The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle
Citation: Joseph A. Schumpeter (1934) The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle.
Theoretical and practical relevance:
Schumpeter is hugely influential, although not in mainstream economnics. He is most influential in the study of innovation and corporate strategy. Although his book is long and dense, he is cited most explicitly for his theory of ecomic production as a form of "combinations". The section, on page 14 of his book includes:
- Technologically as well as economically considered, to produce means to combine the things and forces within our reach. Every method of production signifies some such definite combination. Different methods of production can only be distinguished by the manner of the combination, that is either by the objects combined or by the relation between their qualities. Every concrete act of production embodies for us, in for us, such a combination. This concept may be extended even to transportation and so forth, in short to everything that is production in the widest sense. An enterprise as such and even the productive conditions of the whole economic systems we shall also regard as "combinations." (p. 14)
Scholars of innovation tend to borrow directly from this in terms of defining innovation as novel combinations of existing resources. Growth and change, in this model, can be thought of different types of combinations.