The Theory of Economic Development: An Inquiry Into Profits, Capital, Credit, Interest, and the Business Cycle

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Transaction Publishers, 1934 - Business & Economics - 255 pages
9 Reviews

Schumpeter proclaims in this classical analysis of capitalist society first published in 1911 that economics is a natural self-regulating mechanism when undisturbed by "social and other meddlers." In his preface he argues that despite weaknesses, theories are based on logic and provide structure for understanding fact.

Of those who argue against him, Schumpeter asks a fundamental question: "Is it really artificial to keep separate the phenomena incidental to running a firm and the phenomena incidental to creating a new one?" In his answers, Schumpeter offers guidance to Third World politicians no less than First World businessman.

In his substantial new introduction John E. Elliott discusses the salient ideas of The Theory of Economic Development against the historical background of three great periods of economic thought in the last two decades.

  

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Pick up any introductory economics text, and in its opening pages you’ll find the uncredited work of Joseph A. Schumpeter (1883-1950). He is best known for his theory of “Creative Destruction” – which posits the economic obliteration of the old to make way for the entrepreneurial new – but here he only alludes to it. This pioneering analysis made him an early champion of entrepreneurial profit and laid the groundwork for his later masterpieces on business cycles. Schumpeter wrote extensively on capital and capitalism, earning the sobriquet the “bourgeois Marx.” But he was not an iconic, dusty economist. He studied law, handled the financial affairs of an Egyptian princess in Cairo, became, at 28, the youngest full professor at the University of Graz and served as Austria’s finance minister. Famous for his eccentricities, he told his students that he had three goals: to become the greatest horseman, the greatest lover and the greatest economist. He would then note that he’d fulfilled only two of his objectives. getAbstract considers this classic treatise – despite its density and a few anachronisms – required reading for students of economics and finance in academia, business and public policy.
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Review: The Theory of Economic Development: An Inquiry Into Profits, Capital, Credit, Interest, and the Business Cycle

User Review  - Paul Tennant - Goodreads

i love how he uses the circular flow of capital. what happens to capital once all domestic sources of investment are exhausted. great book on understanding the bottom up approach. That said it is not the easiest of reads, but his mind will amaze you. Read full review

Selected pages

Contents

THE CIRCULAR FLOW OF ECONOMIC LIFE AS CONDITIONED BY GIVEN CIRCUMSTANCES
3
THE FUNDAMENTAL PHENOMENON OF ECONOMIC DEVELOPMENT
57
CREDIT AND CAPITAL
95
ENTREPRENEURIAL PROFIT
128
INTEREST ON CAPITAL
157
THE BUSINESS CYCLE
212
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Page xxxiv - ... cycle" - and, in terms of phenomena, to the factors that would govern the greater or smaller utilization of an industrial apparatus if the latter remains unchanged. All the phenomena incident to the creation and change in this apparatus, that is to say, the phenomena that dominate the capitalist processes, are thus excluded from consideration. As a picture of reality this model becomes most nearly justifiable in periods of depression when also liquidity preference comes nearest to being an operative...

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About the author (1934)

Joseph A. Schumpeter (1883-1950) was professor of economics at the University of Gra and at Bonn. He also served as Austrian minister of finance. He later moved to the United States where he taught at Harvard University until his death. His works include Business Cycles, History of Economic Analysis, and Capitalism, Socialism, and Democracy.

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