Appraising Schumpeter's 'Essence' after 100 Years: From Walrasian Economics to Evolutionary Economics

Schumpeter’s unique type of evolutionary analysis can hardly be understood unless we recognise that he developed it in relation to a study of the strength and weaknesses of the Walrasian form of Neoclassical Economics. This development was largely performed in his first book Wesen und Hauptinhalt der theoretischen Nationalökonomie. This German-language book - which in English might be called ‘Essence and Scope of Theoretical Economics’ - was published a century ago (in 1908). Different readings of Wesen provide many clues about the emergence and structure of Schumpeter’s programme for teaching and research. This programme included a modernisation of static economic analysis but he concentrated on the difficult extension of economic analysis to cover economic evolution. Schumpeter thought that this extension required a break with basic neoclassical assumptions, but he tried to avoid controversy by presenting it as only requiring the introduction of innovative entrepreneurs into the set-up of the Walrasian System. Actually, he could easily define the function of his type of entrepreneurs in this manner, but the analysis of the overall process of evolution required a radical reinterpretation of the system of general economic equilibrium. He thus made clear that he could not accept the standard interpretation of the quick Walrasian process of adaptation (tâtonnement). Instead, he saw the innovative transformation of routine behaviour as a relatively slow and conflict-ridden process. This reinterpretation helped him to sketch out his theory of economic business cycles as reflecting the waveform process of economic evolution under capitalism.Economic statics; evolutionary dynamics; business cycles; Joseph A. Schumpeter; Léon Walras

Escaping Satiation in an Evolutionary Model of Structural Economic Dynamics

This paper presents the problem of satiation in relation to a model of evolutionary endogenous growth. The model represents an attempt to provide an evolutionary economic micro foundation to Pasinetti's scheme of the structural economic dynamics of a labour economy. Like this scheme the model deals with an economic system with a varying number of sectors, each of which is producing a consumption good. The goods are produced within consumer-producer firms which organise both production and consumption for their workers. Through innovative activities firms increase their productivity with respect to individual goods. The long-run consequence of this is that labour becomes available for the production of new consumption goods. If such goods are not provided to a sufficient degree, "technological unemployment" will emerge. If there is slow productivity development in the production of new goods, the overall rate of growth will slow down irrespectively of productivity growth in old sectors. Thus, to enhance long-term growth there is a need of "anticipatory R&D", i.e. R&D which produces designs for novel consumption goods and increases productivity in the production of these goods.Evolutionary modelling, endogenous growth and development, structural economic dynamics, satiation of demand, Robinson Crusoe.

The Dynamics of the Organisation of Industry

The paper presents and formalises an approach to the evolution of the organisation of industry which starts from multi-activity firms, and which relates to economists like Young, Stigler, and Richardson. To capture the open-ended process of disintegration of industry, the paper operates with decomposable tasks and gives an account of the vertical and horizontal structure of production by means of weighted trees — in the graphtheoretical sense. Based on this addition to the analytical toolbox, the paper gives an account of the decomposition of industry as driven by the structural innovations and process innovations of firms that specialise and exchange in an open-ended evolutionary process.Vertical disintegration, horizontal disintegration, production trees, specialisation of production, specialisation of R&D, George B. Richardson

Population Thinking and Evolutionary Economic Analysis: Exploring Marshall's Fable of the Trees

It is increasingly recognised that population thinking is a basic characteristic of evolutionary economics. By taking its starting point in what is here called Marshall's fable of the trees, the paper demonstrates that there are several forms of population thinking. The most basic form is intra-population thinking for single populations, and this thinking easily extends to structured populations, where selection takes place at several levels. But there is also a need of applying inter-population thinking to the co-evolution of populations and intra-to-inter population thinking to the emergence of new populations. To transform these forms of population thinking into evolutionary analyses, there is a need of simple analytical tools. The paper emphasises a simple and basic tool for population thinking 'Price' equation. This little known equation provides a surprisingly powerful tool for the partitioning of overall evolutionary change into a selection effect and what may be called an innovation effect. This partitioning serves as a means of accounting for evolution and as a starting point for the explanation of evolution. The applications of Price's equation cover relatively short-term evolutionary change within individual industries as well as the study of more complexly structured populations of firms. It also, to some extent, helps to understand the effects of co-evolution between populations and the emergence of new populations.Population thinking; Alfred Marshall; statistical analysis of economic evolution; Price'

Constraints on Gauge Field Production during Inflation

In order to gain new insights into the gauge field couplings in the early universe, we consider the constraints on gauge field production during inflation imposed by requiring that their effect on the CMB anisotropies are subdominant. In particular, we calculate systematically the bispectrum of the primordial curvature perturbation induced by the presence of vector gauge fields during inflation. Using a model independent parametrization in terms of magnetic non-linearity parameters, we calculate for the first time the contribution to the bispectrum from the cross correlation between the inflaton and the magnetic field defined by the gauge field. We then demonstrate that in a very general class of models, the bispectrum induced by the cross correlation between the inflaton and the magnetic field can be dominating compared with the non-Gaussianity induced by magnetic fields when the cross correlation between the magnetic field and the inflaton is ignored.Comment: 34 pages, 4 figures. V2: notation improve

On Resumming Inflationary Perturbations beyond One-loop

It is well known that the correlation functions of a scalar field in a quasi-de Sitter space exhibit at the loop level cumulative infra-red effects proportional to the total number of e-foldings of inflation. Using the in-in formalism, we explore the behavior of these infra-red effects in the large N limit of an O(N) invariant scalar field theory with quartic self-interactions. By resumming all higher-order loop diagrams non-perturbatively, we show that the connected four-point correlation function, which is a signal of non-Gaussianity, is non-perturbatively enhanced with respect to its tree-level value.Comment: 17 pages, v2: minor corrections, to appear in jca