HOW EVOLUTIONARY IS SCHUMPETER'S THEORY OF ECONOMIC DEVELOPMENT?
Industry and Innovation, 2002, vol. 9, issue 1-2, 7-22
The generic features of an evolutionary theory which are identified in the conceptional discussion of the present paper can be shown to be present already in Schumpeter's 1912 work, The Theory of Economic Development . None the less, it is argued that Schumpeter fell short of a level of generality by which he would have succeeded in providing a true foundation for evolutionary economics. The reason is his eagerness--very clearly visible in the "lost" seventh chapter--to align his theory with the economic reasoning of contemporary "pure" economic theory that was moulded in an equilibrium-oriented heuristic and the methodology of comparative statics. Schumpeter's conception--which, in opposing the idea of borrowing from Darwinian thought, he called "development"--is rather a special theory of the unsteady capitalist growth process passing through booms and crises. Throughout all of Schumpeter's writings the notion of development is therefore closely related to the business cycle phenomenon. The paper argues that this special framing implies not only some arbitrary hypotheses which are difficult to accept in an evolutionary interpretation, but also some limitations in his understanding of (what he refused to call) economic evolution, particularly with respect to its driving forces.
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