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Joseph A. Schumpeter: A Theory of Social and Economic Evolution

Author(s):Andersen, Esben Sloth
Reviewer(s):Diamond, Arthur M. Jr.

Published by EH.Net (August 2012)

Esben Sloth Andersen, Joseph A. Schumpeter: A Theory of Social and Economic Evolution. New York: Palgrave Macmillan, 2011. xiii + 272 pp. $105 (hardcover), ISBN: 978-1-4039-9627-5.

Reviewed for EH.Net by Arthur M. Diamond, Jr., Department of Economics, University of Nebraska at Omaha.

Samuelson (2003) in his final appraisal of his teacher and colleague Schumpeter, said that a chess player is only as a good as his worst move, but a scholar is as good as his best moves.? Samuelson implied that Schumpeter’s best moves were very good ones.? Presumably these would include his ideas on innovation, entrepreneurship and creative destruction.? His worst moves, according to Samuelson and many others, would include his emphasis and elaboration of the Kondratiev long wave theory.

Esben Sloth Andersen (Professor of Evolutionary Economics at Aalborg University in Denmark) is in tune with many of his fellow European Schumpeter scholars, who tend to focus on extending the implications of Schumpeter’s evolutionary method, and to give substantial attention to all of Schumpeter’s moves; this in contrast to the many United States Schumpeter scholars who are more likely to follow Samuelson by focusing on what they consider Schumpeter’s best moves.

Andersen’s book invites comparison with business historian Thomas McCraw’s (2007) comprehensive intellectual biography.? McCraw’s book includes more new material and is written in a style that is more pleasant to digest.? Of greater importance is that McCraw gives more attention to Schumpeter?s best moves on innovation and creative destruction, and gives less attention to Schumpeter?s moves on evolutionary method and long wave theory.

Joseph A. Schumpeter is part of a series that aims to briefly present the main doctrines of important economists in the context of their lives and of events in the milieu in which they lived.? Andersen does include some chapters on Schumpeter?s life, but these usually read as obligatory afterthoughts, rather than as information integral to understanding Schumpeter?s doctrines.? And he does not seem to take as much care in this part as he does elsewhere, as, for example, when he opines without citation or much explanation that Schumpeter was ?unbalanced? by the events leading up to World War II (p. 135).? The period is more fairly analyzed by McCraw who emphasizes that Schumpeter?s reasonable worries about Stalin?s Communism tempered his initial reaction to Hitler?s National Socialism.? Andersen openly abandons the announced aim of an integrated account, when he suggests (p. 16) that the book can be read as three ?relatively independent? books, the first on Schumpeter?s biography, the second on Schumpeter?s views on economic evolution, and the third on Schumpeter?s views on social evolution.? Much of Andersen?s focus is on how Schumpeter?s thought adumbrates or is inferior to later developments in modeling evolutionary economics, especially those advocated by Andersen himself.? Clearly, as presaged by his previous work (e.g., 1996 and 2009), Andersen?s heart is with the economic evolution book.

Although Andersen?s Joseph A. Schumpeter is intended for a general audience, it is unlikely that a general audience will be reached.? One reason is the price.? Another reason is that Andersen?s main program is textual exegesis, with an emphasis on Schumpeter’s juvenilia that have not been widely read, and sometimes not even translated from the German into English. A final reason is Andersen?s scholastic style: he uses German words, often without translation; unexplained abbreviations and neologisms abound.

Andersen has read the primary and secondary literature on Schumpeter widely and deeply.? Several times he provides pithy quotes from Schumpeter that are extracted from deep in the literature. And he does illuminate important aspects of the development of Schumpeter?s thought.? Since Schumpeter was the premier advocate of economic dynamism, I have long wondered if his praise for Walras was sincere or ironic.? Andersen painstakingly shows that Schumpeter believed the economy moved from Walrasian circular flow to disequilibrium and then eventually back to a new Walrasian circular flow.? So Schumpeter sincerely believed that the development of an equilibrium economics based on Walras was a necessary complement to the evolutionary economics that Schumpeter himself developed.? Although those mainly interested in Schumpeter?s best moves will find other sources, such as McCraw, of greater interest, the Walras example illustrates that Andersen?s book may aid historians of economic thought to better understand how Schumpeter?s full intellectual corpus developed from his little-read juvenilia.

Andersen is not very interested in illustrating his claims with examples from economic history, but when he does illustrate, it is usually with reference to the history of railroads.? Chapter 5 is devoted to Schumpeter?s discussion of railroadization, especially to illustrate a 50- or 60-year Kondratiev long wave, and the nine-year Juglar waves contained within the Kondratiev.? Schumpeter believed that the history of capitalism (up to the time of his death in 1950), could be viewed as roughly consisting of three Kondratievs, the middle of the three being dominated by the railroadization of the world.? Andersen devotes considerable attention to Schumpeter?s long wave theory, possibly because it can readily be discussed in relation to economic evolution, upon which Andersen is firmly focused.?

Although much of the railroadization example comes from Schumpeter?s Business Cycles, Andersen complains that the history portions of Business Cycles are written in a ?loose and discursive? style.? He judges that ?this is probably sufficient for most readers to ignore them? (p. 192).? This even though Andersen grants that Schumpeter himself saw this as ?the most important contribution of the book? (p. 192).? Andersen thus positions himself against McCraw, who agrees with Schumpeter that the best parts of Business Cycles are the economic history chapters.

To his credit, at the end of his book Andersen summarizes the evidence (pp. 251-55) that Schumpeter?s last great initiative was to try to ignite interest among established economists at the National Bureau of Economic Research (NBER), and among young economic historians at Arthur Cole?s Harvard center, in the development of economic history case studies of innovation and entrepreneurship as a source for a better theory of innovation.? This is good news for Schumpeter and Andersen, if Kahneman (201l) and McCloskey (1985, p. 211) are right that what happens last matters most.


Andersen, E.S. (1996) Evolutionary Economics: Post-Schumpeterian Contributions, London: Pinter.

Andersen, E.S. (2009) Schumpeter’s Evolutionary Economics: A Theoretical, Historical and Statistical Analysis of the Engine of Capitalism, London: Anthem Press.

Kahneman, D. (2011) Thinking, Fast and Slow, New York: Farrar, Straus and Giroux.

McCloskey, D. (1985) “Economical Writing,” Economic Inquiry 23, no. 2: 187-222.

McCraw, T.K. (2007) Prophet of Innovation: Joseph Schumpeter and Creative Destruction, Cambridge, MA: Belknap Press.

Samuelson, P.A.? (2003) “Reflections on the Schumpeter I Knew Well,” Journal of Evolutionary Economics 13, no. 5: 463-67.

Schumpeter, J.A.? (1939) Business Cycles:? A Theoretical, Historical, and Statistical Analysis of the Capitalist Process, New York: McGraw-Hill.

Arthur M. Diamond, Jr. is Kayser Professor of Economics at the University of Nebraska at Omaha.? His ?Epistemology of Entrepreneurship? is forthcoming.? He also has recently published several papers related to Schumpeter?s process of creative destruction and is at work on a book entitled Openness to Creative Destruction.
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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):General, International, or Comparative
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII