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Some wisdom from Schumpeter

The latest EconTalk is a conversation with Thomas McCraw about the life and ideas of Schumpeter based on his recent bio of the man. The book is beautifully written and McCraw is very articulate. Schumpeter’s dynamic view of competition is his single most important contribution to economics but because it is not easily formalised in mathematics, it has been ignored by most modern economists.

Here are three wonderful quotes from Schumpeter. The first is from Capitalism, Socialism, and Democracy. The last two are from his diary, quoted by McCraw.

There are no doubt some things available to the modern workman that
Louis XIV himself would have been delighted to have—modern dentistry
for instance. On the whole, however, a budget on that level had little
that really mattered to gain from capitalist achievement. Even speed of
traveling may be assumed to have been a minor consideration for so very
dignified a gentleman. Electric lighting is no great boon to anyone who
has enough money to buy a sufficient number of candles and to pay
servants to attend them. It is the cheap cloth, the cheap cotton and
rayon fabric, boots, motorcars and so on that are the typical
achievements of capitalist production, and not as rule improvements
that would mean much to the rich man.  Queen Elizabeth owned silk
stockings. The capitalist achievement does not typically consist in
providing more silk stockings for queens but in bringing them within
reach of factory girls in return for steadily decreasing amounts of

Humanity does not care for freedom. The mass of the people realize they are not up to it: what they want is being fed, led, amused, and above everything, drilled. But they do care for the phrase.

Politicians are like bad horsemen who are so preoccupied with keeping in the saddle that they can’t bother about where they go.


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