Re: Schumpeter and the Capitalist Process.

G'day all,

A quote which I hope supplements the thoughts of Ganesh, Kenneth and
Bruce as nicely as I think it does:

"... Schumpeter's approach was from business cycle to capitalism whereas
Marx's was the reverse, from capitalism to business cycles ... Marx's
success in long-run prognostications was due to his particular attention
to the treatment of his data.  Or, phrased otherwise, Marx regarded as
variables of his system that which is generally considered as 'given'
data by modern economists.  To a degree, such a contrast holds true
between Marx and Schumpeter ... Marx's explanation of business cycles
depended on the inclusion of certain institutional factors into the
category og variables - the inclusion of which is not essential fro
Schumpeter's explanation.  Not to make explicit the specific
institutional characteristics of capitalism was, for Marx, to give up
the very task of explaining the phenomenon of business cycles. 
Schumpeter, on the other hand, carries out first the process of
abstraction on the capitalist process - the abstraction of which would,
according to Marx, necessarily involve the throwing away of those
elements which are responsible for crises - and then loads the
responsibility for cyclical phenomena, not on the institutional
characteristics, but on the act of innovation which in itself transcends
the institutional specificity."
(Shigeto Tsuru (1997).  *Institutional Economics Revisited* [CUP] pages 55-58)

Cheers,
Rob.

kenneth couesbouc wrote:
> 
>  Ganesh,
>        Schumpeter considers business cycles to be
> historic individuals. Can one then suppose that the
> Kondratieff cycle is due to the use of fossil
> fuels(1887-1943 for coal and 1944-2000 for crude oil);
> the Kuznets cycle to construction, naturally; the
> Juglar cycle to machines and the Kitchin cycle
> to...what? And, if production determins development,
> why does it speed up and slow down at regular
> intervals? Why did the dotcom development suddenly
> fail in 2000? Why didn't all that 3rd generation stuff
> keep development going? Whereas the curve was right on
> cue. So how can this predictability of historic
> individuals be explained?
>  Writing about Hegel in a letter to Engels, Marx said
> he had climbed on the shoulders of a giant and stood
> him on his head. Or words to that effect. (I seem to
> remember reading this in the introduction to the
> Penguin edition of Capital, vol.2) Dare we do this to
> Schumpeter??
>       Regards, Kenneth
> 
>  --- Trichur Ganesh <tganesh@stlawu.edu> a écrit : >
> Kenneth:
> > A few responses come to my mind:
> > (1)  Despite what you write, for Schumpeter, each
> > cycle is a "historic
> > individual" with its own historical specificity.  On
> > this Schumpeter is
> > unambiguous and this is what I read too in his work.
> >  Cf. Business
> > Cycles vol.1, Part 1; cf. also Theory of Economic
> > Development, chapter
> > on business cycles.  I point this out to argue that
> > Schumpeter's attempt
> > was precisely to explain each cycle individually
> > even as he utilised a
> > general theory of innovations for that purpose.  (On
> > Kuznets I am on
> > relatively unfamiliar terrain: I do recall that his
> > focus was on
> > construction cycles).
> > (2)  Schumpeter was less concerned with growth and
> > more with the
> > dynamics of "development" or Entwicklung, historical
> > processes by which
> > the contours of the capitalist system as a system,
> > unfolds over time and
> > space.
> > (3) Consumer Demand for Schumpeter, was a
> > derivative.  Production was of
> > determining importance.  I am inclined to think that
> > it is still true
> > today, though it is a much more contested terrain
> > than in earlier
> > periods (cf. N.Klein's No Logo).   Keynes' (i.e.
> > Marx's) theory of
> > inadequate "effective demand" is a pointer to the
> > incapacity of the
> > masses who have made possible the great mass
> > production, to buy what
> > they have produced .  But the production process
> > itself, i.e., what is
> > to be produced, has little to do with consumer
> > demand.  'Consumer
> > sovereignty' is more a longing than a 'reality',
> > though one could also
> > say that 'you only get what you ask for'.  But what
> > is it that "you" ask
> > for?  Mass assembly line production?  Sweatshop
> > labor production?  Is
> > there really consumer sovereignty regarding demand
> > for the products of
> > transnational enterprises of today or the vertically
> > integrated
> > multinational corporations of the 1890s-1960s?
> > (4)  Debt is endogenous to the functioning of the
> > economic system.  Who
> > is the one who goes into debt and when do problems
> > of debt arise?
> > Capitalist entrepreneurs go into debt to finance the
> > new plant and new
> > machinery with which to plunge into production, and
> > to unleash processes
> > of 'creative destruction', which when complete
> > provide rewards
> > ('profits') that are adequate to re-pay the interest
> > and loans from
> > banks taken to finance the investment.  States also
> > go into debt, often
> > catastrophically.  Spanish bankruptcy in the 16th
> > and 17th centuries,
> > French bankruptcies in the 17th and 18th centuries,
> > these are
> > historically documented (cf. Braudel).  There are
> > limits to the
> > Schumpeterian construct.  What explains the debt
> > crises of the 1980s and
> > of the late 1990s?  On the one hand you may say
> > demand for debt, but the
> > demand is forthcoming precisely because there is an
> > overabundance of
> > liquidity, as there was in the 1980s when third
> > world states began to
> > borrow avidly from transnational and private banks
> > and then found that
> > they could not repay the loans.  Such debt crises
> > are common to all
> > financial expansions.  So it is not as though there
> > is no space in the
> > Marx/Schumpeterian process of creative destruction
> > to accomodate debt
> > crises.  And it is not as though no one has taken
> > them into account
> > either.    Ganesh Trichur.
> >
> 
> 
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