Abstract
Joseph Schumpeter and John Kenneth Galbraith were two of the most influential scholars of the previous century addressing the most fundamental questions confronting society—what is the nature of economy and how is it shaping society? At the heart of their work was a concern about the gap between what they perceived to be the standard models in economics and the evolution of the actual economy. In particular, this meant abandoning the standard models of neoclassical economics and instead focusing on what both perceived to be an evolution towards a more managed economy. The purpose of this paper is to explain the relationship between the works of Schumpeter and Galbraith. Perhaps one of the enduring lessons that bonded Schumpeter and Galbraith is their keen focus on how the economy was evolving over time, and with it, the institutional landscape, that carried with it huge implications for public policy.
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Notes
For example, Schumpeter is ranked among the most prominent economists in Linss (2007).
Quoted from Scherer (1992, p. 1417).
Quoted from Rosenberg (1992, p. 197).
Quoted from Business Week, Bonus Issue, 1993, p. 12.
Cited in Mathew Stewart, “The Management Myth,” Atlantic Monthly, June 2006, pp. 80–86, p. 81.
Quoted from David Halberstam (1993, p. 116).
Halberstam (1993, p. 118) corrects this conventional wisdom. What Wilson actually said was, “We at General Motors have always felt that was good for the country was good for General Motors as well”
In fact, Schumpeter himself backed down from making any specific predictions about the inevitable demise of capitalism and emergence of socialism. In his Presidential address at the annual meeting of the American Economic Association, Schumpeter (1950, p. 447) cautioned, “I do not ‘prophesy’ or predict it…(F)actors external to the chosen range of observation may intervene to prevent…consummation.” (Quoted from Scherer 1992).
For a careful analysis of Schumpeter’s prediction that capitalism could not survive, see Scherer (1992).
Quoted from Business Week, Bonus Issue, 1993, p. 14.
“The Rise and Rise of America’s Small Firms,” The Economist, 21 January 1989, pp. 173–174.
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Audretsch, D.B. Joseph Schumpeter and John Kenneth Galbraith: two sides of the same coin?. J Evol Econ 25, 197–214 (2015). https://doi.org/10.1007/s00191-013-0326-4
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DOI: https://doi.org/10.1007/s00191-013-0326-4
Keywords
- Joseph Schumpeter
- John Kenneth Galbraith
- Innovation
- Entrepreneurship
- Economic development
- Capitalism
- Socialism