work, you shouldn't fool with this book. While Blaug's book is a decent solid survey, the only work which begins to rival Schumpeter's in erudition and incisiveness is Marx's Theories of Surplus-Value, which covers a narrower period. If you respect this book and *really* study it, the effort repays handsomely. Enjoy!
The beginnings of economic concepts in full detail.......2003-11-11
The objective of Schumpeter, one of the greatest economists of all times, is to portray in a very comprehensive detail, all the philosophical thinking that conduced to contemporary Economic Analisys, since the beginning of the ancient greek thought.
To me, that had a very great misconception about the works of Joseph Alois Schumpeter, this book was a revelation, be it for the immensity of his erudiction both as an historian, philosopher and economist, be it for the ingenuity in which he presents many new ideas and perspectives regarding economic analisys.
He is sometimes difficult to follow, not helped by the many and extensive footnotes he appends the book with, and by the many quotations he does in foreign languages, which he usually do not translate, be it in ancient Greek, Latin , French or German. Also , the book was unfinished in his lifetime and had to be edited by his wife, who was also deceased before the full completion of the giantic task. Even so, the book has some 1.300 pages and covers the full range of all the relevant economic thougth until the time of its publication.
A warning sign of caution must be addressed to the non-professional readers not not fully interested in the magnitude of such a scope, that is, of addressing the formative ideas of each and every important concept in economic analisys in a so complete way. This can be an overkill for you. But if you are interested in Medieval thought, the concepts exposed by , for instance, Saint Thomas and many others, this is a very good reading. Enjoy it
Complex and Sophisticated History of Economic Theory.......2000-11-18
The legendary History of Economic Analysis is without a doubt one of the greatest books of economic history ever written, but one should examine what kind of reading they're looking for before he or she embarks on this thousand page text. Schumpeter's unfinished history is divided into sections by ideology and time-period which is particularly useful but once you penetrate the well-organized table of contents, the writing becomes arcane and complex.
For a reader well-grounded in economic theory and history, I am sure that this is a bible; but for a curious reader interested in the history of economics (in a more political as opposed to theoretical perspective) this book may not be right. Highly footnoted and not very smooth writing, as well as obscure references to economists and theories results in a history that is very demanding of the reader. If you are looking for an economic history text that reads like From Dawn to Decadence you may be seriously disappointed, as I had been, but if you are a serious student of economics and are willing to spend the time to deliberate over Schumpeter's words then History of Economic Analysis is right for you.
THE masterpiece in history of economic thought.......2000-04-20
After the considerable success of his then only in germanpublished Little Sketch of Doctrines and Methods, and while he wasteaching at Harvard, Schumpeter started working on a book wich would cover the ground of Little Sketch an beyond. What began just as leisure would become THE masterpiece in History of Economic Thought. Schumpeter spent ten years in this colossal effort and unfortunately did not finish it before his death. Nevertheless, nowhere else you will find a book more powerful and more profound on this theme. By History of Economic Analysis Schumpeter means the history of efforts made in the pursuit of comprehending economic phenomena, from Antiquity to present; not a book on history of ideologies. Schumpeter places the authors in their times and contexts, and tries to understand how they proceeded in analysing economic reality. A must for anyone interested in economic theory, history and philosophy.
Customer Reviews:
Dynamics and Progress.......2007-09-12
The Theory of Economic Development represents a high point in the history of economic science. Schumpeter had a clear understanding of the difference between static and dynamic issues in economics, and an appropriate appreciation of the latter. This book also shows how advanced Schumpeter's thinking was. On page 10 Schumpeter appears to anticipate the modern definition of economics- 20 years before Robbins wrote his Nature and Significance of Economic Science (was this in the original edition, or just in my 1934 reprint?). Chapter one sorts out Say's Law of Markets in detail, and explains its static nature. Chapter two explains economic development in correct dynamic terms (unlike the pseudo-dynamics of Neoclassical growth theory). Schumpeter is able to explain dynamics because he examines entrepreneurship (and vice versa). Schumpeter also leaves room for real institutions, especially financial markets.
I can honestly say that I learned some new and important things from reading this book, despite the facts that I have a PhD in economics and took my first economics class 21 years ago. Unfortunately, most economists would learn more from reading this book than I. This is a sad commentary on the current state of affairs in economics. Schumpeter was interested in matters of great consequence and thought about them deeply. There is simply no comparison between Schumpeter's insightful analysis and the tedious and purely imaginary intellectual constructs of Solow influenced math modelers. There is a clear difference between Schumpeter's analysis and the intellectual gymnastics of modern mathurbationists. Schumpeter was a true professional.
I was somewhat surprised by the extent to which Schumpeter's ideas fit with the ideas of Mises, Kirzner, and Lachmann. Schumpeter is often seen as an Austrian born Walrasian instead of as an Austrian economist in the Menger-Mises-Hayek tradition. There are clear Austrian influences on Schumpeter's thinking, though he was not a Mises clone. I was already impressed with Capitalism, Socialism, and Democracy. Schumpeter was a true genius, and an economist on par with Ricardo and Hayek. Read this book to learn some development economics, and a little intellectual history too.
Before Keynes and Mandelbrot there was Schumpeter.......2004-11-23
Schumpeter had an expression that intuitively sums up in a few choice words quite a few of the theoretical concepts of J M Keynes and the empirical/statistical breakthroughs of Benoit Mandelbrot.Unfortunately,Schumpeter lacked the technical training in mathematics,statistics and probability that he needed in order to give a rigorous exposition of his intellectual and intuitive discoveries.Those few choice words are"regular irregularity".Looking at the data available to him early in the 20th century,Schumpeter was able to categorically argue ,correctly ,that price movements over time in different markets and changes in investment over the business cycle could NOT be modeled by assuming that a normal probability distribution could be applied.Schumpeter was the first economist to make a clearcut distinction between risk(applying a normal probability distribution with a stable mean and variance(standard deviation))and uncertainty.Uncertainty would automatically arise over time due to the regular irregularity of constant(nonconstant)technological innovation,change and advance over time.It is quite easy to see that Mandelbrot's nonparametric two variable constructs, measuring discontinuity and short run/long run persistence/dependence(as opposed to the normal distributions assumptions of continuity and independence),are described by Schumpeter's"regular irregularity".Unfortunately,instead of breaking with the classical and neoclassical schools of economics,as both Keynes and Mandelbrot did,Schumpeter decided to remain a loyal soldier,downplaying his severe disagreements.This was Schumpeter's great error.He recognized the severe limitations of the standard price adjustment equilibrium demand and supply analysis,but went along anyway.The potential reader will find chapter 6 of Schumpeter's book alone to be worth the price of admission needed to obtain access to Schumpeter's brilliant breakthroughs.
On the Economic Causes of Business Cycles.......2004-08-29
In this important book Schumpeter explains the ECONOMIC origins of business cycles. In a convincing way Schumpeter argues that business cycles are inevitable in a developing economy.
This does not mean that there are no other causes of business fluctuations such as changes in commercial policy, wars, inflationary government finance or panics. But these constitute non-economic data and cannot be explained by economic theory.
Conventional macroeconomic theory tends to explain business cycles by some kind of error and focus on correcting this error either by active policy or by advocating a hands-off policy. In this view business cycles have no function.
In a stationary ,non-developing economy (i.e. absence of innovations) there would be very little uncertainty. If you and your competitors have been selling essentially the same product in the same market year in year out and if this were to apply to all products and services would there be any economic risk (fires, epidemics and tax increases are non-economic data) left ? Were there any true economic causes, i.e. causes that economics can explain, of business cycles in the Dark Ages ?
There is still something to be said for Keynesian theory (although not for policy) in that uncertainty does influence investment decisions and that because of uncertainty in a monetary economy some hoarding of purchasing power does occur. But these are mere symptoms of underlying endogenous business cycles caused by the inflationary investment booms - "animal spirits" if you like - invoked by the swarms of innovating firms, e.g. the internet bubble, and the deflationary busts that follow when the old firms die off and yesterday's innovators become part of the stationary cycle. Schumpeter explains the origins of economic uncertainty.
What Schumpeter teaches us is that booms and recessions are necessary phenomena in developing economies, that can't be removed or corrected if we are not to thwart the creation of new wealth by innovation. Recessions are the price we pay for long term economic growth. However, recessions can lead to unnecessary panics that cause unnecessary harm to the economy. Here governments or central banks are able to, and should in my view, correct.
I hope you enjoyed this review and welcome any comments.
Schumpeter's explanation of economic progress.......2001-01-23
This book provides a useful corrective to some of the shortcomings of the so-called Austrian theory of Capital and the Business Cycle. Schumpeter, who studied under the great Austrian economists Bohm-Bawerk, was too much of an independent thinker to be part of an economic movement or school. The Theory of Economic Development is his declaration of independence from Austrian capital theory. In the book, he introduces a theory of development and the business cycle that shocked his more orthodox colleagues. Economic development, Schumpeter argues, involves transferring capital from old businesses using established methods of production to businesses using new, innovative methods. Schumpeter's special insight comes in trying to explain how the transfer of capital from the old to the new takes place. Schumpeter argued that it takes place through credit expansion. Through the fractional reserve system, banks are able to create credit, quite literally out of thin air. This money is lent to businesses specializing in new methods of production, who then bid up the price of production goods and consumer goods in their effort to pay for the production goods they require. Thus a form of inflationary spoliation takes place at the expense of established businesses and consumers. Although Schumpeter does not draw the spoliation inference from his theory, it is nonetheless there in the text for all who can see. Credit expansion is a form of spoliation, a form of robbery hardly distinguishable from counterfeiting. But what is unique about the capitalist engine of production is how it uses spoliation in the service of progress. And not merely spoliation through credit expansion, but spoliation through protectionism, stock manipulation, corporate welfare, cartels and monopolies, and outright fraud and manipulation. Schumpeter's book sheds light on just one aspect of this spoliation, and from this stems the book's vital importance to economic theory.
Average customer rating:
- wrong conclusions, but still actual...Schumpeter's paradox
- Inspired by both historical and classical schools of economi
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Essays: On Entrepreneurs, Innovations, Business Cycles, and the Evolution of Capitalism
Joseph A. Schumpeter
Manufacturer: Transaction Publishers
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ASIN: 0887387640 |
Customer Reviews:
wrong conclusions, but still actual...Schumpeter's paradox.......1999-10-15
In this collection fo essays, Schumpeter states the importance of the entrepeneur in the economy. The spread of literature about networks and industrial districts gets some from here. Let's not simplify Schumpeter's work on simpifications about the capitalism's death. It's no that easy...
Inspired by both historical and classical schools of economi.......1999-10-06
Schumpeter , a professor in Austria, Germancy and the US (Harvard)incorporates much historical and statistical research into classical schools of thought. Like Marx before argued capitalism was destroying itself. Not due to failure but due to success where the interests of the organization deviate fromt the interest of society. He also developed a scheme of cycles using Jular 10 yr., Kitchin 40 mo., and Kondratieff long cycle. These were later developed into ecometrics analysis at the U.S. National Bureau of Economic Research. However, their perdictions are still valid today and can make you rich.
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Medieval Islamic Economic Thought: Filling the Great Gap in European Economics (Islamic Studies)
S.M. Ghazanfar
Manufacturer: RoutledgeCurzon
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ASIN: 0415297788 |
Book Description
This book is a collection of papers on the origins of economic thought discovered in the writings of some prominent Islamic scholars, roughly during the five centuries prior to the Latin Scholastics, like St. Thomas Aquinas.
Book Description
Why does society oscillate between intense interest in public issues and almost total concentration on private goals? In this classic work, Albert O. Hirschman offers a stimulating social, political, and economic analysis dealing with how and why frustrations of private concerns lead to public involvement and public participation that eventually lead back to those private concerns. Emerging from this study is a wide range of insights, from a critique of conventional consumption theory to a new understanding of collective action and of universal suffrage.
Customer Reviews:
interesting but not compelling.......2004-12-17
The author's premise that the general public is given to mass swings from seeking private gain to seeking public benefit, both driven by disappointment, is interesting; but the argument is never quite proven. For starters, there is offered no empirical evidence that this occurs. (The only historical review given is in support of the narrower point that a growing level of wealth generates disappointment in various affected classes.) Secondly, the explanations for why such swings *might* happen, or be expected to happen, never quite explain why these swings would happen *en masse*.
Nevertheless, I recommend reading this book -- it briefly introduces a range of provoking ideas. These include: that potential for disappointment varies by type of good, that there are multiple responses to disappointment (including postponing response by ignoring problems or internalizing dissatisfaction), that consumers do not have perfect knowledge nor only a single set of preferences, that "comfort is the enemy of pleasure," that public involvement could disappoint for providing too much *or* too little opportunity for participation.
The book is more marketing/psychology than economics, but its arguments could help explain, for instance, our modern shift to disposible goods and possible methods for understanding voters by understanding second-order volitions. It gets you thinking, even if the primary argument of the book is less than convincing.
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