------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (August 2006)
Arnold Heertje, _Schumpeter on the Economics of Innovation and the
Development of Capitalism_. Cheltenham, UK: Edward Elgar, 2006. vii +
142 pp. $90 (cloth), ISBN: 1-84542-445-X.
Reviewed for EH.NET by Mark W. Frank, Department of Economics and
International Business, Sam Houston State University.
This book presents a collection of eleven reprinted essays written by
Arnold Heertje (Professor Emeritus, University of Amsterdam), the
outcome of twenty-five years of research on the work of Joseph
Schumpeter. The book offers a solid introduction into the insights of
Schumpeter's vision, as well as an interesting first-hand account on
the evolution of Schumpeter's influence within economics over the
past several decades.
The book's eleven essays are organized into three thematic parts. The
first part contains three essays which present a broad picture of
Schumpeter's life and thoughts. The first essay is, in fact, a
reprint of Heertje's wonderfully concise and informative biographical
sketch of Schumpeter, originally published in _The New Palgrave_
(1987). The second essay comments on Schumpeter's understanding of
technical change in a dynamic economic system. The third offers
insights into Schumpeter's role in the development of methodological
individualism, a concept fundamental to the public-choice theory of
James Buchanan and Gordon Tullock.
The second part of the book consists of two essays which concern
Schumpeter's view on the sustainability of capitalism, and a third
essay, that deals almost exclusively with the work of Joseph
Stiglitz. While the third essay (chapter 6, "From Schumpeter to
Stiglitz") is largely out of place in a book on Schumpeter, the first
two essays constitute the most provocative and insightful parts of
the entire book. These essays concern Schumpeter's famous contention
in _Capitalism, Socialism and Democracy_ (1942) that capitalism would
fail, despite its successes, and be replaced by a socialist society.
With the advantage of hindsight, Heertje argues Schumpeter largely
missed the mark on this prediction, and considers inconsistencies in
Schumpeter's thought to be the primary cause. In Heertje's view, the
importance of small firms and new entrepreneurs, so prominent in
Schumpeter's earlier work, is missing in his later work, replaced
with the routine mechanization of large monopolistic firms. Had
Schumpeter remained faithful to his original connotation of
entrepreneurs, according to Heertje, he would not have lost faith in
the creative destruction of capitalism. But such are the inherent
contradictions of Schumpeter, in his writings as well as in his life.
The third and final part consists of two essays concerning the role
of technical change and economic growth in the writings of
Schumpeter, one essay comparing Schumpeter's work with that of
Keynes, and two essays reviewing more recent works by
neo-Schumpeterians. Though the thematic connection of these five
essays is less obvious, the attempt to place Schumpeter in a larger
historical context is well valued. Heertje also shows us in these
essays that he is no blind disciple of Schumpeter, despite devoting
several decades to the study of his work. Heertje's repeated
criticisms of Schumpeter's lack of mathematical rigor, for example,
are quite striking (though justified). According to Heertje,
Schumpeter's work should be seen as ramified analysis and
description, not true economic theory. While Schumpeter's counterpart
Keynes was able to successfully use the mathematical apparatus of
this time, Schumpeter's visions of economic discontinuity lacked such
rigor. Heertje views this as a clear limiting factor in the early
acceptance of Schumpeter's work, though recent advances in endogenous
growth theory, non-linear dynamics, and chaos theory have given rise
to a new and promising generation of neo-Schumpeterians.
On the whole, this book offers a nice presentation of Schumpeter's
views on technical change, innovation, and entrepreneurs from one of
the leading scholars on Schumpeter's life and work. The book will
certainly be of value to scholars of Schumpeter, but will also be of
interest to novice-Schumpeterians interested in a concise and
accessible critique on Schumpeter's work.
Mark W. Frank is Associate Professor of Economics at Sam Houston
State University, and author of "Schumpeter on Entrepreneurs and
Innovation: A Reappraisal" _Journal of the History of Economic
Thought_ (1998): 505-16.
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Published by EH.Net (August 2006). All EH.Net reviews are archived at
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