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