Note 75 — Chapter V

Cf. the writer's "Schumpeter's Dynamic Economics," Political Science Quarterly, Dec. 1915. Schumpeter's theory, as there presented, is based on the brief discussion in his Theorie der wirtschaftlichen Entwicklung (Leipzig, 1912), pp. 61 et seq., 105, 166-667, 116, 464, and on Schumpeter's verbal expositions of the theory during his American trip. Since that account was published, Professor W. C. Mitchell has given an account of Schumpeter's doctrine, based on the fuller discussion in Schumpeter's Wesen und Hauptinhalt der theoretischen Nationalökonomie, which is in accord with the account here given. (Mitchell, in Papers and Proceedings, Supplement to March, 1916, American Econ. Rev., p. 150.) Mitchell attributes the essential elements of Schumpeter's theory to Walras. The first exposition in English of the conception, so far as the present writer is aware, is in Irving Fisher's Mathematical Investigations in the Theory of Value and Prices, Trans. Conn. Acad. of Arts and Sciences, 1892. Professor Fisher, in his preface, accords priority to Jevons, Auspitz and Lieben, and to Walras. The conception is not to be found in Jevons, though many of the ideas involved in it are. The first non-mathematical exposition of the doctrine, so far as I know, is by Schumpeter. As will be made clear in a footnote at the end of the present chapter, neither Wicksteed nor Davenport has really forced the problem through, to the full equilibrium picture, and neither has escaped the Austrian circle. I do not concur with Professor Mitchell's interpretation of Wicksteed on this point. It may well be that mathematical method, with a system of simultaneous equations, was necessary for the development of the idea. If so, it illustrates both the strength and the weakness of mathematical economic theory: it clarifies thinking, but it gets no causal theory! At all events, no causal theory emerges in this case.