HISTORY OF ECONOMIC ANALYSIS
HISTORY OF ECONOMIC
ANALYSIS
BY
JOSEPH A.SCHUMPETER
EDITED FROM MANUSCRIPT BY
ELIZABETH BOODY SCHUMPETER
AND
WITH AN INTRODUCTION BY
MARK PERLMAN

First published in Great Britain in 1954 by Allen & Unwin (Publishers) Ltd
This edition published in the Taylor & Francis e-Library, 2006.
“To purchase your own copy of this or any of Taylor & Francis or Routledge's collection of
thousands of eBooks please go to www.eBookstore.tandf.co.uk.”
Twelfth impression 1981
First published in paperback 1986
This book is copyright under the Berne Convention.
© Introduction by Mark Perlman
All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or
by any electronic, mechanical, or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or retrieval system, without permission
in writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue reference for this book is available from the British Library.
ISBN 0-203-98391-2 Master e-book ISBN
ISBN 0-415-10888-8 (Print Edition)
Table of Contents

INTRODUCTION BY
MARK PERLMAN

viii


EDITOR’S INTRODUCTION

xxx


PART I INTRODUCTION SCOPE AND METHOD


CHAPTER
1

INTRODUCTION AND PLAN

2
CHAPTER
2

INTERLUDE I: THE TECHNIQUES OF ECONOMIC
ANALYSIS

10
CHAPTER
3


INTERLUDE II: CONTEMPORANEOUS DEVELOPMENTS
IN OTHER SCIENCES

23
CHAPTER
4

THE SOCIOLOGY OF ECONOMICS

31

PART II FROM THE BEGINNINGS TO THE FIRST CLASSICAL SITUATION
(TO ABOUT 1790)


CHAPTER
1

GRAECO-ROMAN ECONOMICS

48
CHAPTER
2

THE SCHOLASTIC DOCTORS AND THE PHILOSOPHERS
OF NATURAL LAW

70
CHAPTER

3

THE CONSULTANT ADMINISTRATORS AND THE
PAMPHLETEERS

139
CHAPTER
4

THE ECONOMETRICIANS AND TURGOT

202
CHAPTER
5

POPULATION, RETURNS, WAGES, AND EMPLOYMENT

240
CHAPTER
6

VALUE AND MONEY

264
6
CHAPTER
7

THE ‘MERCANTILIST’ LITERATURE


318

PART III FROM 1790 TO 1870


CHAPTER
1

INTRODUCTION AND PLAN

358
CHAPTER
2

SOCIO-POLITICAL BACKGROUNDS

371
CHAPTER
3

THE INTELLECTUAL SCENERY

384
CHAPTER
4

REVIEW OF THE TROOPS

438
CHAPTER

5

GENERAL ECONOMICS: A CROSS SECTION

502
CHAPTER
6

GENERAL ECONOMICS: PURE THEORY

548
CHAPTER
7

MONEY, CREDIT, AND CYCLES

657

PART IV FROM 1870 TO 1914 (AND LATER)


CHAPTER
1

INTRODUCTION AND PLAN

721
CHAPTER
2


BACKGROUND AND PATTERNS

727
CHAPTER
3

SOME DEVELOPMENTS IN NEIGHBORING FIELDS

749
CHAPTER
4

SOZIALPOLITIK AND THE HISTORICAL METHOD

768
CHAPTER
5

THE GENERAL ECONOMICS OF THE PERIOD: MEN AND
GROUPS

793
CHAPTER
6

GENERAL ECONOMICS: ITS CHARACTER AND
CONTENTS

853
CHAPTER

7

EQUILIBRIUM ANALYSIS

918
CHAPTER
8

MONEY, CREDIT, AND CYCLES

1040
PART V CONCLUSION A SKETCH OF MODERN DEVELOPMENTS


CHAPTER
1

INTRODUCTION AND PLAN

1104
CHAPTER
2

DEVELOPMENTS STEMMING FROM THE MARSHALL-
WICKSELL APPARATUS

1114
CHAPTER
3


ECONOMICS IN THE ‘TOTALITARIAN’ COUNTRIES

1119
CHAPTER
4

DYNAMICS AND BUSINESS CYCLE RESEARCH

1126
CHAPTER
5

KEYNES AND MODERN MACROECONOMICS

1136



EDITOR’S APPENDIX

1151


LIST OF BOOKS FREQUENTLY QUOTED

1171


AUTHOR INDEX


1174


SUBJECT INDEX

1218

Introduction
MARK PERLMAN
*

There is, as we shall see, much in this book which is
redundant, irrelevant, cryptic, strongly biased, paradoxical,
or otherwise unhelpful or even harmful to understanding.
When all this is set aside, there still remains enough to
constitute, by a wide margin, the most constructive, the
most original, the most learned, and the most brilliant
contribution to the history of the analytical phases of our
discipline which has ever been made. (Viner 1954, pp.
894–5).
I PUTTING SCHUMPETER AND HISTORIES
OF ECONOMIC THOUGHT IN PERSPECTIVE
1.1 Schumpeter was a man of many interests as well as talents. Beyond that he had,
certainly as a young man, monumental ambitions. It is not appropriate in this essay to
devote much space to the journey of his life; fortunately there are now available not only
the 1950 insightful memorials by his colleagues, particularly the one by Gottfried
Haberler,
1
a massive as well as a magnificent piece of bibliographical scholarship on
what he wrote, who wrote about him, and with whom was he most frequently compared

by Massimo M.Augello (1990),
2
but also three recent (1991) and assuredly major
biographies of the man. Schumpeter, A Biography by Richard Swedberg contains a
particularly carefully balanced, scholarly assessment of
*
Thanks are owed to several friends who have read and corrected the manuscript: Professors
A.W.Coats, Warren Samuels, Yuichi Shionoya, Richard Swedberg and Shigeto Tsuro, and Dr
Charles McCann.
1
This essay appeared originally in the Quarterly Journal of Economics. It was reprinted in
Seymour Harris’s edited volume, Schumpeter, Social Scientist (Harris, 1951) and again in Haberler
(1993). The 1951 volume also contained essays by 16 leading economists, including inter alia
Ragnar Frisch, Arthur Smithies, Paul A.Samuelson, Jan Tinbergen, and Fritz Machlup.
2
Augello cites 260 works (including articles and books translated into languages other than the
original) by Schumpeter and 1916 works on Schumpeter. Augello’s own generalizations or findings
are in a comprehensive 93-page essay, replete with valuational (that is, Augello’s straightforward
evaluations) notes. I am not aware of a comparable task done recently by any economist on an
economist.
Schumpeter’s four or five major efforts as well as an intriguing general account of the
times and environments in which he lived. Swedberg discusses ad seriatim the various
decades of Schumpeter’s life and work, and if he attempts to explain the man, he does so
only by inference.
The second biography is different. Opening Doors: The Life and Work of Joseph
Schumpeter by Robert Loring Allen has more of the characteristics of James Boswell’s
The Life of Samuel Johnson, LL.D. or Samuel Pepys’ Diary (1815). Benefitting greatly
from the massive, scholarly, even daunting
3
task of deciphering Schumpeter’s personal

diaries undertaken by Mrs Erica Mattschnigg Gershenkron,
4
Allen interpreted the often
elliptical, if not actually obscure, materials. Unlike Swedberg (a sociologist), Allen (an
economist) was a much-impressed, even overwhelmed, Schumpeter student. Allen
documents much of what Swedberg could do no more than infer.
The third biography, Joseph Schumpeter: Scholar, Teacher, and Politician by Edward
März, a Viennese Marxian historian, eschews not only discussion of Schumpeter, the
idiosyncratic individual, but virtually all mention of Schumpeter’s historico-cultural-
epistemological interests. März’s effort is to fit Schumpeter into the ranks of latter-day
Marxians, an interesting effort but one hardly germane to what we are interested in. For
that reason, what follows is based in large measure on the memorials and the other two
studies.
1.2 I believe that Schumpeter’s intellectual efforts centered on five (possibly four and
a half) major projects. I would classify the first burst of effort (including three books) as
at least two major projects, one involving the nature of economic theory and economic
science and the other concentrating on the nature and sources of economic development.
The first surfaced in the 1908 Das Wesen und der Hauptinhalt der theoretischen
Nationalökonomie (The Nature and Essence of Theoretical Economics) and to a lesser
degree in the 1914 Der Dogmen- und Methodengeschichte (Economic Method and
Doctrine: An Historical Sketch)
5
; the second in the 1911 Theorie der wirtschaftlichen
Entwicklung (The Theory of Economic Development).
His next (I would term it the third) major effort involved a book on money (partly
written but never published by him although it did appear in 1970 as Das Wesen des
Geldes
6
) and his 1939 two-volume Business Cycles. This generally unsuccessful effort
paralleled Maynard Keynes’s 1930 abortive Treatise on Money and his thoroughly

successful 1936 General Theory of Employment, Interest, and Money.
Schumpeter did not think that his Capitalism, Socialism, and Democracy was a major
effort; indeed he ‘often called it a “pot-boiler”’ (Allen, 1992, II, p. 133). Others have not
shared that assessment, and it may well be termed Effort ‘Three and a Half’ or even Four.

3
The task was daunting because much was written, even scribbled, in an archaic German
shorthand.
4
I am indebted to Professor Yuichi Shionoya for this information and other points, too.
5
This book was essentially the basis for the last effort. However, as Schumpeter thought all study
of economic theory involves knowledge of its origins, at the time (pre-World War I) he linked the
two.
6
Edited and introduced by F.K.Mann. Göttingen: Vandenhöck & Ruprecht, 1970, pp. xxvii, 341.
His fifth effort involved his interpretation of the filiation of ideas in the development
of economic theory. This effort surfaced initially with his 1914 Epochen der Dogmen—
und Methodengeschichte (translated later as Economic Doctrine and Method: An
Historical Sketch) and was unfinished when he died, but the outline of the corpus
appeared as History of Economic Analysis (1954). I would also include in this fifth effort
another posthumous collection, Ten Great Economists (1954), which contains polished
essays.

1.3 The unfinished History of Economic Analysis (HEA) is the most significant part of
the fifth and last of Schumpeter’s great projects. To some, its development represents the
somber reflections of an older scholar, one embittered by personal, career, and character
tragedies. To others, it is the quintessential, if uncompleted, final great professional tour
d’horizon of the leading practiced academic professional economics visionary of the
twentieth century. And for still others it is the wisest compendium of names and titles

ever published in English (and possibly in all other languages) in the long history of the
discipline.
1.4 In the past there have been many treatments of the history of the discipline
employed as explanations of the development of economic theory. Indeed, one way to
explain the emergence of the Smithian and Ricardian virtual hegemony was simply to
recount how Smith had fused earlier writings, rejected some, and made others canon.
Ricardo, referring to Smith’s 1776 economics masterpiece,
7
offered a tighter type of
reasoning, and thus it seemed classical economics was assembled, if not actually born.
8

The official ‘registry of birth,’ as seen by the British, was undoubtedly John Ramsay
McCulloch’s The Literature of Political Economy (1840), just as Jérôme-Adolphe
Blanqui’s Histoire de l’économie politique en Europe
9
(1838) could be said to have been
an even earlier French claim—of course making McCulloch’s either a collateral, if lesser,
relative or simply a Pretender.
There is a German lineage, as well. Wilhelm Georg Friedrich Roscher first brought out
his Geschichte der Englishen Volkswirtshaftslehre (1851) and then later in 1874 his
Geschichte der Nationalökonomie in Deutchsland, and his student, Gyula Kautz,
published in 1860 Die Geschichtliche Entwicklung der Nationalökonomie und Ihrer
Literatur. One could go on, but it suffices to indicate that not only Marx treated the
history of economics in Das Kapital (particularly in Volume One, 1867) but that object
of Marxian scorn, Eugen Karl Dühring, published a positivist Kritische Geschichte der
Nationalökonomie und der Sozialismus in 1871.
From a more ‘modern’ standpoint, I am tempted first to point to William Stanley
Jevons’ decision to commission a translation of Luigi Cossa’s Guido allo Studio
dell’Economia Politica (1875) as our ‘cornerstone.’ Cossa was so pleased with Jevons’

request that he expanded and partially rewrote his first edition for that translation. So it
7
The earlier (1759) masterpiece was the more carefully written, The Theory of Moral Sentiments.
8
A more properly systematic approach is to refer to that collector’s ‘gem of a servant,’ The History
of Economic Thought and Analysis (1973) by Emma Fundaburk, to consider the wealth of efforts at
synthesizing the various approaches.
9
This book went through several successive editions. The fifth French edition is dated 1882, and
there was a translation into English of the fourth French edition (1880).
was that the 1876 second edition with a Preface by Jevons (and not published in Italian
until the next year, 1877!) became the template for many of the analytical history of
economics texts which followed.
10

Until Schumpeter’s 1954 History of Economic Analysis appeared, American (and
presumably British) economics graduate students generally referred to several ‘old
standbys:’ Eric Roll’s strange mixture of pro- and then a-Marxian (to coin a neologism) A
History of Economic Thought (particularly the post-World War II 2nd [1946] and 3rd
[1954] editions) and Charles Gide and Charles Rist A History of Economic Doctrines
from the Time of the Physiocrats until the Present Day (translated into English in 1948
from the several [2nd, 6th, and 7th] French editions). More recently, that is, within the
last 20 years, Mark Blaug’s Economic Theory in Retrospect and The New Palgrave have
been the principal authorities for graduate students. For economics undergraduate
students there was Alexander Gray’s excellently composed The Development of
Economic Doctrine: An Introductory Survey (1931) and Henry W.Spiegel’s The Growth
of Economic Thought (1971). More advanced scholars relied on monographs on writers,
schools, periods, and sub-sets of the topic (e.g. monetary theory, etc.). None of the
foregoing, however, is, in my view, magisterial—none attempts to synthesize a vision.
Since the appearance of the History of Economic Analysis two other particularly

authoritative works have appeared: Wesley Clair Mitchell’s Types of Economic Theory:
From Mercantilism to Institutionalism as edited by Joseph Dorfman (1967, 1969)
11
and
Karl Pribram’s A History of Economic Reasoning (1983). Neither attempted to synthesize
a vision, although each sought to present an organizing theme, itself a ‘Whiggish’
interpretation (I would not consider such interpretations really to be visions). I shall
compare their major approaches below.
The most important thing about Schumpeter’s History of Economic Analysis is its
impact on the profession. Unfinished and published with obvious and identified lacunae,
it can not serve as a good reference guide. Yet, reference is regularly made to it. Why?
Although I will expand on this point later, let me say here only that it offers a complex
but not-quite-idiosyncratic vision of economics.
Schumpeter knew Continental sources, with which most British- and American- and
often imaginatively. Most of all, he escaped the usual constraints of having been educated
within the bounds of British Utilitarianism, and even though for much of his life he
apparently had a weakness for the effortless superiority of the English gentleman-scholar,
he was in the important sense an intellectually superbly equipped outsider.
1.5 In sum, then, the importance of the book is that it gives a vision of the
development of the economics discipline, a vision created by an unusually well-read
‘outsider’ (from the standpoint of most British and American-trained professional
economists) at a time when he shunned most professional company and was driven by a
personal ambition work ethic to complete a monumental effort explaining the relationship
10
The well-known text by Charles Gide and Charles Rist, A History of Economic Doctrines, was
not published until 1915.
11
The basic manuscript was the result of a student’s shorthand notes; in that form it was sold in
1949 by Augustus Kelley, Bookseller (New York) with Mrs Mitchell’s permission (extended to a
very limited number of sets) as Lecture Notes on Types of Economic Theory: From Mercantilism to

Institutionalism. Dorfman corrected and greatly expanded the material.
between what he called the economic science and not only other sciences but also
other social studies and philosophical disciplines. Flawed by its incompleteness (due to
the author’s sudden death), there is, nonetheless, nothing else like it in the English
language; and even when one turns to other cultures, nothing has appeared which has its
appeal, if not its scope. Most of all, it is the product of an imaginative mind embittered by
a World War in which his adopted country, perhaps misled by an ubiquitous Anglo-
Saxon cultural penumbra (which he came to despise), was seemingly fighting the wrong
enemy. The book stands as a challenge (perhaps if it had been finished it would have
been as a rejection) to the way Anglo-American economists were accustomed to looking
at themselves and their craft.
II THE BOOK’S PART IN SCHUMPETER’S
LIFE
2.1 Just why Schumpeter undertook to write the 1914 Der Dogmen—und
Methodengeschichte seems to me to be less of a mystery than is the slant of its contents.
He was at the time a young man, perceived both by the world and by himself as a
Wunderkind. It was part of his judgement as well, perhaps, of his conceit, that he wanted
to lay out a schema for the understanding of the development of the economics discipline,
both as a science and as practiced as an art. Assertive in tone, it reflects an intellectual
confidence that was as yet essentially untouched by any serious career failures. But, if
Schumpeter was unscarred, he certainly was aware that others had been. Of them,
according to Swedberg (1991, pp. 91–3), he was greatly concerned about the opinions of
Max Weber, whose efforts to combine an overly abstract theoretical science of
economics with a comparably over-detailed history of events and policies had resulted in
a new ‘discipline,’—Sozialökonomie.
Opportunity came to please him in the form of a request from Weber, himself, to
prepare a history of the subject of economic theory. Weber was undertaking the
organization and publication of a deliberately important collective handbook, Grundriss
der Sozialökonomie. The other selected authors were two eminent older scholars, Karl
Bücher and Friedrich von Wieser. Their presence, plus his own desire to ingratiate

himself with Weber
12
, doubtless affected the rhetoric in the book. And while it retains a
nominal tolerance for a kind of historical approach, it seems to me to be clear that this
was a concession to Weber’s feelings and was more of a courtesy than a fully sincere
opinion. At that time, Schumpeter was generally putting his chips on abstract theory.

12
It succeeded: Weber became a strong admirer and a supporter when it came to Schumpeter’s
applying for chairs. Swedberg reports, however, that the two once avoided coming to blows only by
Weber’s stomping out of a coffee house. What caused such violence? Schumpeter was fascinated
by what was going on in the Soviet Union, and seemingly endorsed Leninism, as practiced. Weber,
incensed by Schumpeter’s indifference to human cruelty, could not restrain himself (Swedberg,
1991, pp. 92–3).

This earlier book went untranslated into English until after Schumpeter’s death, but for
most of the history of economics aficionados of the inter-Wars period, its existence and
(for those who could read German, its contents) assured Schumpeter of an extra degree of
professional standing. Yet, Schumpeter himself seems to have regarded it as evidence of
an unfinished product. Space limitations do not permit much dwelling on its contents (cf.
Perlman, 1982), but at the time he wrote it he was intent upon (1) drawing a distinction
between scientific economics and political economy; (2) showing how British classical
economics was giving way to ‘schools of economic thought;’ (3) indicating that the
future of economic analysis lay in the tradition of Walrasian general equilibrium analysis,
albeit in a ‘dynamic rather than a static form;’ and (4) insisting that the filiation of ideas
as well as economic policy rested best in the minds and hands of a disinterested cultural
elite.
2.2 By the 1940s Schumpeter was estranged from many of his Harvard colleagues. It
is popularly believed that this breach came about because of World War II and the
alliance between the Western democracies and Stalin’s Soviet Union. More than fifty

years after the event, it is hard to reconstruct the many feelings influencing the situation.
Loring Allen suggests that the alienation may have had an earlier source in Schumpeter’s
ambivalence regarding anti-Semitism and the Nazis; but many of Allen’s judgements
seem to me to be facile and too easily based on hearsay as well as post hoc, ergo propter
hoc assessments. But, whatever the cause, Schumpeter withdrew from Cambridge and
concentrated on reformulating his ideas about the historical development of the
discipline. When the war ended, Schumpeter reemerged from his cocoon, but he was
never the caterpillar, much less the butterfly, he had been as a young man. He wrote
brilliant essays on Irving Fisher and Maynard Keynes; both of them were published
posthumously in Ten Great Economists (TGE), surpassing his analysis in the HEA. He
served as President of the American Economic Association in 1948 and in that capacity
delivered an address on ‘Science and Ideology’. More to our point, he was asked to
deliver, inter alia, a eulogy of Wesley Clair Mitchell just after the latter’s death (in 1950).
It was a
strange, idiosyncratic performance but, for the record, the written essay, finished just
before Schumpeter’s own death, if effusive is also wise. The History of Economic
Analysis seems to have been largely the product of the bitter years leading to and during
the War. Swedberg relates how Schumpeter proposed the volume to the Oxford
University Press, and from the first it was conceived as a vision, a massive treatment of
the emergence of the scientific discipline. But, like many last great works of artists and
other writers, it seems to have been cursed by an evil star. What was written was done so
by a depressed author. It was unfinished when he died, and his devoted student and third
wife, Elizabeth Boody Schumpeter, who had brought out of chaos what order there had
been during the years from around 1938 onwards, sought to polish the manuscript as best
she could and to integrate as much as possible.
The task was extremely difficult. Schumpeter’s writing method was disordered. Major
bits and large pieces were to be found in three different studies, and it was not always
clear which had been written first and which later. Much was written in an archaic
German shorthand. However, she persevered.
But the evil star’s curse on the project followed her as well. She suffered a malignancy

during the months when she could work on the book, and she died well before it came
out. Several Harvard colleagues did what they could to complete her task, but committees
rarely can do as well as a single individual and, as I have indicated, Elizabeth
Schumpeter’s own knowledge of the vision, surely greater than anyone else’s, was far
greater than theirs.
Elizabeth Schumpeter also proposed the printing of a collection of his essentially
obituary essays on key economists, essays running from 1914 until no less than a
fortnight before his death. Her selection (TGE) combines a judgement regarding market
taste (which may explain the lengthy essay on Marx coming first) and one reflecting
Schumpeter’s regard for the eminence of the ten ‘greats’ (Marx, Walras, Carl Menger,
Marshall, Pareto, von Böhm Bawerk, Taussig, Fisher, Mitchell, and Keynes) plus three
appended short pieces on Knapp, von Wieser, and von Bortkiewicz.
Ten Great Economists I find is worth noting particularly because of its lengthy
analysis of Pareto’s work. It is canon that Schumpeter thought Walras the greatest
economist in the history of the profession. I suggest that a less conventional view is also
worth considering. In the end he admired Pareto as much or more. At the very ‘least,’
Pareto was the worldly St Paul to Walras’s spiritual Jesus.
III How THE BOOK is ORGANIZED
3.1 In the HEA Schumpeter sets out to explain how the discipline should be perceived.
Part I (3.7 percent of the pages) as it appears seems to me to be the most important. In his
1914 study, Der Dogmen—und Methodengeschichte, which was long on self-conscious
organization,
13
Schumpeter’s themes involve a distinction between ‘science’ (e.g.
scientific economics) and econo-political programs (political economy), and contrast the
roles played by disinterested ‘consultant administrators’ as distinct from venal
pamphleteers (cf. Perlman, 1983). The older Schumpeter set out in the HEA to do
something far more sophisticated. He sought to explain economics in terms of the
dynamics of the sociology of knowledge rather than under the more usual rubric, classical
epistemology. I feel that his exposition would possibly have been pedagogically easier

had he chosen to tie his thoughts to Pareto’s Trattato di Sociologia Generale, with its
distinction between rational and non-rational systems. But their goals involving theory as
a means to understanding human meanings were similar and Schumpeter, in explaining
ultimately what shaped economics (and by economics he clearly meant economic
theorizing), stated quite flatly that first one had to know

13
Jacob Viner observed that this book was along the lines of the Cossa study (1954, p. 898).


economic history
14
and statistical display and analysis.
15
Given that background, one was
then ready to study theory. Schumpeter took pains to explain that much writing passing
for theory was irrelevant and even jejune; theorists poisoned their own well by making
foolish condemnations of empirical details and extravagant claims relating to their own
progress and prowess. Many theorists were intentionally ignorant of the fact that the best
theorists (like Newton) were skeptical (with reason) of being classified by theorists as
theorists.
Nonetheless, Schumpeter’s rule of thumb was that abstract rules were to be derived
from and then tested against observed data. Although he refers to Marshall as a leader in
the practice of ‘scientific economics’ (1954, p. 21), it is also even more true that
Schumpeter abhorred the tendency of Marshall and the Marshallians to bend their
analysis in the name of ideologies such as free trade, utilitarianism, and so forth.
In a significant sense, Part I of the History of Economic Analysis seems to have been
laid out as a major contribution. However, as it was unfinished, it suffers seriously from
omissions. What Schumpeter had to say about his bugaboo—ideology—and his Golden
Fleece—a scientific economics—can be inferred from the written version of his 1948

Presidential Address. But what he had meant to say about his coming to grips with the
meaning of Weber’s Sozialökonomie is not adequately specified, and in his conscious
eschewing of Pareto’s sociological system (as we will note below, his long essay on
Pareto was written during the last months of his life) his views are left for me, at least—
up in the air.
3.2 Part II reflects Schumpeter’s greatest relative strengths. It involves about a quarter
of the book’s pages, and it takes up ad seriatim first the contrasting seminal contributions
of Plato and Aristotle and the amazing lack of analytical material associated with
Republican and Imperial Rome before turning to a splendid survey of the Christian and
Natural Law writers. The third chapter of this part is a reprise of his 1914 theme of the
consultant administrators and the pamphleteers—the former groped for a vision, the latter
for reward. His treatment of Smith is insightful but, nonetheless, harsh. Praise, such as he
gave it in this chapter to the English, was reserved for Josiah Child.

The fourth chapter is more generous in tone; in it Schumpeter’s identification of the
qualities of the hero becomes apparent. What impressed him most was the hero’s ability
to build an original system rather than merely to introduce a mechanism of thought.
Taking up William Petty and his associates, Boisguillebert, Cantillon, Quesnay and his
14
Swedberg notes the influence of Max Weber (Swedberg 1991, p. 184).
15
Schumpeter’s view was similar to Lord Kelvin’s; science involved measurement, even if it was
not measurement, itself. Schumpeter, alert to Hayek’s disparagement of scientism, was amenable to
every discipline developing its own ordering of knowledge (not learning), and specifically physics
(Schumpeter 1954, pp. 16–18).


associates, and Turgot, Schumpeter, the first President of the Econometric
16
Society,

eventually added (in pencil) Turgot’s name to one chapter’s original title, The
Econometricians.
There follow three chapters focussed on specific topics and subtopics; suffice it here to
list only the topics: (5) Population, Returns, Wages, and Employment; (6) Value and
Money, and (7) The ‘Mercantilist’ Literature. They contain much informative
information—names, titles, dates, and, most of all, the tracing of the filiation of ideas, but
they are mostly descriptive. Schumpeter, quite naturally, ‘graded’ the names—among
those getting ‘firsts’ or ‘very high seconds’ were Botero, Serra and Misselden, Steuart,
and perhaps Hume. For many, the most useful thing about this part is the integration of
Continental names (with what is for many readers limited to English) the British names.
3.3 Part III covers economics between 1790 and 1870. The initial three chapters cover
the plan of the analysis, a bird’s-eye view of the economic history of the period, and a
marvelous survey of the dominant idea-sets of that era. Again, Schumpeter ‘reviews the
troops’ (his phrase), and identifies his heroes, including Longfield and von Thünen,
Cournot, J.S.Mill, Say, and Sismondi. Schumpeter then devotes most of a chapter (5) to
J.S.Mill. In chapter 6 Schumpeter synthesizes British Classical Economics, using
Senior’s four postulates (rational maximization, the Malthusian Law, diminishing returns
in agriculture, and increasing returns in industry) as a convenient reference point or point
of intellectual departure. From there he continues in the integration of Ricardian and
Marxian thinking, Say’s Law of Markets, and the concern with production and
distribution. Both chapter 6 and its sequel (7), ‘Money, Credit, and Cycles’ are English-
experience oriented.
Schumpeter’s treatment of British Utilitarianism is worth specific mention. He accepts
its centrality in the development of the Brtish classical system, but he does not accept its
validity. Accordingly, it should come as no surprise that neither Mandeville
17
nor
Bentham has a tablet, much less a memorial, in his Pantheon.
3.4 Whereas it took three chapters of about 84 pages in Part III to introduce the
intellectual background (the sociology of ideas) for the period 1790 to 1870, it took four

chapters but fewer pages (about 74) to introduce the intellectual background for the
period ‘From 1870 to 1914 and later’ in Part IV. Even so, this Part is the one giving full
geographical sweep. Taking up developments in theory in Britain (he concentrates far
more on Marshall than on Jevons or Edgeworth), France, Germany and Austria, Italy, the
Netherlands and Scandinavia, the United States, and finally in ‘Marxism’ (if not a land,
certainly a ‘cloud’ of its own), he sets the stage for what he really wants to discuss.
Chapter 6 is on the Marshallian system; chapter 7 is on the evolution of equilibrium
analysis (partial equilibrium being seen as the product of Cournot and Marshall; general
equilibrium, albeit static, as principally the product of Walras). Chapter 8 takes up
applications as seen in the treatment of Money, Credit, and Cycles.

16
Schumpeter thought the word, Econometrics, philologically ignorant, ‘…it ought to be either
Ecometrics or Economometrics’ (Schumpeter 1954, p. 209).
17
Hardly mentioned (two slim references). Hayek, by way of contrast, makes Mandeville’s role
seminal in the development of individualism, utilitarianism, and even in the self-regulating market.
(See Hayek, 1967, Perlman, 1990, and 5.6 below.)
Schumpeter mentions with enthusiasm his colleague Haberler, and with less
enthusiasm his contemporary, Maynard Keynes.
18
Bates Clark and Wesley Clair
Mitchell
19
get short shrift.
20
Irving Fisher (on balance) is treated with qualified
enthusiasm and at some, if limited, length.
21
Instead, he sets out to glorify Walras, and as

I have mentioned earlier and will mention again below, he eschewed most but not all
lengthy discussion of Pareto. As Schumpeter was a man hardly consumed with modesty,
false or otherwise, it is puzzling why he did not mention any of his own contributions;
perhaps that was to be left to the last.
In my judgement, Part 4—because it was to lay the foundations for an understanding
of the meaning of dynamic general equilibrium analysis—needed much more work. My
guess is that, given the time, Schumpeter could have greatly expanded and improved its
exposition. But, I also believe that given the state of mathematics during the period
before 1960 and his own reluctance to get involved in further studies in mathematics, this
section was bound to have been limited.
3.5 Part V was to be ‘A Sketch of Modern Developments.’ As the manuscript was left,
it had a truncated statement of his plan, a comparison of the Marshallian-Wicksellian (an
essentially partial equilibrium analysis) approach, a discussion of ‘totalitarian economics’
(Germany, Italy, and Russia), some thoughts about dynamics and business-cycle
research, and a slightly polished assessment of Keynes’s impact on the profession.
22
This
Part, clearly intended to be ultimately no more than a ‘sketch’, is too unfinished to be of
concern to anyone but those interested only in very preliminary drawings.

IV THE REACTIONS TO THE THESES IN THE
BOOK
4.0 The appearance of the book about four years after Schumpeter’s death may
have affected its reception, but we know for a fact that it produced a number of
unusually long book review essays. Virtually everyone thought it monumental—in its
purpose, if
18
Schumpeter’s treatment of Keynes, always something of a touchy subject, is most
conscientiously handled in a critical but yet balanced manner in Ten Great Economists
(Schumpeter, 1951, pp. 260–91).

19
See 2.2, above for reference to a much more thorough assessment of Mitchell.
20
Mitchell paired Schumpeter and Pareto in his lectures. Even so, the topic was not one of
Mitchell’s ‘favorites’ (Mitchell, 1969, chapter 15).
21
Again, duty overcame the sequence of writing discipline. In Ten Great Economists there is a
generous memorial essay on Mitchell, written just before Schumpeter’s own death.
22
See 3.4 for reference to a longer, and presumably written later, essay on Keynes.

not in its delivery. Most, but not all,
23
of the leading journals reviewed it, usually
choosing a well established scholar
24
to assess Schumpeter’s vision of what a massive
assessment of the development of economics should be. Most reviewers did not hesitate
to assess it relatively passionately—the reviews appeared for the most part long after
Schumpeter’s death and the book was considered so important that no attention was paid
to te nil nisi bonum rule.
Briefly put, all of the reviewers were in some senses impressed, even awed, by the
vision and the massive detail (however imperfect it was left). But many of the reviewers
were put off by Schumpeter’s evident anti-British (usually meaning anti-Utilitarianism)
judgements. Most reviewers swallowed hard his lauding of his Continental heroes, but
most of them, lacking his first-hand familiarity with the texts, were in no strong position
really to complain. One reviewer, Ronald Meek (1957), took him to task for
oversimplifying, indeed bending, the Marxian concept of the institutional nature of social
value (social mores) creation.
4.1 George Stigler’s review in the Journal of Political Economy was unusual in that he

was led to question from the first why anyone should want to ‘write on such a scale’ (p.
344). While Stigler expressed his amazement at Schumpeter’s obvious erudition, he also
thought that many of Schumpeter’s derived generalizations (e.g. economists are slow to
embrace new ideas) were clearly wrong (ibid.). He found the exposition so truncated that
he often could not really understand just what Schumpeter had in mind.
25
His criticisms
were even more directed to the vision than they were to the execution.
But, Stigler also had rare praise for Schumpeter:
There is splendor in Schumpeter’s contempt for those who explain and
appraise theories by the venal motives that their authors conceivably
nurtured. There is intellectual chivalry in his attempts to divorce the
quality of the analyses from the policies to which they were married.
There is magnanimity and generosity in the treatment of almost every
minor economist, and of course these are the ones who need such
treatment. And there is wit…
(p. 345)
4.2 Another Chicago economist, Frank Knight (himself no mean historian of economic
thought) had what seem to me to be among the most trenchant criticisms of the book.
Although he ended his lengthy essay with a sort of ‘if-cats-can-look-at-kings’ apology,
his review, appearing in the Southern Economic Journal, was clearly admonitory on
several grounds. He took care to notice that if Schumpeter was willing to start with the
Babylonians, albeit with only a brief reference, he surely should have been
23
The Economic Journal, for instance, promised to review it, but I cannot find the review in the
journal, Loring Allen’s reference to the contrary notwithstanding (1991, pp. 215, 218).
24
Economica, by way of contrast, turned to the then very young A.W.Coats to write a review. He
did a discerning job.
25

‘When Mill’s fundamental propositions on capital or Böhm-Bawerk’s three grounds for the
emergence of interest are disposed of in a page or two, not even the expert can claim a full
understanding of Schumpeter’s position’ (p. 344).
able to make some, even if limited, references to Indian (and presumably other Asian)
sources as well. Knight’s point was that Schumpeter’s book was limited to Western
economic thinking, but that even there, Schumpeter failed a real test.
Like several others, Knight noted the anti-British feeling in Schumpeter’s mindset.
Unlike all the others, however, he noted strongly Schumpeter’s clear neglect of the
Protestant (and explicitly the Old Testament) impact on economic thinking. He explicitly
distrusted Schumpeter’s sense of hero-worship—Schumpeter scored individuals on scales
of originality and personal endowment—of course, absent personal moral qualities.
Knight chose to soften that criticism by adding the paradox that if he had to trust
anyone’s judgements, Schumpeter’s would have been among the more reliable.
Most interesting to me, however, was Knight’s observation relating to Schumpeter’s
limited appreciation of the fact that different societies had different ‘utility functions’ (to
employ an accepted neologism). Individualism emerges late in the historical game. And:
Primitive ideas were, necessarily, oriented to order, not to Freedom and
Progress. But under primitive conditions the activities of the money-
lender (even the merchant) can be profoundly disturbing, disastrous. And
medieval society had powerful additional ‘reasons’ in a theory of society
centered on ‘salvation,’ to be achieved through an orthodox creed and
ritual in the custody of a divinely commissioned absolute authority.
(p. 267, emphasis in the original)
4.3 Three English writers sought to target his anti-British judgements and their
implications. I turn first to I.M.D.Little, then to Lionel Robbins, and finally to Mark
Blaug, whose assessment of the book is probably the most carefully reasoned.
While Little’s principal interest seems to lie in criticizing Schumpeter’s discomfort
with welfare economics, I thought his strongest criticism was reserved for Schumpeter’s
virtually total neglect of the influence of Thomas Hobbes on whatever came afterwards.
Hobbes, Little believes (and I share this view), offered economists along with others the

paradigmatical problem; the efforts of most English theorists sought either to deny or to
resolve that problem. From Hobbes comes the streams of thought emerging as
individualism, empiricism, and eventually utilitarianism. But, as Schumpeter’s
interpretation does not stress the Hobbes connection, Schumpeter would have little or no
reason to employ Hobbes as the hinge between the medieval traditions and what I tend to
call the modern.
Lionel Robbins first took pains to indicate how beautifully prepared Schumpeter had
been by his connections and training in Vienna (then bathed in intellectual sunshine) to
undertake the task of writing a massive (too massive, in Robbins’ opinion (Robbins,
1955, p. 4)) treatise on the whole subject of economics. After the usual bows in the
direction of some personal nil nisi bonum rule, Robbins got down to his task.
Robbins, like Schumpeter, was a man of great culture, wide reading, and many
friendships. Unlike Schumpeter, Robbins harbored virtually no religious sympathies,
Instead, he was a Common Sense Englishman with faith in the perfectibility of man
through study and the uses of reason; in short, he embraced British Utilitarianism,
something which Schumpeter did not accept either as a workable philosophy or, even
less, as a substitute for religious convictions. Thus, much of Schumpeter’s erudition,
based as it was on a sophisticated Continental Catholicism, not only left Robbins cold,
but clearly he paid no attention to it.
In general, Robbins thought that Schumpeter’s bias against classical economics
reflected the feelings of someone outside the ‘true’ Utilitarian tradition. Robbins wrote
that Schumpeter’s perception of the influence of Bentham’s and James Mills’
Utilitarianism was distorted; most English writers were more balanced in their
assumptions of the meaning and consequence of that doctrine.
However, it is when Robbins sets out to demolish Schumpeter’s scaler system of hero
ratings that he scores his truest hits. Robbins’s approach is to attack first the textual
validity of Schumpeter’s assertions (1) of Smith’s place in the scheme of things, (2) of
Ricardo’s influence, (3) of Cournot’s analytical skills, and (4) of Marshall’s writings and
influence, and second to demonstrate that Schumpeter’s treatment of Walras was biased
in the other direction. Schumpeter, according to Robbins, clearly did not apply the same

rigor in assessing Walras as he did elsewhere (Robbins 1955, pp. 4–5).
Clearly what Robbins dismissed was the basic Schumpeterian schema, which
separated what went earlier from the economics of the British classical school-giving to
the former the split between real philosopher/theologians and mere pamphleteers. The
main casualty was Adam Smith’s reputation: put against such philosopher/theologians as
Plato, Aristotle, and Aquinas, Smith becomes a small potato. Schumpeter’s implication
(never really stated) that Ricardo had a good bit of the pamphleteer in his writings, tended
further to denigrate his opinion of the majesty of the British contribution. But it would be
an error to conclude that the thoughtful Robbins was unimpressed with what Schumpeter
had to say in 400 pages about the classical British tradition.
Robbins lauded Schumpeter’s treatment of economics since 1870, but noted rather
trenchantly that in contrast to Schumpeter’s rule, individual writers, not the schools of
thought, are what is to be judged. It is in this sense that Robbins thought that Schumpeter
clearly underrated Marshall and treated a supposed neglect by Marshall of Jevons, of von
Thünen, and of Cournot and Dupuit with scorn. He thought that Schumpeter’s treatment
of Walras was designed so as to protect both himself and Walras from criticisms that
Edgeworth and Marshall were Walras’s betters both with regard to vision and to technical
detail.
26

While Robbins chose to end his essay with a pastoral reminiscence of his last meeting
with Schumpeter, the important thing is the thrust of an Englishman against someone
who may have been an Anglophile in his youth (prior to World War I), but who was very
different in his maturity and old age.
27



26 Later, when Lionel Robbins (1955) was to suggest that he disputed Schumpeter’s ranking
Walras ahead of Ricardo, I think that Lord Robbins missed the underlying point. Ricardo’s

substance was based squarely on a Benthamite pedestal displaying at best only one limited aspect
of human frailty-cum-choice, while Walras’s substance was based on the greater foundation of
mathematical logic and the Cartesian perception of cosmic system.
27 The pastoral reference is to the last time when Schumpeter and Robbins met; it was ‘a lovely
day in June [in the middle 1930s]…and, as we glided down the Thames between Twickenham and
Datchet, I can still see him, cheerfully ensconced in the prow of our ship, surrounded by the eager
spirits of the day, Nicky Kaldor, Abba Lerner, Victor Edelberg, Ursala Hicks-Webb, as she then
was, the master-organizer of the party-the four fingers and the thumb of each hand pressed against
those of the other, discoursing with urbanity and wit on theorems and personalities’ (p. 22).

Somewhat later on, Mark Blaug was to put this line of criticism in a different way, but
with much more precision and clearly more bite. In his authoritative statement-cum-
textbook (1962, etc.), Blaug takes most of Schumpeter’s assertions about what he set out
to do and then measures them against what he actually did. Of course, it was the same
with Schumpeter as with many others: the reach was greater than the grasp. Most
importantly, Blaug struck at Schumpeter’s belief that ideology could be separated from
science. But Blaug’s blow, unlike Ronald Meek’s (to which we will come shortly), was
not aimed with the view that one’s directions are shaped by one’s environment; rather,
where Schumpeter asserted that in the making of theory, particularly when it dealt with
statistical factual observation, one could strip from the science one’s ideological
commitments, Blaug asserts that the stripping occurs when one sees the results of the true
scientific applications only after testing the constructs under differing conditions. Blaug,
something of a Popperian, is also something of a logician; and between the two, Blaug
fashions his measuring rod. Blaug, like Schumpeter, does not suffer from observable
doubt; nonetheless, in my judgement, he offers, scattered throughout his book, the most
penetrating, detailed analyses of Schumpeter’s treatise.
4.4 Another critical attack came, as one might expect, from the Marxian corner, in the
person of Ronald Meek. Published in the Scottish Journal of Political Economy in 1957,
Meek’s essay, ‘Is Economics Biased? A Heretical View of a Leading Thesis in
Schumpeter’s History,’ attacks frontally Schumpeter’s problem of separating science and

ideology, and in so doing turns to the thorny issue of whether the filiation of ideas
invariably leads to progress. Meek understands Schumpeter’s fascination with Marxism,
but insists that it was so endowed with a visceral distaste for Marx that Schumpeter was
rendered unreliable in making his judgements. Marx had argued that economics was
making scientific progress until the 1830s and then went off on a bourgeois kick.
Marxians argue, writes Meek, that during the Patristic-Scholastic phase the writings
tended to identify what prices ought to be; during the Neo-Scholastic-Mercantilist phase
the writings tended to explain why things sold at the prices they did, and in the classical
stage the writings tended to identify the competitive equilibrium and the amount of labor
power consumed in the manufacture of goods. Schumpeter, by contrast, thought that the
Patristic-Scholastic writers had developed a theory of utility and scarcity. What emerged
afterwards contained much side-tracking as well as clear error.
Meek’s argument is most clearly appreciated when it comes to consideration of
marginal analysis, something which Schumpeter thought was real science and
ideologically neutral. Meek thinks that marginal analysis reflects the nexus between men
(the producers) and goods, whereas the earlier classical analysis reflected the nexus
between men (the workers) and the owners. Consequently, there was no great advance
with the advent of marginal analysis; if anything, it led to the examination of things other
than what was important—namely social relationships and the production process.
4.5 Having thus laid out several lines of criticism of Schumpeter’s book, let me turn to
one of the more masterful reviews, that of Jacob Viner which stresses the virtues of the
work:
It is when Schumpeter is dealing with authors whose analytical quality he
rates highly and whose economic analysis constituted a complex and
coordinated system that he rises to his highest level in his book. His
reports of these systems are magnificent feats of summarization. In
outlining the analytical framework of these systems, moreover, he brings
clearly into the light the fullness of their achievement and enables us to
read these authors henceforth with deeper understanding and appreciation.
It is the substantial portions of the book which he devotes to exposition,

appraisal, and praise of the economic analysis of Cantillon, Quesnay,
Marx, Jevons, Menger and Böhm-Bawerk, Cournot, and Walras—and less
enthusiastically, Adam Smith, Marshall, and Fisher—which constitute its
most valuable contribution. Nowhere else, I think, in the literature of our
discipline, can one find, within comparable limitations of space, as
brilliant, and as self-effacing, exposition by one economist, himself a
master, of the analytical achievements of other economists.
(p. 899, emphasis added).
The foregoing is not presented as though Viner did not have major disagreements, which
are presented logically and comprehensively. I still find Viner’s case against
Schumpeter’s treatment of Ricardo the best yet.
4.6 Limitations of space preclude any more than the merest reference to O.H. Taylor’s
(Schumpeter’s colleague who regularly had taught the History of Economic Thought at
Harvard) generally laudatory review in the Review of Economics and Statistics, or
G.B.Richardson’s critical and laudatory essay in the Oxford Economic Papers, or of a
1956 general review essay (containing other books as well) by V.W.Bladen in the
Canadian Journal of Economics and Political Science.
I am left, however, to report just one additional criticism, to be found in Arnold
Heertje’s biography of Schumpeter in The New Palgrave.
Reading Schumpeter, one realizes that his lasting significance stems from
historical description and non-mathematical theoretical analysis. His
inability to put his ideas about the development of economic life into a
mathematical form may eventually change our assessment of him. But
whatever the final evaluation of Schumpeter may be, it cannot be denied
that he gave new direction to the development of economic science by
posing some entirely new questions. Schumpeter’s preoccupation with the
dynamics of economic life broke the spell of the static approach to
economic problems.
Throughout his life Schumpeter was an enfant terrible, who was
always ready to take extreme positions for the sake of argument, and often

seized the chance to irritate people. But he was also a giant on whose
shoulders many later scholars contributing to economic science stood. As
an economist he is no longer in the shadow of Keynes, but in the centre of
the economic scene, both in the theoretical and empirical sense.
(Heertje, 1987, at p. 266).
V MY ASSESSMENT OF THE BOOK
5.1 What is outstanding in this work in my estimation is first the scope of Schumpeter’s
vision and secondly the evidence of breadth of execution. I believe that since its
publication, two, perhaps three, other books offering a vision of comparable (but not
necessarily of equal) scope have appeared. They are works by Ben B.Seligman (1962),
Wesley Clair Mitchell (1967, 1969), and Karl Pribram (1983). The latter two were also
published posthumously, but the material they were based upon was more complete than
was the case here.
5.2 The Seligman book studies the history of economics from the standpoint of an
increasing emphasis on analytical (meaning generally geometric and algebraic)
technique. As a study, I think it reflects a dismay (perhaps even a disillusionment) about
the directions that economics has taken, particularly since the dominant influence of Paul
A.Samuelson’s 1947 The Foundations of Economic Analysis. It is a readable book, but its
vision is narrowly reactive, and I think that the mere mention of it suffices for our
purposes.
5.3 The Mitchell study, Types of Economic Theory: From Mercantilism to
Institutionalism, on the other hand, is magisterial. In its form it is a well-revised transcript
of a student’s shorthand transcription of several sets of Mitchell’s lecture notes by Joseph
Dorfman, the noted historian of American economics.
28
Mitchell’s approach, reduced
here almost to the point of triviality, is an interpretation of how economic thinking
mirrored society’s adaptation principally to the phenomena of modern (post-Industrial
Revolution) industrialization and modern industrialized urban life.
29

Economic theory, in
Mitchell’s mature and considered judgement, was essentially a set of somewhat
idiosyncratic explanations by a group of bright economists seeking to explain in terms
familiar to themselves empirical phenomena associated with the aforementioned social
processes. In common with Schumpeter, Mitchell thought theory was about meanings,
usually of observable phenomena.
5.4 I believe that Pribram’s book, A History of Economic Reasoning, is another
example of a magisterial interpretation. Pribram’s approach, also reduced to something
28
I have not included any discussion of Dorfman’s five-volume encyclopedic masterpiece, The
Economic Mind in American Civilization, principally because it deals only with the evolution of
thought within a geographically determined framework. Nonetheless, it serves as the prototypical
factual summary of the evolution of the discipline.
29
Mitchell, himself, did not focus consciously on the process of modern urbanization, but I believe
that a sophisticated reading of what he covered also included that phenomenon, even if not
consciously articulated.
approaching triviality, is that from the time of Plato until the present, economics, as a
type of thinking, has sought to harmonize two quite opposing methods, a priorism and
empiricism. Such was the problem faced by Aristotle in contemplating Plato’s essences;
such was the problem faced by the Franciscan, Roger Bacon,
30
in facing the Dominicans
and what later became the Cartesian influence; such was the division between the 19th-
century Kantians and the Hegelians, the division between the Communists and the
Fascists during the 1930s, and such has been the division between the internationalists
(the American post-World War II Free Traders) and the ‘autarkic nationalists’ (meaning
the Keynesian-influenced British).
5.5 What Schumpeter offered in the History of Economic Analysis, again reduced to
something almost approaching triviality, is the view that understanding economic

phenomena, after abstracting what one understood from ideological preferences, depends
in large part on the epistemological methods one employs, but that each of these methods
has its own historico-sociological experience. He came, particularly in his later years, to
the view that one has to appreciate the way that what one borrows affects whatever one
has. As I interpret this point my example is that in employing the calculus, economists
borrowed a method originally designed for physical mechanics, and that the physics
discipline’s fascination with explaining the equilibrium of forces was translated in
economics into a fascination with a static equilibrium, not at all suited for a process
which was essentially biological, organic, and ever-mutating.
31
When Schumpeter wrote
of dynamic general equilibrium he had in mind something quite different from a
‘Newtonian’-Golden Fleece. Pribram, also educated at the University of Vienna (he was
von Wieser’s principal assistant), like Schumpeter expressed the view that British and
American economics was seriously constrained by the influence of Benthamite
utilitarianism.
5.6 I come now to my own principal criticism of what Schumpeter offered us, namely his
vision. Blaug’s careful reading of what Schumpeter promised and what he delivered
shows that they were not the same. Query, if one is the more important than the other, is
the delivery necessarily the basis for the ultimate assessment? If so, then one does not
understand the unique place of visions. But, will any dream do? Not likely! What sets
Schumpeter’s dream above the others’ is the multiplicity and complexities of its parts.
But, assuming that Schumpeter sought to offer a vision, how can his vision be judged?
Hayek, in some senses a product of the same Viennese Gymnasium-mold which produced
Schumpeter, offers the beginnings of an interesting comparison and ultimate criticism.
30
Perhaps because I am better versed in English secular literature than I am in Latin theological
literature, I prefer as the prototype not Roger Bacon (1214–94) but Francis Bacon (1561–1626).
31
There are several ways of viewing the process of looking for equilibrium. One, the Newtonian, is

determinate: if Jupiter wobbles, one can ultimately not only figure out why, but should be able to
confirm the source through cognition (albeit with a better telescope). The second one, which can be
termed agricultural, postulates that by controlling the inputs, the outpt can be determined within
limits (e.g. change the temperature, and the tomatoes will come to market sooner or later). The third
approach, the Shackelian, suggests that there is no way to determine equilibrium; in the struggle
between well-matched adversaries there is no way to predict whether there will be an outcome,
much less what it involves.