The Theory of Economic Development

Schumpeter proclaims in this classic analysis of capitalist society first published in 1911 that economics is a natural self regulating mechanism when undisturbed by “social and other meddlers.”  In his preface he argues that despite weaknesses, theories are based on logic and provide structure for understanding fact. Schumpeter then proceeds to demonstrate that there are underlying principles in the phenomena of money, credit and entrepreneurial profit that complement his earlier theories of interest and the business cycle. Of those who argue against him, Schumpeter asks a fundamental question, “is it really artificial to keep separate the phenomena incidental to running a firm and the phenomena incidental to starting a new one?” In his answers, Schumpeter offers guidance to third world politicians no less than first world businessmen.

From Book (Harvard University Press), published on 01-12-1934


  • Schumpeter, Joseph A.


  • Innovation research

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