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Why Schumpeter has had so little influence on today’s main line economics, and why this may be changing

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Abstract

While Schumpeter’s broad theory of how capitalist economies worked articulated in his Theory of Economic Development received strong attention in his lifetime, it was neoclassical economic theory that took hold of the profession in the last half of the twentieth century, and today few economists even read Schumpeter. The first part of this essay considers the reasons why Schumpeter largely has been ignored. However, recent developments have increased the interests of economists in innovation and in innovation driven economic activity, and the time now may be ripe for a renaissance of Schumpeterian economics. The second part of this essay provides a sketch of what an economics text-book, written from a Schumpeterian perspective, might look like.

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Notes

  1. He provides the basis for one much later, in Chapter 7 of his Capitalism, Socialism, and Democracy.

  2. The most influential such study of is Solow’s (1957). However. Solow’s work was preceeded by several other studies that came to a similar conclusion on the basis of methodologies that, while not the same as his, were similar.

  3. For a discussion of the intellectual history here see Nelson (2012a). Dosi and Nelson (2010) provide a broad review of the modern literature.

  4. Salter (1966) was one of the first economists documenting the tightness of the relationship at an industry level between increases in productivity (and implicitly decreases in unit costs) and declines in prices.

  5. For a review and discussion see Nelson (1998).

  6. I note that evolutionary economics has drawn extensively on the theory of behavior articulated in Simon (1957), March and Simon (1958), and Cyert and March (1963).

  7. Such an analysis could draw heavily on Winter (2006), Teece (2009), and Dosi et al. (2000).

  8. See Malerba et al. (2012), Innovation and the evolution of industries: history friendly models, unpublished, for a broad review.

  9. For a start on such an analysis see Nelson and Consoli (2010).

  10. McCraw (2007) provides an excellent discussion of the evolution of Schumpeter’s thinking about the appropriate nature and role of economic theory. See also Andersen (2011).

  11. For example, see Kitcher (2003) for a discussion of the contribution to understanding made by Darwin. Giere (1988) provides a good general discussion of the changes that have been occurring in the thinking among philosophers regarding the nature of science.

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Authors and Affiliations

  1. Columbia University, New York, NY, USA

    Richard R. Nelson

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  1. Richard R. Nelson
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Correspondence to Richard R. Nelson.

Additional information

The basic themes in this paper were first presented at the conference in Vienna in October 2011 commemorating the 100th anniversary of the first publication of Schumpeter’s great book The Theory of Economic Development.

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Nelson, R.R. Why Schumpeter has had so little influence on today’s main line economics, and why this may be changing. J Evol Econ 22, 901–916 (2012). https://doi.org/10.1007/s00191-012-0296-y

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