DeLong on Schumpeter

by Liberty and Power

Brad DeLong on Schumpeter in the Chronicle.
Good piece.

More Comments:

Gus diZerega - 12/4/2007

If so, Steve, then much of that conversation was probably based on a web of mutual misunderstandings. We may have talked past one another.

I had tried to argue that 'Austrian' (meaning Kirznerian) entrepreneurs pushed towards equilibrium, Schumpeterian entrepreneurs disequilibrated, and in the real world, entrepreneurs did both, but often disproportionately one or the other.

Entrepreneurial profit is made possible by Schumpeterian entrepreneurs and Austrian entrepreneurs nibble away at it.

My basic point was accepted by the critics, but I was told that Kirzner was not simply of the view that entrepreneurs were the market's equilibrating forces, that he saw they could both push towards equilibrium and push towards disequilibrium. I should drop that comparison - which I was happy to do if I was wrong in my interpretation.

And thus I did till I read above that I was not alone.

(For the benefit of those not at the gathering, we had been discussing whether analogous processes could be found in other emergent social systems such as science and democracy.)

Steven Horwitz - 12/4/2007

Gus,

What was said, if memory serves, is that Kirzner's entrepreneur does not lead us to a general equilibrium in the neoclassical sense. I could be wrong in my memory of that conversation though.

Gus diZerega - 12/4/2007

When at a recent conference I said Kirzner saw entrepreneurship as equilibrating and Schumpeter saw it as disequilibrating, I was told I was wrong about Kirzner. This was what I remembered from reading him long ago - in Competition and Entrepreneurship. But I was told I didn't read him with enough subtlety. I'm not going back to read the book again - too many books too few hours.

So who is right? Those who denied this interpretation of Kirzner, or those who read him this way?

Aeon J. Skoble - 12/4/2007

I was just glad to see that readers of the Chronicle would get a chance to hear about Schumpeter at all! But thanks to you also for posting this other material.

Mark Brady - 12/3/2007

Aeon, thanks for this, which otherwise I would have missed.

Many people think of Schumpeter as an Austrian economist, which he was in the literal sense, although he was outside of the Austrian school.

It's worth pointing out for the benefit of readers who are not familiar with Austrian economics that whereas Schumpeter saw entrepreneurship as disequilibrating, Kirzner saw entrepreneurship as equilibrating.

Kirzner explains why here. Scroll down for the exchange on Schumpeter.