The Theory of Economic Development. An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle.

The work contains among the clearest statements of Schumpeter's radical conception of "circular flow", the business cycle, and the role of the entrepreneur. This translation features a new preface by the author. The Theory of Economic Development has been judged as Schumpeter's "most innovative work" (ANB). In it, Schumpeter "replaced Marx's greedy, bloodsucking capitalist by the dynamic innovating entrepreneur as the linchpin of the capitalist system, responsible not just for technical progress but the very existence of a positive rate of profit on capital. Distinguishing between 'inventions' and 'innovations', he stressed the fact that scientific and technical inventions amount to nothing unless they are adopted, which calls for as much daring and imagination as the original act of discovery by the scientist or engineer. Furthermore, the 'innovations' that count for economic progress consist of much more than the new machines that capture popular attention: they take the form of new products, new sources of supply, new forms of industrial and financial organization just as much as of new methods of production. The capitalist earns 'interest', but the entrepreneur earns 'profit' and without the dynamic change created by the entrepreneur, the rate of profit would soon fall to zero. His theory of the entrepreneur has ever since been the starting point for every subsequent discussion of entrepreneurship" (Blaug, pp. 215-16). This work was published as Volume XLVI in the Harvard Economic Studies series. Redvers Opie, the translator, was a personal friend of the author and a son-in-law of F. W. Taussig. Swedberg S.003. Mark Blaug, Great Economists before Keynes, 1985).