Wednesday, 8 September 2010

Schumpeter: from statics to dynamics in economics

Schumpeter spoke of the fundamental need for economic theory to ‘cross the Rubicon’. ‘By “crossing the Rubicon,” I mean this: however important those occasional excursions into sequence analysis may have been, they left the main body of economic theory on the “static” bank of the river; the thing to do is not to supplement static theory by the booty brought back from these excursions but to replace it by a system of general economic dynamics into which statics would enter as a special case.’ [J. Schumpeter, History of Economic Analysis (New York: OUP, 1954) 1160. P. McShane, Introduction, For a New Political Economy, CWL 21, xxv.]

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