Entrepreneurs “from within”? Schumpeter and the emergence of pure novelty

Abstract

1. Introduction

As Rosenberg wrote a half-century ago, the economic theory of innovation is still occupying Schumpeter’s conceptual edifice. This was largely true in 1976. It remains true in 2024. Antonelli (2015) even suggested that Schumpeter should be counted among the fathers of the systemic and interactive theories of innovation that developed in the 1980s (Kline and Rosenberg, 1986). If this were the case, it would imply, among other things, that Schumpeter would have developed an endogenous theory of economic change that explains the apparition of pure novelty. Some authors showed that this preoccupation was indeed central throughout his life (Becker and Knudsen, 2005).

Schumpeter views capitalism as a self-transforming system in which the introduction and selection of innovation plays a major role (Swedberg, 1991; McCraw, 2007). As opposed to neo-classical equilibrium analysis, in which economic change exclusively comes from exogenous shocks that oblige economic actors to passively adapt (this change can be analyzed by an analytical method that he was the first to coin as “comparative static”; Schumpeter, 1908 [2017]), Schumpeter, from his very first publications until the last ones, continuously insists on the endogenous nature of economic development. As Becker and Knudsen stressed, “the objective of Schumpeter is to exclude exogenous shocks as explanation for economic development” (Schumpeter et al., 1932 [2005]: 111).

To do so, Schumpeter relies on the entrepreneur who is in charge of the introduction of novelty and innovation. It is the action of the entrepreneur that, by introducing innovation, continuously modifies equilibrium conditions, thus generating economic changes. However, this central role attributed to the entrepreneur by Schumpeter leads to a paradox (Encinar and Munoz, 2006). Indeed, the Schumpeterian entrepreneur is largely exogenous to the socioeconomic sphere or “an outsider who enters the economic system guided by animal spirit” (Antonelli, 2015: 111). As a consequence, the Schumpeterian entrepreneur does not provide an adequate explanation or understanding of the genuine origins of novelty. To coin Cantner, the entrepreneur in Schumpeter is the “deus ex-machina of change” (2016: 702). The entrepreneur only provides a name, a label to economic development, but it does not explain how it is generated (Becker and Knudsen, 2005).

Interestingly, Schumpeter himself realized that. In a text written in 1932 but only rediscovered and translated into English in 2005 (Becker and Knudsen, 2005), he writes that the concept of the entrepreneur (that he calls “creator personality”) is “merely a descriptive term that helps identify novelty, but nothing has been explained thereby” (Schumpeter et al., 1932 [2005]: 113). This short confession leads Becker and Knudsen to conclude:

“Development”’s dismissal of entrepreneurship as the explanation of discontinuities is the rare instance where Schumpeter himself indicates that he is still searching for an entirely adequate explanation of the novel social phenomena he had characterized as discontinuities. But as a close reading of Schumpeter’s works through time reveals, the problem of accounting for discontinuities that “Development” identifies is probably a life-long companion of Schumpeter’s academic career. Thus, Schumpeter continued to adapt his explanation of discontinuities as well as his concept of development indicating that he apparently never got it quite right (Becker and Knudsen, 2005: 111).

So, ultimately, why was Schumpeter unable to conceive of a truly endogenous theory of novelty? Some authors have suggested that Schumpeter remained constrained by his methodological choices and, in particular, his desire to stick to a Walrasian-inspired analytical framework (Graça Moura, 2003, 2015, 2017). This suggests that Schumpeter’s failure to endogenize novelty would simply be the result of his methodological mismatch stemming from his Walrasian commitment.

In this paper, we provide an alternative explanation. We argue that Schumpeter’s inability to build an endogenous theory of pure novelty is not only the mere logical consequence of his unsuitable methodological approach but also the inevitable outcome of his “theory” of how novelty is generated. To do so, we provide a detailed analysis of Schumpeter’s theory of pure novelty which, we show, is based on an individual and elitist dimension of entrepreneurship and an energetic and vitalist axiom of social change, which is by nature hardly compatible with endogenous evolution. Moreover, we show that Schumpeter’s attachment to an elitist, individual, and energetic theory of pure novelty, while having undergone significant refinements over time, persisted throughout his life.

To understand that, we introduce two very important distinctions. Building upon Becker et al. (2006), a first distinction revolves around the two different research questions in Schumpeter’s agenda: one related to the diffusion of innovation in the economic realm and its effects in terms of market structure (concentration, instability, etc.) and further business opportunities emerging “from within” (subsequent innovations, business cycles, etc.). This is essentially an ex-post research question as it focuses on what happens once novelty is brought into economic life; the second research question is, in contrast, far more ambitious as it aims to explain the creative sources of the innovation ex-ante, that is to say, how pure novelty can emerge endogenously in the economic circuit. Although not always explicit, this is undoubtedly for Schumpeter the “greatest unmet scientific challenge” (Becker et al., 2006: 356). The second distinction we introduce relates to the types of entrepreneurs in Schumpeter’s work: the individual and energetic entrepreneur, whom Schumpeter sometimes calls the “creator personality,” often associated with the young Schumpeter; and the routinized and depersonalized entrepreneurial function, which can be exercised within large organizations or even centralized states, often associated with the old Schumpeter.

Our work shows that, while changes in Schumpeter’s theory of the entrepreneur, with a more and more important focus on the depersonalized and routinized entrepreneurial function, have led to an increasing endogenization of innovation (i.e., the ex-post research question), they have been largely ineffective in explaining the emergence of novelty in the first place (i.e., the ex-ante research question), which remains into the hands of the individual and energetic entrepreneur. This is precisely why in Capitalism, Socialism and Democracy (1942) (CSD in the following) Schumpeter predicts that the obsolescence of the entrepreneur as a “creator personality” and the increasing importance of the depersonalized and bureaucratized entrepreneurial function will inevitably lead to the end of economic development and the advent of a socialist mode of economic organization. Yet, for Schumpeter, while the socialist regime is capable of successfully managing a stable growth regime (without disruptive change), it is incapable of generating development, i.e., breakthrough innovations. Only entrepreneurial capitalism, relying on extraordinary individual entrepreneurs motivated by extra-rational elements, can produce pure novelty.

We believe that these findings have important implications for understanding Schumpeter’s thinking and, in particular, his vision of capitalism, socialism, and economic development. In particular, our work adds two things to the existing literature:

• First, we put forward an alternative explanation to Schumpeter’s inability to explain endogenously the emergence of pure novelty. Since Schumpeter is inclined to attribute the emergence of pure novelty only to extraordinary people moved by a source of energy that is largely disconnected from the socioeconomic sphere, he could not develop a consistent endogenous theory of the apparition of pure novelty.

• Second, we show that even though Schumpeter’s theory of the entrepreneur evolved over the course of his life—shifting, as noted by a vast literature, toward a more routinized and depersonalized entrepreneurial function—his view on the emergence of pure novelty remained remarkably stable throughout his life: only the individual and energetic entrepreneur can be the origin of pure novelty. This helps explain the main conclusions the “old” Schumpeter reached about capitalism and socialism.

In the next section, we reformulate Schumpeter’s research agenda to show that the development of an endogenous explanation of pure novelty was an essential part of it. In Sections 3 and 4, we explore Schumpeter’s theory of novelty. We show that it is based on an individual dimension of entrepreneurship (Section 3) and follows from an energetic and vitalist axiom of social change (Section 4). Section 5 offers a reinterpretation of the old Schumpeter and shows that, while, as acknowledged in the literature, there have been clear changes in his thinking on the entrepreneur throughout his life, when it comes to the explanation of pure novelty (i.e., the ex-ante research question), Schumpeter’s view remained remarkably consistent. Section 6 concludes.

2. A reformulation of Schumpeter’s research agenda: explaining the emergence of pure novelty “from within”

The main intellectual agenda of Schumpeter is to account for the dynamics of capitalism through an endogenous explanation for economic change. In his mind, an endogenous explanation must refer to internal factors of the socioeconomic sphere,¹ in contrast to other kinds of causes (political, etc.) that must only “be accepted as data” so that “we must try to abstract from them when working out an explanation of the causation of economic fluctuations properly so called, that is, of those economic changes which are inherent in the working of the economic organisms itself” (1939: 7). This willingness to provide an endogenous explanation is no better illustrated by the use of the term “from within” which appears constantly in his writings, as illustrated, for instance, by this passage when he relates his meeting with Walras:

Walras would have said (and as a matter of fact he did say it to me the only time that I had the opportunity to converse with him) that of course economic life is essentially passive and merely adapts itself to the natural and social influences which may be acting on it, so that the theory of a stationary process constitutes really the whole of theoretical economics and that as economic theorists we cannot say much about the factors that account for historical change […] I felt very strongly that this was wrong and that there was a source of energy within the economic system which would of itself disrupt any equilibrium that might be attained (Schumpeter, 1937: 166).

Importantly, Schumpeter’s intellectual challenge of endogenizing economic change implies accounting not only for the emergence and diffusion of innovation but also for explaining the origin of novelty brought into the economic sphere in the first place (Becker and Knudsen, 2005; Becker et al., 2006; Velardo, 2020). In our view, this, therefore, leads to the coexistence of two very different research questions in Schumpeter’s agenda: One is related to the diffusion, once it has been produced, of novelty within the economic sphere. As stated in the introduction, this is an ex-post research question that focuses mostly on the impact of novelty on firms, markets, and economic structures. It allows accounting properly for the endogenous ex-post effects of innovation into the economic circuit. For example, Schumpeter investigates the locus of innovation (entrepreneurial function), its diffusion (innovation clustering or radical/incremental innovations), and its effects on the economy (creative destruction and economic development).

The second research question focuses on the origins of pure novelty. It relates to the emergence, in the first instance, of pure novelty in social life. Note that Schumpeter’s interest in the emergence of pure novelty goes much beyond economics. It led him to systematically pay attention to phenomena related, for example, to science, politics, or arts. From this perspective, his understanding of economic change can be considered as a local application of a broader theory of social change:

The writer believes, although he cannot stay to show, that the theory here expounded is but a special case, adapted to the economic sphere, of a much larger theory which applies to change in all spheres of social life, science and art included (1939: 97).

The coexistence of these two research questions is reflected in the well-known distinction established by Schumpeter between invention and innovation. This point is stressed by Witt (2002):

the exclusive focus on innovations—submitting that entrepreneurs do not have to search for, discover, or invent the new combinations—is, in effect an attempt to avoid an explanation of the emergence of novelty. (It corresponds to the somewhat artificial distinction between inventive and innovative activities that Schumpeter makes.) (Witt, 2002: 15).

In other words, this distinction quite conveniently allows us to evacuate the ex-ante question related to the origin of novelty and to focus only on innovation, that is, the diffusion and impact of novelty within economics. As explained by Schumpeter himself:

As soon as it is divorced from invention, innovation is readily seen to be a distinct internal factor of change. It is an internal factor because the turning of existing factors of production to new uses is a purely economic process and, in capitalist society, purely a matter of business behavior (1939: 86).

By focusing exclusively on innovation (as distinguished from the process of emergence of the invention in the first place), Schumpeter is therefore able to propose an endogenous theory of economic change, after the introduction of novelty, i.e., ex-post. Innovation indeed reacts to causes that are internal to the economic sphere (competition, market power, market size, market concentration, imitation, etc.). However, this trick does not solve the problem of the endogenous emergence of novelty in the first place. As already mentioned above, although Schumpeter was well aware of the importance of an endogenous explanation of pure novelty production, he never succeeded. In the next two sections, we explain this failure by showing that an endogenous explanation is incompatible with Schumpeter’s fundamental vision of the emergence and production of pure novelty. We show that this vision is indeed based on an individual and elitist dimension of entrepreneurship (Section 3) and follows from an energetic and vitalist axiom of social change (Section 4).

3. An individual and elitist explanation of pure novelty

Schumpeter’s theoretical ambition—to provide a general framework accounting for the emergence of novelty in every area of social life—cannot be confined to pure economic theory and is more aligned with his socioeconomic endeavor. Indeed, Schumpeter’s sociological work could be considered as a “logical priority” (Festré and Garrouste, 2008: 374) to his economic analysis by accounting for behaviors that do not conform to the hedonistic (and static) rational conduct from the Walrasian framework.² Schumpeter himself saw socio-economics as a conceptual bond between history and pure economics, what he called a “reasoned history” (1939: 220), to explain the phenomenon of development. Furthermore, Schumpeter elucidates in Social Classes how leadership and novelty are inherently interconnected. This conceptual linkage is reiterated in Entrepreneur, where he states that “Leadership only has a function when something new has to be carried out” (1928a: 248). Then, to understand correctly how Schumpeter attempted to tackle the issue of novelty in economics, one must look at his analytical effort in socioeconomics.

In “Social Classes” (1927a) Schumpeter built a theory of social order and social change in a complex society through a set of key concepts including social class, social functions, and leadership. Social classes are supposed to perform socially necessary functions that complement each other and sustain a specific social order over time. The hierarchy between social classes is directly linked to leadership. Some social functions involve a greater level of leadership, such as the ones performed by warlords in the medieval era as waging war supposes faculties of command. Leadership therefore “provides a criterion for ranking socially necessary functions above and below one another and not simply for placing them beside each other as mere social necessities” (Schumpeter, 1927a: 158).

Now, importantly for our discussion, even though Schumpeter makes it clear that leadership can be embodied collectively, social leadership remains “always clearly discernible in the actions of the individual and within the social whole” (Schumpeter, 1927a: 165). Leadership is indeed defined as an “aptitude” which is “something that shows itself immediately in the physical individual —much like the color of hair or eyes” (Schumpeter, 1927a: 161). Though individual differences in aptitude for leadership “do not fall into sharply marked categories” (Schumpeter, 1927a: 164) as “most individuals possess it to modest degree, sufficient for the simplest tasks of everyday life” (Schumpeter, 1927a: 165), there is only a minority who has enough to use it as a “special function”. Leadership “emerges only in regards to new individual and social situation and would never exist if individual and national life always ran its course in the same way and by the same routine” (Schumpeter, 1927a: 278). It is then novelty, defined as “doing what has not been done before” (Schumpeter, 1928b: 380), that gives the individual the opportunity to reveal himself as a leader:

Leadership only has a function when something new has to be carried out […] other functions usually associated with the leader-function are accessory, non-essential and conceptually separable from it. If only the execution of routine activity would do when an army is in action […]; if a political body would never encounter new situations […]; if science would not always run into new problems […], then, generally speaking, an organization would still be required, which in the first two cases also would require an administrative hierarchy. Finally, one would also need a somehow structured individual or collegial apex for such a hierarchy – but there would be no need of any “leading men” (Schumpeter, 1928a: 248).

Put differently, “social” or “group leadership” is the social and institutional consolidation of what has been first an individual form of leadership expressed by “leading men” who have succeeded in exploiting new opportunities that are fulfilling new useful social functions. Therefore, for Schumpeter, without any possible doubt, the individual is the “active unit of evolution” (Festré and Garrouste, 2008: 375). Social change, despite the multiple refinements formulated by Schumpeter, remains the action of special individuals who, in contrast with Marxian sociology, can conflict with their social-class interest, allowing them to climb the social ladder, and then alter gradually the social structure as a whole, in getting “along unconventional paths” (Schumpeter, 1927a: 133):

Apart from favorable or unfavorable accidents, we have considered it to be the rule, in cases of ascent or descent within the class, that the class member performs with more or less success than his fellows those activities that he must perform in any event, that are chosen by or imposed on him within his class limitations. […] But there is, of course, still another way that is particularly apposite to the transgression of class barriers. That is to do something altogether different from what is, as it were, ordained to the individual. […] artisan families like the Wurmsers and Fuggers may develop into great merchant dynasties; the modern worker may, in familiar fashion, push his son into the so-called new middle class, or, as we have seen, himself become an entrepreneur—which does not, of itself, constitute class position, but leads to class position (Schumpeter, 1927a: 133).

From here, we can appreciate the analytical difference between class leadership and individual leadership (cf. Figure 1). The first lies in the nature of the function to be carried out without direct concern for novelty. In contrast, the second lies in the individual feat itself, that is regardless of his initial class position, in creating something that did not exist before and that the individual succeeds in asserting it to others. As displayed in Figure 1, individual leadership consists in (i) creating something new that breaks the consensual state of the world and/or (ii) successfully convincing others that such a new element is valuable despite their spontaneous reluctance to novelty. We find here the well-known characteristics of the entrepreneur, both as a “creator personality” in introducing novelty in the social realm (case (i)), and as a “function” in making novelty acceptable for consumers and further imitators (case (ii)). For sure, as detailed in Entrepreneur (1928a), these two criteria are rarely met within the same entrepreneur, which allows the characterization of various “ideal types” ranging from the mere manager to the great captain of industry. In any case, both of these two tasks require “characteristics that are only possessed by a small percentage of the population” (1928a: 250).

Figure 1.

The different types of leadership and their characteristics in the capitalist system, inspired by Entrepreneurs (1928a).

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Then, regardless of space and time, for Schumpeter, the individual action of exceptional men (i.e., a “small percentage of the population”) remains the originator of social change within the social structure and, ultimately, transforms the economic system as a whole. Building on Gislain’s (1991) perspective, we endorse therefore the view that Schumpeter’s analysis of the entrepreneur is characterized by “analytical inegalitarianism,” manifesting as a form of “elitism” due to its reliance on a strong dichotomy between leaders and followers. The influence of Pareto and Mosca, two famous promoters of the elite theory, on Schumpeter is well documented in the literature (Andersen, 2009; Andersen, 2012). Pareto, in particular, proposes a theory of elites that seems to us very close to that implicit in Schumpeter (1949a, c): Although leadership abilities are distributed continuously within the population, only a minority of innately endowed individuals emerge as actual leaders, thereby justifying their hierarchical superiority on others, portrayed as passive masses. The main characteristic of the minority, which places them in a leading position, is a combination of surplus energy, aptitude for leadership, and personality traits (leadership, creativity, intuition, willpower, strength of mind) that cannot be learned but are instead a form of gift for which individuals differ “as they differ in their ability to sing” (Schumpeter, 1927a: 165; see also Schumpeter 1934 [1911]). This surplus is largely exogenous and difficult to acquire through learning. However, it is not necessarily hereditary, thus explaining the circulation of elites dear to Pareto.³

To conclude, even if entrepreneurship as leadership is the result of specific socioeconomic conditions (labeled by Schumpeter as the capitalist order), the engine of social change remains in an ad hoc entrepreneur endowed with extraordinary abilities contrasting with the other agents populating the economy. In the next section, we scrutinize further this point in showing that Schumpeter does not only offer an elitist but also an extra-rationalist ontology of entrepreneurship.

4. An energetic and vitalist axiom of social change

As evidenced in Entrepreneur (1928a), Schumpeter argues that the ultimate engine of social change relies on the feat of individual characteristics that are possessed by only a small percentage of the population. A necessary step toward an endogenous explanation of novelty would then be to look at the internal process by which these leaders manage to create something new. How does the state of the economic system at a given moment induce the act of creation and change by individual leaders? This question can, for instance, be examined through their motivations which could be economic and explicitly aim to modify the circuit. But this is not the direction taken by Schumpeter. His analysis of the entrepreneur’s motivations is very clear on this point:

First of all, there is the dream and the will to found a private kingdom, usually, though not necessarily, also a dynasty […] a sensation of power and independence […] from spiritual ambition down to mere snobbery […] Then there is the will to conquer: the impulse to fight, to prove oneself superior to others, to succeed for the sake, not of the fruits of success, but of success itself […] the financial result is a secondary consideration […] Finally there is the joy of creating, of getting things done, or simply of exercising one’s energy and ingenuity […] Only with the first groups of motives is private property as the result of entrepreneurial activity an essential factor in making it operative (Schumpeter, 1911: 94).

While economic motivations are certainly present, they are clearly not the most important in explaining the emergence of novelty. The Schumpeterian entrepreneur cares about expected profits only as “a secondary consideration.” According to Schumpeter, the entrepreneurs’ main sources of motivation are mostly to be found outside the economic sphere. In other words, Schumpeter does not represent the creative leader as reacting to the economic conditions of the system. On the contrary, Schumpeter’s analysis tends to show that creative leaders mobilize a rationality that is quite different from the hedonistic-optimizing agent. Actually, his statement is even stronger than that. Schumpeter goes so far as to say that substantive rationality is not merely unrelated but opposed to the creative process:

What has been done already has the sharp-edged reality of all the things which we have seen and experienced; the new is only the figment of our imagination. Carrying out a new plan and acting according to a customary one are things as different as making a road and walking on it.

How different a thing is becomes clearer if one bears in mind the impossibility of surveying exhaustively all the effects and counter effects of the projected enterprise. Even as many of them as could in theory be ascertained if one had unlimited time and means must practically remain in the dark. […] Thorough preparatory work, and special knowledge, breadth of intellectual understanding, talent for logical analysis, may, under certain circumstances be sources of failure (Schumpeter, 1934 [1911]: 85, emphasis added).

Some commentators have observed that Schumpeter, like Simon, does not ultimately question the notion of rationality itself, but considers that it can only be approximated in real life. Put otherwise, Schumpeter would be “convinced that improvements in computational and management technique will provide closer and closer approximations to true rationality and may even unbound rationality in some spheres” (Langlois, 2002: 19). Against these points, we argue that Schumpeter does not fully endorse this rationalist view. For sure, he believes that the progress of science does affect the creative process and, in doing so, the entrepreneurial function (cf. also Section 5). However, to say that the rationalist course of knowledge is progressively supplanting the entrepreneurial function does not prove as such that Schumpeter does adhere to a conception of rationality à la Simon. If this were true, it would imply that Schumpeter would see the creative dimension of entrepreneurial leadership (imagination, intuition, ingenuity, etc.) as mere “crutches” that the entrepreneur resorts to because of his limited abilities or because of his lack of knowledge. But, as illustrated in the previous quotation, Schumpeter, instead, describes a fundamental clash between, on the one hand, creative capabilities, and, on the other hand, the rationalist view of the bounded (and substantive) rationality model. Getting more knowledge and having more calculative procedures are not only useless but are, at some point, counterproductive for introducing new things in the economic realm.

Interestingly, Schumpeter does not confine this extra-rationalist route of novelty to entrepreneurship. In a conference given in 1949 entitled “Science and Ideology” he explained how ideology, defined as an individual’s beliefs and convictions resulting from his social position and interests, influences scientific work. However, and quite revealing of Schumpeter’s view about the emergence of radical novelty, this influence is not necessarily seen as negative, quite the contrary. Ideology, Schumpeter claimed, is a set of preconceptions that are, though not evidenced by the rigorous examination of reason, a necessary step of the scientific process (Heilbroner, 1993). Ideology feeds what Schumpeter calls the “vision” of the scientist, which is a prescientific conception of the world made of values and ideals that motivate the scientific endeavor:

It is pertinent to remember another aspect of the relation between ideology and vision. That prescientific cognitive act which is the source of our ideologies is also the prerequisite of our scientific work. No new departure in any science is possible without it. Through it we acquire new material for our scientific endeavors and something to formulate, to defend, to attack. Our stock of facts and tools grows and rejuvenates itself in the process. And so-though we proceed slowly because of our ideologies, we might not proceed at all without them (Schumpeter, 1949b: 359).

On these differences between the logic of scientific proof and the logic of discovery, Schumpeter seems clearly influenced by the theories of H. Poincaré and E. Mach, both cited in his History of Economic Analysis (HEA in the following) (1954). But, beyond that, his extra-rationalist conception of the act of creation echoes somehow the broader intellectual background of his epoch, characterized by a “vitalist” conception of knowledge and science. Santarelli and Pesciarelli (1990: 692) note that in HEA (1954) “Schumpeter describes de Zeitgeist of the age as featuring ‘a current of thought which sets itself against the liberal cult of rationality’.”

For example, Schumpeter mentions the work of Henry Bergson twice in the part IV of HEA (1954), and Leontief recognized the existence of a “remarkable affinity” between “Schumpeter’s economic development and Henry Bergson’s equally famous creative evolution” (Leontief, 1950: 106).⁴ For Bergson people are energized by a vital impulse (“élan vital”) and organize themselves for creative evolution. In the view of Bergson, our intelligence is an important but limited means of access to reality that must leave room for intuition. Intuition allows us to understand observed phenomena in a broader way going beyond ideas and propositions that are widely accepted as scientifically true. In particular, Bergson proposes a nondeterministic conception of the evolutionary process of Tarde, arguing that the successive movements of creation/imitation in human history exceed the causal chains of events identified by the use of reason. According to Phelps “Bergson clearly understands that creativity would no longer exist if we had reached a world of determinism” (2013: 282).

We find here a key idea of Schumpeter according to which reason can only invest novelty retrospectively, that is to say by amputating novelty from its seminal movement. The causal reconstitution conducted by the reason remains artificial because it is made after the facts, missing the vital impulse of the process. Bergson illustrates this point in almost Schumpeterian terms:

The finality it [our reason] understands best is the finality of our industry, in which we work on a model given in advance, that is to say, old or composed of elements already known. As to invention properly so called, which is, however, the point of departure of industry itself, our intellect does not succeed in grasping it in its upspringing, that is to say, in its indivisibility, nor in its fervor, that is to say, in its creativeness. Explaining it always consists in resolving it, it the unforeseeable and new, into elements old or known, arranged in a different order. The intellect can no more admit complete novelty than real becoming; that is to say, here again it lets an essential aspect of life escape, as if it were not intended to think such an object (1907: 164, emphasis added).

In addition, the literature has stressed how much the work of Schumpeter parallels with the Nietzschean vitalism of the Übermensch (Santarelli and Pescialli, 1990; Shionoya, 1997; Muller, 1999).⁵ As opposed to most hedonistic and passive economic actors (the masses), the entrepreneur is looking for hurdles to overcome, for problems to solve. In line with Nietzsche’s philosophy, there is in the entrepreneur a willingness to endanger oneself. To use Phelps words, entrepreneurs are looking for the high level of flourishing (testing, creating, exploring) that is associated with vitalism.

Furthermore, following the path of his professor von Wieser, Schumpeter places the effective action of the individual leader far above his reasoning. Change only arrives by “getting things done” (1911: 94; 1942: 130). Again, this echoes the philosophy of Bergson who considered that only action and instinct can generate something radically new and so that we “must thrust intelligence outside itself by an act of will.”⁶ In “The Sociology of Imperialisms,” Schumpeter refers to this will of action as a stock of “energy” that leaders are supposed to have in excess (1919: 25). The energetic agent can take very diverse social forms according to the period and the institutional environment considered. In warlike societies, this excess of energy is devoted to fighting and finds “its natural complement in war” (Schumpeter, 1919: 25), whereas, in capitalist societies, energy is channeled into entrepreneurship, which is only the continuation of war by other means.

In summary, it is less the consequence of an inappropriate methodology than his deliberate theoretical choices that prevent Schumpeter from endogenizing novelty. Schumpeter’s ontology of the production of pure novelty is incompatible with a perfectly endogenous theory of change because, for him, the emergence of pure novelty depends on (i) extraordinary individuals and (ii) motivated by a source of energy largely disconnected from pure reason. In the following section, we show that although Schumpeter’s vision of the entrepreneur evolved over the course of his life, this ontology remained deeply rooted in him, and helps explain his chronic inability, despite the changes he made, to fully endogenize economic development.

5. The persistence of the individual and energetic entrepreneur: a reinterpretation of the late Schumpeter

5.1 The evolution of Schumpeter’s view on the entrepreneur

Several authors have noted the evolution of Schumpeter’s thought over time, especially concerning the entrepreneur. In particular, Becker and Knudsen (2002) and Becker et al. (2011) note a substantial shift of emphasis between the first edition of Theory of Economic Development (TED in following) in 1911 and the second version published in 1926 (on which the English version of 1934 is based), downplaying the importance of the energetic and individualistic entrepreneur for explaining economic changes.⁷ It is thus common in the literature to distinguish between a “young” and “old” Schumpeter.⁸ This distinction consists of a shift in how innovative activities are conducted, moving from individual innovators in small enterprises to large firms endowed with bureaucratic and depersonalized R&D departments. Schumpeter envisioned this shift in the context of the prodigious progress of rationalist attitudes in society. He continues to mention the pivotal role of the entrepreneur, but within large firms and R&D departments, and he increasingly emphasizes the entrepreneur as a depersonalized function instead of insisting on his individual and exceptional personality traits.

Becker and Knudsen note that “Whereas the entrepreneur of 1911 was a powerful, towering leader, the entrepreneur of 1926 is a much weaker individual” (2002: 391). To explain this weakening of the entrepreneur, Becker and Knudsen (2002) hypothesize that unfortunate personal events in the mid-1920s radically transformed Schumpeter “from a man of immense vitality into a depressed and emotionally broken man” (p. 391). In addition, it is also likely that Schumpeter wished to guard against criticism that was addressed to his 1911 book as being an apology for the entrepreneur (Shionoya, 2007), and to reduce the dependence of his dynamic model on the individual and energetic entrepreneur, who carried far too much explanatory weight on his shoulders.

In this regard, and given the fact that Schumpeter was aware of the incapacity of his entrepreneur to endogenize economic development (Becker and Knudsen, 2005), it is tempting to consider this evolution as a step further in Schumpeter’s difficult quest for endogenizing the emergence of pure novelty. For some commentators, in the second half of his life, Schumpeter would have therefore been able to move away from the initial vision of the exogenous entrepreneur to embrace an almost systemic vision of the innovation process. This view seems to be endorsed, for instance, by Freeman, who explained that the main differences between the “young” and the “old” Schumpeter “are in the incorporation of endogenous scientific and technical activities conducted by large firms” (Freeman, 1982: 214).

To our knowledge, Antonelli (2015) is the one to have pushed this statement the furthest by describing Schumpeter as a pioneering thinker of the systemic approach to innovation. To support his argument Antonelli relies on one of Schumpeter’s last publications, The Creative Response in Economic History (1947), published 3 years before his death. This paper can be considered as the last paper in his life where he detailed his main ideas about capitalism, development, innovation, entrepreneurship (and its decline), credit, and profit. Therefore, for Antonelli this paper “should be considered the result of the successful attempt by Schumpeter to synthesize, into a single integrated and coherent framework, the main results of his life work on the role of innovation in the economy and in economics” (Antonelli, 2015: 100). And, in particular, the main point that Antonelli retains from this paper is that “The late Schumpeter is much closer to the notion of innovation as an emerging property of a system, than the scholars of the entrepreneurial animal spirit would suggest” (Antonelli, 2015: 111).

[For Schumpeter] Firms are able to implement a creative response if the externalities made available by the system are sufficient to support their innovative efforts. If the system is unable to support the firm, its reaction will be adaptive. The quality of the system in terms of externalities is the crucial sorting device. The characteristics of the system determine whether the adaptive or creative response will fail or succeed. The inclusion of system characteristics as a key factor in determining the outcome of individual behavior seems to be a late discovery for Schumpeter, and the result of a final effort to bring together the different threads of his analysis in an integrated framework (Antonelli, 2015: 102 and 103).

However, even if the “old” Schumpeter insists less on the exceptional personality traits of the entrepreneur and if he is much closer to an endogenous theory of innovation (i.e., the ex-post research question), we argue that, with regard to the ex-ante research question, he remains anchored in a vision where pure novelty can only be introduced by exceptional individuals guided by extra-rational elements. In other words, if the role of the individual and energetic entrepreneur is indeed downplayed, it does not disappear. As far as the origin of pure novelty is concerned, the evolution remains more formal than substantial and cannot mask the persistence of the elitist, energetic, and extra-rationalist ontology.⁹

5.2 The persistence of the individual and energetic entrepreneur as the only source of development

Indeed, Schumpeter’s late work almost all continues to convey this same ontology. For example, this is still salient in the 1934 English version of TED where entrepreneurial action requires a tremendous stock of energy:

A new and another kind of effort of will is therefore necessary in order to wrest, amidst the work and care of the daily round, scope and time for conceiving and working out the new combination and to bring oneself to look upon it as a real possibility and not merely as a day-dream. This mental freedom presupposes a great surplus force over the everyday demand and is something peculiar and by nature rare (Schumpeter, 1934 [1911]: 86).

Again, in CSD Schumpeter insists on the exceptionality of the entrepreneur, its energetic ability to strike against the masses, and its extra-rational thinking:

To act with confidence beyond the range of familiar beacons and to overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the entrepreneurial function […] This function consists in getting things done. This social function is already losing importance and is bound to lose it at an accelerating rate in the future […] the romance of earlier commercial venture is rapidly wearing away, because so many more things can be strictly calculated that had of old to be visualized in a flash of genius (CSD, 1942: 130).

Similarly, a careful reading of Creative Response in Economic History (1947) shows that, although there is indeed a greater role attributed to the “system” and a greater emphasis on the entrepreneurial function, Schumpeter continues to insist on the central position of the energetic entrepreneur in the innovation process: “the mechanisms of economic change in capitalist society pivot on entrepreneurial activity […] it is in most cases only one man or a few men who see the new possibility and are able to cope with the resistances and difficulties which action always meets with outside of the ruts of established practices” (Schumpeter, 1947: 150–152). Likewise, he repeatedly insists on the fact that entrepreneurial action rests on intuition, or even “flashes” and the “ability to perceive new opportunities that cannot be proved at the moment at which action has to be taken” ( Schumpeter, 1947: 157), that is to say on faculties that cannot be reduced to substantive rationality. In sum, as observed by Langlois (2002), the theory of the entrepreneur proposed by Schumpeter in this article remains unchanged at least from the mid-1920s and the second publication of TED: “one can find examples from Schumpeter’s work written after 1942 that present very much the same theory of entrepreneurship as does the Theory of Economic Development (Schumpeter, 1947)” (Langlois, 2002: 7).

However, in our view, the best evidence of the fidelity of the “old” Schumpeter to the individual and energetic view of the emergence of pure novelty lies in his analysis of the entrepreneurial obsolescence, which coincides with the end of economic development and with the advent of a socialist mode of economic organization. For us, it is a clear demonstration of the essential role played by the entrepreneur as “creator personality” (as opposed to the entrepreneur as a rational function) in the emergence of pure novelty. To understand that point it is crucial to remember the distinction established by Schumpeter between the concept of “development” as opposed to “growth” (Figure 2). This distinction was already present in the “young” Schumpeter and echoes the distinction between creative and adaptive response in his 1947 paper: Development is triggered by a creative response that generates a qualitative leap while growth is triggered by an adaptive response that only causes incremental changes. This difference is perfectly illustrated in the 1932 article Development. As Becker and Knudsen explain in their introduction:

Figure 2.

Different types of economic regimes.

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Schumpeter consistently made a distinction between incremental change, which he called growth, and a more fundamental discontinuous change, economic development. Development is a discontinuity of the steady state, a disruption of the static equilibrium leading to an indeterminate future equilibrium. Since his early works, Schumpeter had persistently associated development with discontinuity, but in Development, Schumpeter adds precision by defining development as a change from one vector norm to another in such a way that this transition cannot be decomposed into infinitesimal steps (Becker and Knudsen, 2005: 110).

This conceptual distinction between development and growth carries significant implications for Schumpeter’s definition of a steady state. Contrary to being devoid of innovation and growth, the steady state would actually encompass both. Indeed, Schumpeter never believed that innovation could be exhausted. Accordingly, the steady state is a situation of steady growth sustained by continuous incremental innovations that can be rationally planned. Schumpeter sometimes talked about an “equilibrium of growth” (Schumpeter, 1927b: 290). However, this mechanized and routinized progress remains a matter of quantitative improvements of the existing and is far from economic development defined as a qualitative jump toward a new state of the world.

While in CSD Schumpeter does not return explicitly to the distinction between growth and development, a careful reading of the book shows that this distinction remains essential to understanding his argument. Indeed, for Schumpeter, the disappearance of the individual and energetic entrepreneur and the probable advent of socialism inevitably leads to a regime of growth, not of development. In other words, economic development remains exclusively compatible with the presence of individual and energetic entrepreneurs, not with a planned economy and a routinized and depersonalized entrepreneurial function. The whole argument put forward by the “old” Schumpeter (in CSD and elsewhere) can be sketched as follows.

Schumpeter makes the (bitter) observation of the almighty power of scientific progress, which, coupled with the democratic spirit, tends to erode the social structures of capitalism. As a consequence, the production of innovations no longer requires any leadership activities such as risky ventures, unconventional ways of thinking, “evangelization” of the masses, etc. The likely consequence of this rationalization of the innovation process is the disappearance of the individual and energetic entrepreneur. Indeed, in line with his earlier writings, he explains that entrepreneurs can only flourish through and by means of extra-capitalist elements. The entrepreneurial activity is made of an extra-rationalist aspect, or “extra-logical functions” (Langlois, 2002: 18), that is found ultimately in the “energetic surplus” of some rare individuals. Schumpeter even goes so far as to ask if capitalism is not the mere extension of the same feudal regime (1942: 139) as the political authority inherited from feudalism equips capitalism with a “protecting framework not made of bourgeois material” (1942: 138). These institutional survivals provide, on one hand, the “personal force” (1942: 133) of the entrepreneur, and, on the other hand, the “extra-rational loyalties” (1942: 144) of the masses to the social order.

However, as rationalization of economic change progresses, this extra-rationalist aspect of the entrepreneurial activity is gradually doomed to vanish and so does the possibility of generating radical novelty. By extending its empire to all aspects of social life (including morals, traditions, institutions, etc.), capitalist rationalism undermines its symbiotic relationship with the “non-bourgeois stratum” (1942: 167) of the past and thereby opens the way to its own rationalization.¹⁰ Bourgeois rationalism therefore inevitably leads to the disappearance of the individual and energetic entrepreneur, the domination of large corporations in which the entrepreneurial function has not entirely disappeared but is bureaucratized and depersonalized, and, in the end, the advent of socialism. For Schumpeter, socialism is indeed precisely the economic regime of substantive rationality, proceeding from computational capabilities and techniques. Thus, as science pushes back the knowledge frontiers, the domain of substantive rationality expands and, with it, the possibility of socialism (Langlois, 2002; Graça Moura, 2003). It follows that bureaucracy replaces the individual and energetic entrepreneur not so much because of its innovative and creative advantage but because of its cultural suitability with the immoderate (and illusory) claim of the reason to control the world in its every detail and, symmetrically, to disregard everything that cannot be purely intellectualized.¹¹ Indeed, for Schumpeter, reason cannot rationalize its own limitations since it tends to relegate to the dustbin of obscurantism everything that it cannot consciously understand according to its own standards.¹²

Yet, it is worth asking about the type of change a socialist regime can actually generate. Does Schumpeter really think that socialism would be able to foresee and plan the flow of radical development in the long run? Of course not. The explicit clash that Schumpeter makes between, on one hand, the imaginative and creative capabilities of the individual and energetic entrepreneurs, and, on the other hand, the rationalist conception of knowledge tends to prove the contrary (cf. Section 4). It is difficult to see how the progressive rationalization of the world could result in the same innovative outputs as the ones produced by energetic entrepreneurs. To assert the contrary would be to consider that Schumpeter could think of socialism as a viable and sustainable mode of organization that would outperform entrepreneurial capitalism. Yet, he never believed such a thing.

Schumpeter was indeed pessimistic about the capacity of socialism to outperform entrepreneurial capitalism (pessimism that is often hidden by his well-known irony, especially in CSD) (Muller, 1999; Langlois, 2002; Boettke et al., 2017). Due to the increasing rationalization of thinking, Schumpeter conjectures that socialism might outperform late and degenerate capitalism (without individual and energetic entrepreneurs) in the generation of rational incremental innovation and therefore replace it, but in no way can it be compared to entrepreneurial capitalism. If a planned economy could perfectly anticipate and integrate many (incremental) advances in its “system of equations,” just as forecasters are able to anticipate and integrate sectoral progress with Moore’s or Rock’s Law, it is not able to disrupt itself and generate “development.” It is indeed one thing to say that the rationalist route for knowledge is progressively supplanting the entrepreneurial function. It is however quite another thing to say that such a bureaucratization of economic life could truly mimic the creative part of entrepreneurship and disrupt the economy as the individual and energetic entrepreneurs would have done. Only the latter with their own rationality, based on intuition, energy, and authority, are capable of generating economic development. This inability of socialism to generate development also explains why Schumpeter insists in CSD that the advent and viability of socialism will be made possible only because this regime comes after entrepreneurial capitalism, which will have cleared the way and produced sufficient material wealth for its heir to survive (Shionoya, 2007).

CSD’s argument can thus be summarized as follows:

• As capitalist civilization progresses, rationalist and utilitarian thinking render the individual and energetic entrepreneur, i.e., the “creator personality, obsolete.” Rational thinking disregards and replaces intuition and energy and tends to replace it by a routinized and depersonalized entrepreneurial function.

• This leads to the probable replacement of capitalism by a form of socialism since socialism is precisely an organizational regime that is highly compatible with rational, bureaucratic, and routinized thinking.

• The socialist regime, in which the entrepreneurial function is entirely bureaucratized, can, in theory, perform as well as or even better than the degenerate capitalist regime (rationalized, in which individual and energetic entrepreneurs have disappeared). It can continually generate balanced growth, in the form of a steady growth state.

• The socialist regime can in no way match the economic performance of the disappearing entrepreneurial capitalist regime, which is the only one capable of generating economic development (as distinct from growth).

In conclusion, we consider CSD as a clear demonstration that, according to Schumpeter, in an economy where the individual and entrepreneur has disappeared and has been replaced by a bureaucratized and depersonalized entrepreneurial function and where change is rationally planned, there can be incremental innovation, i.e., growth, but no production of pure novelty and therefore no development at all. Routinized innovation performed by corporate organizations or the State is a very imperfect substitute for the individual and energetic entrepreneur. Scientific progress conveyed by large and bureaucratic organizations could lead to steady economic growth but could not replace the creative action of the individual “creator personality.” By observing that leadership can be “embodied” by collective institutions, the “late” Schumpeter is simply noting the gradual advent of scientific methods characterizing the mass consumer society to come. However, this holistic dimension, referred to as component (b) in Figure 1, is unrelated to the creative dimension, the individualistic component (a) in Figure 1, which remains in the hands of some individuals endowed with special creative capabilities. On this point at least, Schumpeter’s vision remained remarkably consistent throughout his life: the spark of novelty can only be found in the energy of individual leaders nourished and supported by an extra-rational matrix.

6. Discussion and conclusion

This article explored the question of the emergence of pure novelty in Schumpeter’s work. We have evidenced that Schumpeter remained deliberately faithful to an elitist and extra-rationalist conception of change in which the production of pure novelty is in the hands of the individual figure of a “creator personality” endowed with exceptional abilities, a conception which is not compatible with endogenous change. As put by Becker and Knudsen “much as he tried throughout his career he failed to generate any explanation of novelty […] Schumpeter himself arrived at the conclusion that he could not provide such an explanation” (Schumpeter et al., 1932 [2005]: 357). According to Shionoya (1997), creation for Schumpeter is an enigma of human beings. Our work suggests therefore that Schumpeter’s inability to provide an endogenous theory of pure novelty is less the consequence of an inappropriate methodology than the inevitable outcome of his vision of how novelty is generated.

Of course, Schumpeter did not fail to point out that entrepreneurial actions can take place in very different eras and contexts as they consist, in a very broad sense, of doing “something altogether different.” In the medieval era for instance, because society placed value on security and military conquest far more than on the production of new goods and services, the entrepreneurial function could only grow slowly, at the margins of the feudal system. In contrast, what is fascinating about capitalism—and that has indeed fascinated Schumpeter throughout his life—is its intrinsic capacity to systematically translate individual leadership into an entrepreneurial function. However, while this later point allows for a better account of the formal diversity of leadership throughout history, it remains silent on the issue of the emergence of novelty, which is entirely left in the hands of individual leaders. In other words, making explicit the conditions of possibilities that turn individual leadership into an (entrepreneurial) function, which is the capitalist era, is not equivalent to proposing an endogenous explanation of novelty.

In complement to recent works that emphasize the differences between a “young” and an “old” Schumpeter, we clarify the extent to which this dichotomy is relevant. We indeed connect this “young” versus “old” dichotomy with the “dual” nature of Schumpeter’s research agenda (ex-ante vs. ex-post question about innovation), which contributes to enhancing the significance and analytical clarity of this dichotomy. Admittedly, if the “late” Schumpeter shifted from an individual to a more corporate-based explanation of how innovation spreads and affects the economy (ex-post research question), he did not change when considering the origin of pure novelty in the first place (ex-ante research question). Ultimately, and despite his recognition of the role of the large corporation, of dedicated R&D departments, and of the increasing rationalization process, for both the “young” and the “late” Schumpeter the production of pure novelty remains the prerogative of the individual and “extra-rational” entrepreneur.

What can we learn from Schumpeter’s struggle to explain novelty? On the one hand, despite a questionable and undoubtedly mystifying entrepreneurial ontology, Schumpeter’s “theory” of novelty identifies antecedents of innovation that are still richer than the ones conceptualized by many scholars today and, in particular, by neo-Schumpeterian economic growth literature. Indeed, neo-Schumpeterian growth theorists have heavily relied on a view that considers that innovative opportunities can be modeled according to ex-ante known probability distribution (Henrekson et al., 2024). In such a framework, the entrepreneurial function can certainly be routinized as a set of calculable risks. However, this can only account for what the recent entrepreneurship literature might call “discovered business opportunities,” or what Schumpeter would have called adaptive response or growth, in contrast to “created business opportunities,” or what Schumpeter would have called “creative response” or “development.”¹³ Once uncertainty is introduced, i.e., when opportunities are to be created, part of the explanation has to deal with subjective knowledge, skills, and intuitions borne by individuals. Then, along with other pioneers such as Knight or Kirzner, it is still useful to rely on Schumpeter’s thoughts and insights for conceptualizing further the antecedents of innovation, especially in cases where innovative outputs are considered as truly new or radical.

But, on the other hand, Schumpeter’s overemphasis on the extraordinary traits of the entrepreneur leads him to largely understate the importance of the structure of the system (institutions, culture, interactions between agents, etc.) that generates positive feedback and makes novelty emerge. More recent research in innovation economics has pointed to the possibility of endogenizing, at least in part, the emergence of novelty as an emerging property of a complex and interactive system. In other words, an endogenous theory of innovation has to be systemic. As explained by Witt:

in all these cases there seems to be a common, abstract causation of evolutionary change: the emergence of novelty within, and its dissemination throughout, the system under consideration. If this is true, endogenous change originates, in the last resort, from the capacity of the system under investigation to produce novelty […] An explanation of how new knowledge is created, and what the feedback relationships between search, discovery, experimentation, and adoption of new possibilities look like, and the respective motivations—all this would be necessary in order to really be able to treat economic change as being endogenously caused (Witt, 2002: 11 and 15).

Similarly, Phelps (2013) emphasized the democratization of creative and entrepreneurial activity allowed by capitalism which authorizes the massive production of entrepreneurs (a vision eloquently represented by the title of his book “Mass flourishing”). This modern culture is seen by Phelps as a property of capitalism thus leading him to praise “a system for the generation of endogenous innovation decade after decade as long as the system continues to function” (2013: 14). These recent theories do not sharply contradict Schumpeter regarding the existence of individual-level mechanisms for explaining novelty. They do, however, demonstrate that novelty is an emergent property of a complex, systemic process and that it is always perfectly indeterminate ex-ante. These explanations therefore differ from Schumpeter’s in that they view novelty largely as something “inevitable” and absolutely “impersonal” meaning that if one individual does not introduce a novel input X at time t, another will necessarily do so at time t + 1. Thus, while there is room for individual-level mechanisms in explaining novelty, these mechanisms are not idiosyncratic.¹⁴ In considering the entrepreneur as an exceptional character endowed with extraordinary mental characteristics. Schumpeter was not predisposed to take that route, though he did some significant steps in this direction in his late writings.¹⁵ In contrast with Phelps, for Schumpeter, the entrepreneur remains rare and unique and depicted in sharp contrast with the rest of the population.

However, the fact remains that, even from an endogenous and systemic perspective, the process of the emergence of novelty, and therefore the direction of economic change, remains very largely undetermined and impossible to predict exactly ex-ante (Witt, 2002). On that last issue, Schumpeter was clearly right. One of his main themes is indeed the indeterminacy of the process of the emergence of novelty: “Novelty is the true core of everything that must be accepted as indeterminate in the most profound sense” (Schumpeter et al., 1932[2005]: 113). In one of the last written records left just before his death, he even proposed a principle of indeterminateness regarding the emergence of novelty:

Without committing ourselves either to hero worship or to its hardly less absurd opposite, we have got to realize that, since the emergence of exceptional individuals does not lend itself to scientific generalization, there is here an element that, together with the element of random occurrences with which it may be amalgamated, seriously limits our ability to forecast the future. That is what is meant here by “a principle of indeterminateness” (Schumpeter, 1949c: 195).

This last quote sounds like the end of Schumpeter’s ambitions to endogenize the production of pure novelty and, as a consequence, the entire innovation process. In contrast to his early writings, Schumpeter does not resort to a crude glorification of the entrepreneur. However, this does not negate the individualistic and energetic focus of his perspective. Indeed, while a heroic or genius representation of entrepreneurship is inherently individualistic, an individualistic representation does not necessarily imply a heroic or genius portrayal. Schumpeter’s late characterization of the entrepreneur as “creator personality” supports that point (Ballandonne, 2021). As Schumpeter himself acknowledges in the same sentence, completely dismissing the pivotal role of these “exceptional individuals” is “hardly less absurd” than “hero worship.” This reflects a Schumpeter constantly balanced between absolutely irreconcilable conceptions: on the one hand, consistent with his Mitteleuropa background (extra-rationalism, vitalism, the importance of hierarchy, etc.), Schumpeter follows his “pre-analytical” vision according to which economic and social dynamics depend on exceptional creative men. On the other hand, his positivist and rationalist conception of science (such as endorsed by the American economists’ circles to which he belongs later) leads him to consider analytical tools that distance himself even more from any satisfactory explanation for novelty. As he admits in a relatively unknown article on rationality: “life is ontologically irrational” (cited in Graça Moura, 2017).

Footnotes

References