Skip to main content
SpringerLink
Log in

Schumpeter’s Split Between “Pure” Economics and Institutional Economics: Why Methodological Individualism Was Not Fully Considered

  • Chapter
  • First Online:
Neglected Links in Economics and Society

  • 221 Accesses

Abstract

While Joseph A. Schumpeter is classified as a pioneer of evolutionary economics in a wide sense and of entrepreneurship and innovation management in a narrower sense, Schumpeter is less known for his contributions in the area of scientific methodology and history of science. The chapter deals with methodological premises in Schumpeter’s scientific positioning. In 1908, in his Das Wesen und der Hauptinhalt der theoretischen Nationalökonomie, Schumpeter developed and pioneered his methodological individualism which is very much acknowledged. However, comparing these early positions with methodological writings in his History of Economic Analysis (1954) shows that he has not really shifted from methodological individualism to an institutional perspective that addresses the academic interplay and sees economic action rooted in historical predispositions, paths, and social constraints.

Bögenhold, Dieter. Schumpeter’s Split Between “Pure” Economics and Institutional Economics: Why Methodological Individualism was not Fully Considered, in: International Advances of Economic Research, 2018, Vol. 24 (3), 253–264.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
eBook
USD 16.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 129.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 129.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Similar content being viewed by others

Notes

  1. 1.

    For a discussion of Schumpeter within his times and in relation to his contemporaries, see Cantner and Dopfner (2015), also Michaelides and Milios (2009, 2015).

  2. 2.

    Reading Menger in light of new institutional economics (NIE), it looks as if a more direct line leads from NIE back to Schmoller, as the counterpart of Menger within the first battle of methods rather than to Menger. “Schmoller’s critique of classical economics is strikingly similar to that made more recently by Ronald Coase—the ‘father’ of the New Institutional Economics” (Furubotn & Richter, 2005, p. 41). Schmoller insisted on the importance of comparative institutional analysis which is so central for current new institutional economics. “He considered such topics as evolution, feelings, and norms, as some modem institutional economists do” (Furubotn & Richter, 2005, p. 42). However, reading new institutional economics as a discussion of organizational forms and efficiency (Williamson, 1973, 1985), the recent level of discussion and terminological apparatus has become much more elaborated than the early discussion of Schmoller or Menger could do at their time (Ménard & Shirley, 2008).

  3. 3.

    For a discussion of the Homo sapiens oeconomicus and different taxonomies see Dopfner (2004).

References

  • Arrow, K. J. (1994). Methodological Individualism and Social Knowledge. American Economic Review, 84(2), 1–9.

    Google Scholar 

  • Backhaus, J., & Hansen, R. (2000). Methodenstreit in der Nationalökonomie. Journal for General Philosophy of Science, 31(2), 307–336.

    Article  Google Scholar 

  • Bögenhold, D. (2008). Economics, Sociology, History: Notes on Their Loss of Unity, Their Need for Re-integration and the Current Relevance of the Controversy Between Carl Menger and Gustav von Schmoller. Forum for Social Economics, 37(2), 85–101.

    Article  Google Scholar 

  • Bögenhold, D. (2014). Schumpeter as a Universal Social Theorist. Atlantic Economic Journal, 42(3), 205–215.

    Article  Google Scholar 

  • Cantner, U., & Dopfner, K. (2015). Schumpeter and His Contemporaries. Journal of Evolutionary Economics, 25(1), 1–20.

    Article  Google Scholar 

  • Coleman, J. S. (1990). Foundations of social theory. Belkman Press.

    Google Scholar 

  • Davis, J. B. (2016). Hodgson, Cumulative Causation, and Reflexive Economic Agents. In F. Gagliardi & D. Gindis (Eds.), Institutions and the Evolution of Capitalism (pp. 78–91). Edward Elgar Publishing.

    Google Scholar 

  • Dopfner, K. (2004). The Economic Agent as Rule Maker and Rule User: Homo Sapiens Oeconomicus. Journal of Evolutionary Economics, 14(2), 177–195.

    Article  Google Scholar 

  • Elster, J. (1982). The Case for Methodological Individualism. Theory and Society, 11(4), 453–482.

    Google Scholar 

  • Fagerberg, J. (2003). Schumpeter and the Revival of Evolutionary Economics: An Appraisal of the Literature. Journal of Evolutionary Economics, 13(2), 125–159.

    Article  Google Scholar 

  • Furubotn, E. G., & Richter, R. (2005). Institutions and Economic Theory. The Contribution of the New Institutional Economics. The University of Michigan Press.

    Book  Google Scholar 

  • Granovetter, M. S. (1992). Economic Institutions as Social Constructions: A Framework for Analysis. Acta Sociologica, 35(1), 3–11.

    Article  Google Scholar 

  • Granovetter, M. S. (2017). Society and Economy: Framework and Principles. The Beknap Press of Harvard University Press.

    Book  Google Scholar 

  • Hayek, F. v. (1945). The Use of Knowledge in Society. American Economic Review, 39(4), 19–30.

    Google Scholar 

  • Heertje, A. (2004). Schumpeter and Methodological Individualism. Journal of Evolutionary Economics, 14, 153–156.

    Article  Google Scholar 

  • Hodgson, G. M. (1998). The Approach of Institutional Economics. Journal of Economic Literature, 36(1), 166–192.

    Google Scholar 

  • Hodgson, G. M. (2007). Meanings of Methodological Individualism. Journal of Economic Methodology, 14(2), 211–226.

    Article  Google Scholar 

  • Hodgson, G. M. (2012). From Pleasure Machines to Moral Communities. An Evolutionary Economics Without Homo Oeconomicus. Chicago University Press.

    Book  Google Scholar 

  • Hodgson, G. M. (2015). Conceptualizing Capitalism. Institutions, Evolution, Future. Chicago University Press.

    Book  Google Scholar 

  • Kasper, W., Streit, M. E., & Boettke, P. J. (2012). Institutional Economics. Property, Competition, Policies. Edward Elgar.

    Google Scholar 

  • Kolev, S. (2015). Ordoliberalism and the Austrian School. In C. J. Coyne & P. J. Boettke (Eds.), The Oxford Handbook of Austrian Economics (pp. 419–444). Oxford University Press.

    Google Scholar 

  • Kurz, H. (2012). Schumpeter’s New Combinations: Revisiting His Theorie der wirtschaftlichen Entwicklung on the Occasion of Its Centenary. Journal of Evolutionary Economics, 22(5), 871–899.

    Article  Google Scholar 

  • Kurz, H. (2015). The Beat of the Economic Heart: Joseph Schumpeter and Arthur Spiethoff on Business Cycles. Journal of Evolutionary Economics, 25(1), 147–162.

    Article  Google Scholar 

  • Lindemans, J. W. (2012). Methodological Individualism and Cultural Evolution: Ontogenetic and Phylogenetic Approaches to Social Order. Quarterly Journal of Economics, 15(3), 331–369.

    Google Scholar 

  • Louzek, M. (2011). The Battle of Methods in Economics. The Classical Methodenstreit–Menger vs Schmoller. The American Journal of Economics and Sociology, 70(2), 439–463.

    Article  Google Scholar 

  • Ménard, C., & Shirley, M. M. (Eds.). (2008). Introduction. Handbook of New Institutional Economics (pp. 1–20). Springer.

    Google Scholar 

  • Menger, C. (1976 [1871]). Principles of Economics. NY University Press.

    Google Scholar 

  • Michaelides, P. G., & Milios, J. G. (2009). Joseph Schumpeter and the German historical School. Cambridge Journal of Economics, 33(3), 495–516.

    Article  Google Scholar 

  • Michaelides, P. G., & Milios, J. G. (2015). The Schumpeter-Hilferding Nexus. Journal of Evolutionary Economics, 25(1), 133–146.

    Article  Google Scholar 

  • Neck, R. (2014). On Austrian Economics and the Economics of Carl Menger. Atlantic Economic Journal, 42(3), 217–227.

    Article  Google Scholar 

  • Neck, R. (2015). The Positivist Dispute After 50 Years–An Unrepentant ‘Positivist’ View. Journal of Classical Sociology, 15(2), 185–190.

    Article  Google Scholar 

  • North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge University Press.

    Book  Google Scholar 

  • Schumpeter, J. A. (1906). Über die mathematische Methode der theoretischen Ökonomie. Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung, 15, 30–49.

    Google Scholar 

  • Schumpeter, J. A. (1908). Das Wesen und der Hauptinhalt der theoretischen Nationalökonomie. Duncker and Humblot.

    Google Scholar 

  • Schumpeter, J. A. (1914 [Engl. Transl. 1954]). Epochen der Dogmen- und Methodengeschichte. In K. Bücher, J. A. Schumpeter, & F. V. Wieser (Eds.), Grundriß der der Sozialökonomik, Vol. 1, Grundlagen der Wirtschaft (pp. 19–124). J.C.B. Mohr.

    Google Scholar 

  • Schumpeter, J. A. (1915). Wie studiert man Sozialwissenschaft? In Schriften des Sozialwissenschaftlichen Akademischen Vereins in Czernowitz (pp. 5–44). Duncker and Humblot.

    Google Scholar 

  • Schumpeter, J. A. (1926). Gustav von Schmoller und die Probleme von heute. Schmollers Jahrbuch für Gesetzgebung. Verwaltung und Volkswirtschaft, 50, 337–388.

    Google Scholar 

  • Schumpeter, J. A. (1939). Business Cycles: A Theoretical, Historical and Statistical Analysis of the Capitalist Process (Vol. 2). McGraw Hill.

    Google Scholar 

  • Schumpeter, J. A. (1942). Capitalism, Socialism, and Democracy. Harper.

    Google Scholar 

  • Schumpeter, J. A. (1952). Aufsätze zur ökonomischen Theorie. J.C.B. Mohr.

    Google Scholar 

  • Schumpeter, J. A. (1953). Aufsätze zur Soziologie. J. C. B. Mohr.

    Google Scholar 

  • Schumpeter, J. A. (1954). History of Economic Analysis. Oxford University Press.

    Google Scholar 

  • Schumpeter, J. A. (1963 [1912]). The Theory of Economic Development. Oxford University Press.

    Google Scholar 

  • Shionoya, Y. (2005). The Soul of the German Historical School: Methodological Essays on Schmoller, Weber and Schumpeter. Springer.

    Google Scholar 

  • Sombart, W. (1982 [1931]). Wirtschaft. In A. Vierkandt (Ed.), Handwörterbuch der Soziologie (pp. 209–216). Enke.

    Google Scholar 

  • Swedberg, R. (1991). The man and his work. In R. Swedberg (Ed.), Joseph A. Schumpeter. The economics and sociology of capitalism (pp. 3–98). Princeton University Press.

    Chapter  Google Scholar 

  • Udehn, L. (2002). The Changing Face of Methodological Individualism. Annual Review of Sociology, 28, 479–507.

    Article  Google Scholar 

  • Urquhart, R. (2013). Taking the Modern for Nature: Methodological Individualism as an Interesting Mistake. European Journal in the History of Economic Thought, 20(5), 812–844.

    Article  Google Scholar 

  • Vercelli, A. (2016). Microfoundations, Methodological Individualism and Alternative Economic Visions. Review of Political Economy, 28(1), 153–167.

    Article  Google Scholar 

  • Williamson, O. E. (1973). Markets and Hierarchies: Some Elementary Considerations. The American Economic Review, 63(2), 316–325.

    Google Scholar 

  • Williamson, O. E. (1985). The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. Free Press.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Faculty of Economics and Management Department of Sociology, University of Klagenfurt, Klagenfurt, Austria

    Dieter Bögenhold

Authors
  1. Dieter Bögenhold
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Dieter Bögenhold .

Rights and permissions

Reprints and permissions

Copyright information

© 2021 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Bögenhold, D. (2021). Schumpeter’s Split Between “Pure” Economics and Institutional Economics: Why Methodological Individualism Was Not Fully Considered. In: Neglected Links in Economics and Society. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-79193-3_9

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-79193-3_9

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-030-79192-6

  • Online ISBN: 978-3-030-79193-3

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation