Schumpeter and the Political Economy of Change

Schumpeter and the Political Economy of Change

Schumpeter and the Political Economy of Change

Schumpeter and the Political Economy of Change

Synopsis

Recognizing the lack of insightful treatment that neoclassical economics has given to spatial and structural dimensions, this work applies the Schumpeterian dialectic to political economy in an attempt to explain the role played by change in profit-seeking economies. Topics covered include applying the dialectic to local and regional contexts in advanced economies, multinational business organizations and their impact on individual economies, and the emergence of service industries. A summary section discusses public sector concerns, and assesses what government can and cannot do to influence change in the face of automatic capitalistic processes.

Excerpt

In an effort to establish a basis for what is to follow, this chapter will lay out in summary form Joseph Schumpeter's ideas concerning how change takes place under capitalism. No attempt will be made to summarize, assess, or critique his overall contribution to economic thought. Instead a compact, pared down explanation of his dialectic will be provided. It will deal with the role of innovations and their agents--entrepreneurs. the process through which innovations break the economy out of the operating mode of the circular flow and, through cyclical movements, cause it to grow, or expand, will be addressed. Space constraints have dictated a conceptual framework largely devoid of the rich historical examples that liberally garnish Schumpeter's work. Nonetheless, it is hoped that what is included here will supply a functional overview of how he believed change occurs under capitalism.

According to Joseph Schumpeter, capitalism is an evolutionary process (1950, 82). He went on to explain that capitalism is by its very nature a method of economic change and thus can never . . .

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