Schumpeter&Equilibrium

rakesh bhandari djones at uclink.berkeley.edu
Thu Apr 25 04:26:19 MDT 1996


Thanks to Hans D. for getting me to think about so many different problems.

1. Schumpeter as bourgeois Marxist:  I didn't quite understand Derrida's
recent essay in *New Left Review*, but in the same issue there is a very,
very good essay by George Catephores on Schumpeter as the bourgeois Marx.
Schumpeter's work can be read as a reply to Marx on many levels: the nature
and origin of profit; the nature and tendencies of cycles; the consequences
of the concentration and centralization of capital.

There is much discussion of two Schumpeters, but this usually refers to the
early Schumpeterian glorification of the entrepreneur and the later
Schumpeter's promulgation of big business.

Fewer have commented on the gap between the pure theoretical Schumpeter of
Theory of Economic Development and Business Cycles and the posthumously
published analytical historian of economic thought.  But it has been
suggested that Schumpeter covers his complete break with neoclassical
economics in his theoretical work with a paean to Walras in his *History*.

I think that Nathan Rosenberg has argued persuasively that Schumpeter's
theoretical work is often a devastating criticism of neo-classical
economics.

2. Re the Bohm-Bawerk/Schumpeter controversy over interest: Schumpeter has
wrongly been accussed of denying that interest can exist in the circular
flow.  Stolper clarifies Schumpeter's position. Schumpeter somehow wanted
to grasp the connection between credit and the impetuous advance of the
productive forces which for him was the insignia  of capital (Schumpeter
was very fond of some of the formulations in *The Communist Manifesto* in
this regard).

  Money was thus coming to play a different function under capitalism than
it had before and Schumpeter attempted to capture this in theory.  I know
of no work comparing Schumpeter's and Marx's theories of credit money,
though Robert Guttmann does write about this.

3. As for Schumpeter's value theory.  Most of the literature does not delve
into this (Robert Heilbroner is a great exception--see his *Behind the Veil
of Economics* where he links Schumpeter's value theory to his elite theory
of history!).

 Schumpeter both recognized and forgot that there were important
differences between Marx's and Ricardo's theory.

 Riccardo Bellofiore has argued that Marx and Schumpeter both did not
reduce value theory to a stationary theory of prices.  Schumpeter himself
is forced to admit into theory monopolistic practices as the only method
*by which to conserve value* against the threat unleashed by gales of
creative destruction.

Thanks again.
rb



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