Posts Tagged ‘Schumpeter’

An Economics Forecast

Saturday, 7 March 2009

A minor prediction: Over the next few weeks, news stories about the economy are going to make increasing reference to Joseph Alois Schumpeter.

Schumpeter was an economist from the Austrian School. His theory of the business cycle was, however, distinct from that which has come to be seen as the Austrian School theory of business cycles (which theory I will not labor here). Schumpeter believed that economic crises were processes of creative destruction, whereby economies restructured in consequences of accepting pent-up innovations (typically technological) incompatible with the existing order, but ultimately beneficial.

Unless this theory is in some way trivialized, it does not explain the present crisis; but I none-the-less expect various journalists and alleged economists to pitch exactly the idea that it does. And I would actually not be surprised for the economy to emerge significantly restructured, but that would be more a matter of a sort of economic gerrymandering by the Democratic Party, taking advantage of the crisis.