Patterns of intention: Oberkampf and Knoll as Schumpeterian entrepreneurs

ABSTRACT

Presented here is an analysis of Schumpeter’s interest in political economy, as it relates to his use of history to investigate economic change and capitalism. This aspect of Schumpeter’s work – referring to style and involving a range of moral and aesthetic considerations – is largely neglected in entrepreneurship studies despite his influence on the discipline. This paper argues these considerations are essential to understand Schumpeter’s entrepreneur and the role of creative destruction in rejuvenating capitalism. However, his theory also involves political inclinations and choices, such as elitism and a fear of declinism, both of which are more typical to conservative not destructive worldviews. To illustrate my argument I examine and describe two cases, those of Oberkampf and Knoll, the latter a rough contemporary of Schumpeter. The findings point to the central role of political economy in past and present debates about the political role of entrepreneurship in society, suggesting a need for further attention to the zeitgeist (spirit of the time) in future research.     

An alternative to shareholder capitalism? A review of Alex Edmans' “Grow the Pie: How Great Companies Deliver Both Purpose and Profit”

Alex Edmans' “Grow the Pie: How Great Companies Deliver Both Purpose and Profit” provides an alternative approach to business called Pieconomics. Profits to shareholders play a critical role in Pieconomics (similar as in shareholder capitalism), but the goal of an enterprise is to maximize the social value it creates (somewhat similar as in stakeholder capitalism). This review discusses and critically evaluates this thesis.     

John Hobson, Thorstein Veblen and the Phenomenon of Imperialism

Abstract . Although Hobson (1858–1940) and Veblen (1857–1929) both wrote extensively on imperialism, a systematic comparison of their views has yet to be undertaken. This is corrected with reference to three issues: their respective condemnation and explanation of, and remedy for, imperialism. The contexts in which they wrote is outlined and it is shown that on the basis of a shared definition of imperialism: (1) they both condemned imperialism on economic and political grounds, although Veblen's hostility was arguably the greater; (2) they both advanced dualistic explanations of imperialism, but whereas Hobson developed more fully and emphasized economic rather than ideological forces, the reverse was the case for Veblen; and (3) they agreed that modern imperialism could be remedied by the establishment of an international system of law and order. Veblen, however, was far less confident that this would solve totally the problem of imperialism and hence argued for the abolition of both capitalism and patriotism. The convergencies and divergencies in their analyses of imperialism may reflect the British liberal and American radical traditions that the politically involved Hobson and the iconoclast Veblen, respectively, operated within. There is a lesson for our time in their views.     

Book review essays

Book reviewed in this article: Regionalism and monopoly capitalism: a new approach to the study of local power : Dulong, R. 1978: Les régions, l'état et la société locale. Paris: Presses Universitaires de France. Regionalism and monopoly capitalism: a new approach to the study of local power : Logroye, J. Wright, V. editors 1979: Local government in Britain and France: problems and prospects (LGBF). Regionalism and monopoly capitalism: a new approach to the study of local power : Tarrow, S., Katzenstein, P. and Graziano, L. editors 1978: Territorial politics in industrial nations (TPIN). Regionalism and monopoly capitalism: a new approach to the study of local power: Lojkine, J. 1977: Big firms' strategies, urban policies and urban social movements (1975). In Harloe, M., editor, Captive cities.     

Karol Wojtyła’s Katolicka Etyka Społeczna as Precursor and Hermeneutic Key to Pope John Paul II’s Economic Teaching

The highly anticipated publication of Karol Wojtyła’s Katolicka etyka społeczna (KES) in 2018 provides a novel and important basis for understanding the economic thinking of Pope John Paul II. The text is comprised of Wojtyła’s extensive lecture notes from the 1950s on the topic of Catholic social teaching and spans almost 500 pages. KES illustrates the future pope’s deep concern for economic justice as a young priest and his ambivalence towards capitalism, which persisted throughout his papacy. Given the size of KES, this article selectively focuses on Wojtyła’s treatment of topics of continuing relevance: the right of the Church to pronounce on economic matters; private property and the “social mortgage” on it; inequality, the just distribution of resources, and the “option for the poor”; the moral assessment of capitalism and Marxism; the dignity of labor and workers’ rights; and the role of conflict in promoting the common good. I contend that KES is consonant with the later papal teaching of John Paul II on economic justice and that it provides a hermeneutic key to understanding it. Furthermore, I argue that the “radicalism” of Karol Wojtyła on matters of economic justice in KES coheres with papal social teaching from Pope Paul VI through that of Pope Francis.     

On the Priority of Labor Over Capital

In his encyclical Laborem Exercens, John Paul II asserts the principle of the priority of labor over capital. The purpose of this article is to examine this principle. The conflict between labor and capital is often noted as an essential part of capitalism. There is a long tradition of assigning more significance to labor than to capital. In fact, the classical economists argued that labor determined the “value” of a good. To understand this conflict, we must first review what is capital and its role in capitalism. We will then look at John Paul II’s assertion of the principle of labor over capital, followed by a review of how economists have understood the relationship between labor and capital. Neoclassical economists dismiss labor and capital as classes, so they believe there is no conflict. We examine one neoclassical economist’s claim of a gap in the principle of the priority of labor over capital by not including finance capital in the analysis. We demonstrate that the Church’s teachings on usury answer the objections raised. We conclude with a review of the implications of the priority of labor over capital.     

Common knowledge with probability 1

Two people, 1 and 2, are said to have common knowledge of an event if both know it, 1 knows that 2 knows it, 2 knows that 1 knows it, 1 knows that 2 knows that 1 knows it, and so on. This paper provides a Bayesian definition of common knowledge, that is, a definition in terms of beliefs (probability measures). The main result is an equivalence between this definition and a definition in terms of the σ-fields representing 1 and 2's information. To obtain this result the conditional probabilities must be proper and the σ-fields posterior completed.     

The Division of Labour,Capitalism and Socialism: An Alternative to Sayer

Sayer (1995) has argued that the division of labour has a structure that is distinct from capitalist relations of production, and, following Hayek, that it is determined most strongly by the use of knowledge by enterprises. Conscious coordination or alteration of the division of labour therefore usually result in reduced efficiency and in an authoritarian suppression of difference. In this article we argue that the division of labour in capitalism is strongly determined by conflict within and between classes, and that in the short term socialist policy can and should aim to alter it. A model of socialist economic coordination is presented which is feasible and ameliorates many of the problems of the capitalist division of labour. This model would enable the development rather than suppression of positive differences.     

Conspicuous Consumption as Routine Expenditure and its Place in the Social Provisioning Process

The article utilizes the framework of social provisioning to argue that conspicuous consumption is an essential process of capitalism, and should be explored as a routine practice rather than an exceptional behavior. The objectives are: 1) to discuss conspicuous consumption as a process within a heterodox social provisioning framework; and 2) to emphasize the need for formulating theoretical concepts and discussions that are consistent with heterodox frameworks such as social provisioning.     

Book Reviews

Struyk, Raymond, J. (ed.), Economic restructuring of the former Soviet block. The case of housing Green, Eric Marshall, Economic security and high technology competition in an age of transition: the case of the semiconductor industry Gibson-Graham, J.-K., The end of capitalism (as we knew it): a feminist critique of political economy Lorrain, D. and G. Stoker (eds.), The privatisation of urban services in Europe Herlyn, U. and B. Hunger (eds), Ostdeutsche Wohnmilieus im Wandel Preston, Peter and Paul Simpson-Houseley, Writing the city: Eden, Babylon and the New Jerusalem Reichhard, Christoph and Hellmut Wollmann (eds.), Kommunalverwaltung im Modernisierungsschub?     

Is there aJ-curve for the economic transition from socialism to capitalism?

It is often assumed that the process of transition from socialism to capitalism involves a dislocation and disorganization of the economy in the early stages of the transition. Thus, it is argued, economic performance will at first worsen and then gradually improve as the new system takes hold. This paper argues that, based on evidence from Czechoslovakia, Hungary, and Poland, there is no evidence for such aJ-curve phenomenon. Using a simple macroeconomic model, we show that, in these three reforming countries, the decline in production can be explained by exogenous shocks to the balance of trade, to investments and to autonomous consumption. This finding also suggests that macroeconomic policy in these countries may be too restrictive to permit a recovery of employment and production.     

On Schumpeter, Services and Economic Change

Abstract . Joseph A. Schumpeter, the Austrian-American economist, worried about “Can capitalism survive” a generation ago, and so far it has. But his work poses these questions: How do growth and change take place in a free enterprise economy? Can his model for expansion through innovation and creative destruction through the competitive process be a basis for understanding present day industrial economies? He emphasized that capitalism was an evolutionary system and that the very need for newness or rejuventation should insure continual change in it. With respect to declining industries and firms the task of economics was to turn what might have been a rout into orderly retreat. And so he gave a limited blessing to certain monopoly practices deriving from a broader strategy, risk avoidance. Schumpeter's entrepreneurs have disappeared but innovative ability still is exercised, largely through issue-specific consulting services in the burgeoning service sector, services that foster stability as well as change     

Uncertainty and the Economy of Exclusion: Insights from Post‐Keynesian Institutionalism

Critics of Pope Francis’s Evangelii gaudium argue that recent economic growth and reductions in inequality are evidence that his notion of the “economy of exclusion” is misguided. However, Francis alludes to another type of exclusion—increased uncertainty generated by technological change that affects citizens even in developed nations. Drawing from Post‐Keynesian institutionalist theory, this article argues that this condition is common in capitalism, and that grassroots reforms are needed to ensure shared prosperity.     

Beyond the Global City Concept and the Myth of ‘Command and Control’

The article argues that the lack of convincing empirical evidence for the global economy as being subject to ‘command and control’ results from that contention being a neo‐Marxist myth. First, imagining the global economy as being subject to ‘highly concentrated command’ through the function of some major cities as ‘strategic sites’ for the production of ‘command and control’ is traced back through several neo‐Marxist authors to narrate its genesis, and to argue that the lack of evidence for that proposition is a consequence of those antecedents envisioning capitalism as a totalizing structure, thus making the assumption that it is subject to control and coordination from a distance. Second, Taylor's interlocking world city network model is forensically examined to explain that it is fallacious because it is a structuralism that, bedevilled by a sorites paradox, contains the further problem of containing no credible evidence for the existence of ‘command centres’. Finally, the article moves beyond neo‐Marxism's key concepts by juxtaposing their assumptions with ethnographic results from social studies of finance, a manoeuvre which forges an understanding of cities as socio‐technical assemblages and eventful multiplicities, beyond, inter alia, the baseless assumption that the global economy is subject to ‘command and control’.     

New Regionalism Reconsidered: Globalization and the Remaking of Political Economic Space

Amid the near frenzied exaltation of economic globalization and a purported decline of the nation state, a range of subnational regional economies and urban metropoles are increasingly being canonized as the paradigmatic exemplars of wealth creation. Indeed, across many of the advanced developed countries a whole host of academics, consultants, influential commentators, politicians and bourgeois interest groups are readily invoking the region to be the appropriate site for regulating global capitalism. In a recent article in IJURR, though, John Lovering disputes this emerging New Regionalism, viewing it to be seriously compromised by several practical and theoretical inadequacies. This article has two principal aims. First, and while sympathetic to the general tenor of Lovering’s critique, it offers a rejoinder through some sobering reflections on what might be recovered from the range of New Regionalist perspectives currently vying for attention within critical studies of regional development. Second, it presents a series of future theoretical directions for a geopolitically sensitive regional research agenda, drawing on recent thinking from the new regional geography, globalization and the politics of scale, institutional‐relational state theory and the regulation approach. An argument is made that a synthesis of these perspectives might intensify our understanding of the social and political construction of regions, the uneven geography of growth, and the moments of re‐scaled regionalized state power that now enframe the process of economic governance.     

Moral Capitalism: A Biblical Perspective

We argue that laissez‐faire capitalism in its current form is unsustainable, and that if it is to survive, we need to develop a new moral capitalism. An underexplored source on the subject that may provide insight into current difficulties is the Hebrew Bible. We explicate four basic principles of the Hebrew Bible and Talmud on economic affairs, and show how these ancient ideas can be used to create a more moral economic system.     

Cities in Contemporary Capitalism

This article outlines essential concepts of the political economy approach of urban research and offers critical modifications and clarifications to some of its contentions concerning the functioning of cities as ‘strategic places’ of capital accumulation. The interrelations between contemporary capitalism and urban economic development are discussed at the scale of a transnationally extended urban system. Based on the general context of the global economic downturn, I focus on the role of cities in distinct circuits of capital, the switching of capital flows within the urban system and the different functional roles of cities within the world city network that interconnects cities both in the global North and South. I call into question the established focus of urban economic research on the role of cities as financial and service centres, arguing that cities might redirect their economic development trajectories towards ‘real economy’ activities, in contrast to relying on the disastrous development model of finance‐dominated capitalism.     

Capitalism and freedom?

This essay tests Milton Friedman's conjecture that capitalism is a necessary condition for political freedom. For the decade around 2000 indices of the degree of capitalism and the degree of political freedom are highly correlated and provide plausibility for Friedman's conjecture. In looking at changes over time in the nineteenth century, however, the analysis refutes Friedman's conjecture. These apparently contradictory results are reconciled by showing that both capitalism and freedom are related to such variables as the educational level of the population so that, although not causally tied, they are correlated in a cross-national comparison.     

Book reviews

Book reviewed in this article: Andrew, C. and Milroy, B. 1988: Life spaces: gender, household, employment. Little, J., Peake, L. and Richardson, P. 1988: Women in cities: gender and the urban environment. Bridger, S. 1987: Women in the Soviet countryside. Lash, S. and Urry, J. 1987: The end of organised capitalism. Wilson, W.J. 1987: The truly disadvantaged: the inner city, the underclass, and public policy.     

The Political Economy of Confucian Harmony: A Xunzian Vision

A global market economy of pure instrumental rationality now poses a growing threat, jeopardizing common citizenship, the capacity for human flourishing, and harmony between humans and nature. Growing skepticism about the sustainability of market capitalism and its moral legitimacy propels us to search for a new economic model in which humans are no longer held hostage to the unbridled pursuit of self‐interest and limitless possession at the expense of the well‐being of others and nature and that attempts to overcome the old conflict between capitalism and socialism. We can call this alternative model “moral economy,” an economic system that reconciles private interests with the public good broadly construed. In this article I reconstruct the Confucian ideal of moral economy by paying close attention to Xunzi's ethical and political thought. Xunzi, one of the key classical Confucians, stipulates the threshold of sufficiency by extending the ruler's care to the most destitute of society as well as giving moral priority to their basic needs without dismissing the foundational importance of individual merit and contribution. Rejecting both pure economic meritocracy and dogmatic egalitarianism, Xunzian Confucianism aims to create a political economy of harmony where various distributive values (need, equality, and merit, among other things) each have their own place.