Joseph Schumpeter (1883-1950) is one of the most fascinating and
influential economists of the twentieth century, renowned for his
brilliant and unorthodox insights into the nature of capitalism. His
students include leading economists such as Paul Samuelson, Robert Solow
and the former chairman of the Federal Reserve, Alan Greenspan.
The Theory of Economic Development is one of Schumpeter's most important
books and the one that made him famous. He poses a fundamental question:
why does economic development proceed cyclically rather than evenly?
Turning prevailing economic theory, which approached economics as
equilibrium, on its head, Schumpeter argues it is because economics is
constantly transformed by its own internal forces. These forces are the
'circular flow' of economic life; economic development, characterised by
disruption and innovation; and finally, the levers that push and pull
capitalism including credit, profit and interest. These are all
manifested in the 'business cycle', one of Schumpeter's major
contributions to understanding economics and now a perennial feature of
virtually all economics and business curricula. He is also the first
economist to place the entrepreneur at the heart of capitalism,
anticipating subsequent fascination with entrepreneurship in popular
business and management writing. Schumpeter also lays the groundwork for
his subsequent, highly influential idea of the 'creative destruction'
characteristic of radical and rapid economic change.
The Theory of Economic Development remains a vital, magisterial account
of economics and the nature of capitalism whose many insights remain
highly relevant today.
This Routledge Classics edition includes a new Introduction by Richard
Swedberg.
