Schumpeter and the essence of profit

Kakarot-Handtke, Egmont (2011): Schumpeter and the essence of profit.

Abstract

Schumpeter had a clear vision of the developing economy, but he did not formalize it. The quest for a germane formal basis is in the following guided by the general question: what is the minimum set of foundational propositions for a consistent reconstruction of the evolving money economy? We start with three structural axioms. The claim of generality entails that it should be possible to free Schumpeter’s approach from its irksomeWalrasian legacy and to give a consistent formal account of the elementary circular flow that served him as a backdrop for the analysis of the entrepreneur-driven market system.

• Item Type: MPRA Paper
• Language: English
• Keywords: New framework of concepts; Structure-centric; Axiom set; Profit; Money; Credit; Structural stress; Catching-up process; Monopoly
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E25 - Aggregate Factor Income Distribution; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E30 - General; E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E10 - General; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General; B - History of Economic Thought, Methodology, and Heterodox Approaches > B4 - Economic Methodology > B41 - Economic Methodology

References

Ackerman, F. (2004). Still Dead After All These Years: Interpreting the Failure of General Equilibrium Theory. In F. Ackerman, and A. Nadal (Eds.), The Flawed Foundations of General Equilibrium, pages 14–32. Milton Park: Routledge.

Allen, R. L. (1991). Opening Doors. The Life and Work of Joseph Schumpeter, volume 1. New Brunswick, NJ: Transaction Publishers.

Boylan, T. A., and O’Gorman, P. F. (2007). Axiomatization and Formalism in Economics. Journal of Economic Surveys, 21(2): 426–446.

Chick, V. (1998). On Knowing One’s Place: The Role of Formalism in Economics. The Economic Journal, 108(451): 1859–1869. URL http://www.jstor.org/stable/2565849.

Debreu, G. (1959). Theory of Value. New Haven, London: Yale University Press.

Desai, M. (2008). Profit and Profit Theory. In The New Palgrave Dictionary of Economics Online. Palgrave Macmillan, 2nd edition. URL http://www. dictionaryofeconomics.com/article?id=pde2008_P000213.

Ellerman, D. P. (1986). Property Appropriation and Economic Theory. In P. Mirowski (Ed.), The Reconstruction of Economic Theory, pages 41–92. Boston, MA, Dordrecht, Lancaster: Kluwer-Nijhoff.

Föllmer, H. (1974). Random Economies with Many Interacting Agents. Journal of Mathematical Economics, 1: 51–62.

Hahn, F. (1981). Review of M. Beenstock: A Neoclassical Analysis of Macroeconomic Policy. Economic Journal, 91(364): 1036–1039.

Hahn, F. (1984). Equilibrium and Macroeconomics. Cambridge, MA: MIT Press.

Hanusch, H. (1988). Introduction. In H. Hanusch (Ed.), Evolutionary Economics, pages 1–7. Cambridge, New York, NY, etc.: Cambridge University Press.

Hudson, M. (2010). The Use and Abuse of Mathematical Economics. real-world economics review, (55): 2–22. URL http://rwer.wordpress.com/2010/12/17/rwer-issue-55-michael-hudson-math/.

Kakarot-Handtke, E. (2011a). The Coherency of Money, Profit, Price, and Distribution. SSRN Working Paper Series, pages 1–15. URL http://ssrn.com/abstract=1858031.

Kakarot-Handtke, E. (2011b). Keynes’s Missing Axioms. SSRN Working Paper Series, pages 1–29. URL http://ssrn.com/abstract=1841408.

Kakarot-Handtke, E. (2011c). Properties of an Economy Without Human Beings. SSRN Working Paper Series, pages 1–23. URL http://ssrn.com/abstract=1863788.

Kakarot-Handtke, E. (2011d). The Pure Logic of Value, Profit, Interest. SSRN Working Paper Series, pages 1–21. URL http://ssrn.com/abstract=1838203.

Keynes, J. M. (1973). The General Theory of Employment Interest and Money. The Collected Writings of John Maynard Keynes Vol. VII. London, Basingstoke: Macmillan. (1936).

Kirman, A. (1989). The Intrinsic Limits of Modern Economic Theory: The Emperor has No Clothes. Economic Journal, Supplement: Conference Papers, 99(395): 126–139. URL http://www.jstor.org/stable/2234075.

Kirman, A. (2009). Economic Theory and the Crisis. real-world economics review,(51): 80–83. URL http://www.paecon.net/PAEReview/issue51/Kirman51.pdf.

Kreuzenkamp, H. A., and McAleer, M. (1995). Simplicity, Scientific Inference and Econometric Modeling. Economic Journal, 105: 1–21. URL http://www.jstor.org/stable/2235317.

Lavoie, M. (1992). Foundations of Post-Keynesian Economics. Cheltenham: Edward Elgar.

Leonhard, R. J. (1995). From Parlor Games to Social Science: von Neumann, Morgenstern, and the Creation of Game Theory 1928-1944. Journal of Economic Literature, 33(2): 730–761. URL http://www.jstor.org/stable/2729025.

Mill, J. S. (2006). A System of Logic Ratiocinative and Inductive. Being a Connected View of the Principles of Evidence and the Methods of Scientific Investigation, volume 8 of Collected Works of John Stuart Mill. Indianapolis, IN: Liberty Fund. (1843).

Mirowski, P. (1986). Mathematical Formalism and Economic Explanation. In P. Mirowski (Ed.), The Reconstruction of Economic Theory, pages 179–240. Boston, MA, Dordrecht, Lancaster: Kluwer-Nijhoff.

Morishima, M., and Catephores, G. (1988). Anti-Say’s Law versus Say’s Law: A Change in Paradigm, pages 23–52. Cambridge: Cambridge University Press.

Pålsson Syll, L. (2010). What is (Wrong With) Economic Theory? realworld economics review, (55): 23–57. URL http://www.paecon.net/PAEReview/issue55Syll55.pdf.

Patinkin, D. (1989). Walras’s Law. In J. Eatwell, M. Milgate, and P. Newman (Eds.), General Equilibrium, The New Palgrave, pages 328–339. New York, NY, London: Macmillan.

Popper, K. R. (1980). The Logic of Scientific Discovery. London, Melbourne, Sydney: Hutchison, 10th edition.

Rotheim, R. J. (1981). Keynes’ Monetary Theory of Value (1933). Journal of Post Keynesian Economics, 3(4): 568–585. URL http://www.jstor.org/stable/4537623.

Schmiechen, M. (2009). Newton’s Principia and Related ’Principles' Revisted. Norderstedt: Books on Demand, 2nd edition.

Schumpeter, J. A. (1946). The Decade of the Twenties. 36(2): 1–10.

Schumpeter, J. A. (1954). Economic Doctrine and Method. London: Allen and Unwin.

Schumpeter, J. A. (1970). Wesen und Hauptinhalt der theoretischen Nationalökonomie. Berlin: Duncker und Humblot.

Schumpeter, J. A. (1994). History of Economic Analysis. New York, NY: Oxford University Press.

Schumpeter, J. A. (2008). The Theory of Economic Development. An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. New Brunswick, NJ, London: Transaction Publishers. (1934).

Shaik, A. (1980). Laws of Production and Laws of Algebra: Humbug II. In E. J. Nell (Ed.), Growth, Profits, and Property, pages 80–95. Cambridge, New York, NY, Melbourne: Cambridge University Press.

Slutzky, E. (1937). The Summation of Random Causes as the Source of Cyclic Processes. 5(2): 105–146.

Stolper,W. F. (1988). Development: Theory and Empirical Evidence. In H. Hanusch (Ed.), Evolutionary Economics, pages 9–22. Cambridge, New York, NY, etc.: Cambridge University Press.

von Neumann, J., and Morgenstern, O. (2007). Theory of Games and Economic Behavior. Princeton: Princeton University Press. (1944).

Walsh, V., and Gram, H. (1980). Classical and Neoclassical Theories of General Equilibrium. New York, NY, Oxford: Oxford University Press.

Wicksell, K. (1936). Interest and Prices. London: Macmillan.