Dear Pat, You're right about the two types of economists, and about Schumpeter's tangled feelings towards the two. I'd call the one neoclassical/old-Marxist and the other Austrian/pomo-marxist. Put that way it seems that the difference is the weight each gives to new ideas in explaining the modern world, namely, zero and 80%. I would quarrel only with your kindly treatment of new growth theory, whose conception of human capital has no space for ideas: it's just one high-school graduate piled on top of another! Once the ideas are there we will all accede to accumulationist notions of how they spread. After all, the high-pressure steam engine needed to be invented only once. What is hard to formulate---and what Schumpeter was groping for, I think---is an account of the First Industrial Revolution that is not mechanical. A mechanized view---that, say, the original accumulation of capital did the trick---runs up against the objection that original accumulations were available in ancient Egypt or in medieval France or in Ming China, and none resulted in an explosion of the production possibility curve. So to make sense of 1700-1900 in Europe and its offshoots a really new, Kirznerian alertness, Hayekian discovery, true creativity (thus pomo marxists) seems to be required, eh? And those seem to entail a free society. Like most economists, Schumpeter loved the "precise" machinery (look at his advocacy of econometrics: would he approve of the monster he helped create?). But his Romantic attachment to innovation and new ideas as an explanation for the success of capitalism led him in another direction, didn't it? Regards, Deirdre McCloskey