Regarding Schumpeter, it seems to me that there is a basic issue
underlying most of this discussion, including Solow's criticism of
Schumpeter and the concept of obsolescence in relation to creative
destruction. One can describe this in terms of the notion that there are
two classes of economists.
First, there are those who look at the economic world (economic growth,
economic fluctuations) in terms of mechanical forces, many of which
remain to be discovered by mining the data sets. This view was bolstered
by the macroeconomics boom of the 1950s and 1960s, which incorporated
the fledgling methods of econometrics and mathematical modeling.
Obsolescence, from this point of view, is an event that occurs as time
passes through the operation of the mechanical forces.
Second. there are those who look at the economic world in terms of
distinctly human action. In this view, it is not mechanical forces, but
human entrepreneurship that causes the economic world to be what it is
and to change. The newest of the new growth theory, for example, sees
growth as the consequence of human capital, which distinctly human
actors produce under particular institutional conditions. Obsolescence,
in this view, is due to the invention and innovation of entrepreneurship.
I am not well read on Schumpeter. But all of the things that I have read
by him suggest that he saw the economic world as being
entrepreneurship-driven. Surely this is true of his concept of creative
destruction. The paradox, of course, is his far-fetched prediction that
entrepreneurship would ultimately become routine enough to be capable of
surviving a turn toward socialism.
Pat Gunning
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