The interdependence between economic analysis and methodology in the work of Joseph A. Schumpeter ∗

Abstract

This paper offers an overview of Schumpeter's entire economic work from a methodological perspective. Only from this ‘birds-eye’ view do all the well-known parts of his work become part of a mosaic which – from a distance – forms a picture of logical succession: It tells the story of an intensive search for an appropriate analytical understanding of the phenomenon of economic change. As a result, this paper argues that, from a methodological perspective, Schumpeter's work appears to be anything but a monolithic unit.     

The Role of the Proximate Principle in the Emergence of Urban Parks in the United Kingdom and in the United States

Abstract

Residences located close to urban parks frequently sell at a premium. The increased home values represent a ‘capitalization’ of a park’s value to proximate homeowners and this phenomenon has been termed ‘the proximate principle’. The evolution of the principle from squares and gardens in small private estates to large park areas occurred with the development of Regent’s Park in London. The proximate principle’s dissemination into the new industrial cities of the UK first emerged at Prince’s Park in Liverpool, but it was still confined to private developments. Its transition into the public sector occurred with the development of Birkenhead Park. The data showing that Birkenhead Park was potentially a self‐financing venture funded by the enhanced value of proximate profits were widely disseminated and provided the financial rationale for many subsequent urban parks in other UK cities. This principle was absorbed by Frederick Law Olmsted on two early visits to Birkenhead Park and incorporated into the design of Central Park in New York City, the first large urban park in the US. Olmsted meticulously documented the impact of Central Park on adjacent property values and demonstrated that the park made a ‘profit’. These data were crucial in verifying the legitimacy of the proximate principle and in providing the justification for large urban parks in a host of other US cities. Although these data are naïve when viewed through the lens of modern social science, recent studies using sophisticated techniques have confirmed the fundamental legitimacy of the proximate principle.     

The Technology Innovation System in Japan

In recent years, many pieces of the Japanese puzzle have been identified and described as lessons for Western businessmen to learn. But the pieces are part of an interlocking system and to understand the role of each piece, it's necessary to see the whole. In the Japanese technology innovation system there are many parts—companies, universities, research institutes, government—and the way they are put together is the subject of this article by Joseph MacDowall. He points out some very unique characteristics about the way the system works. But he also points out some characteristics that are very much Western in origin. This article is based on the personal observations of the author, made during in-depth discussions he held during site visits to over 20 industrial plants or to their research and development laboratories, 25 government research institutes, and at least eight Japanese universities. During the four years he lived in Japan, Mr. MacDowall participated in discussions on the subjects of research, technology, work life, and Japanese culture.     

Product type and the relative influence of buyers in commercial construction

Organizational purchasing is usually the product of collective decision making. While the seller's first contact with a prospective customer is with the purchasing agent, the purchasing agent is by no means the sole decision maker. The purpose of this study is to identify the relative influence of purchasing agents and other buyers in the commercial construction industry. Individual buyers and firms can also make use of the framework evolved to examine their own buying practices.     

From gaze to dialogue: host–guest relationships in Lijiang,China, as illustrated by the case of Joseph F. Rock

The gaze places host and tourist in an “authority field” which is unfavorable to the development of harmonious interpersonal relationships and cultural interactions for both sides. Mutual, equal and just host–guest relationships should be established through dialogue, which will improve tourists’ understanding and experiences, awaken the hosts’ cultural consciousness and establish a new type of cultural interaction. The paper is based on analysis of the work and life experience of Joseph Rock in southwest China during 1922–1949. It uses content analysis to examine more than one thousand photos which contain visual representations of his gaze. The changing values of tourism to the ego and culture were revealed through a change in emphasis from “I–It” to “I–You” relationships as Rock turned from gaze to dialogue.     

The Economics of Property Rights in Early and Medieval Christianity

Early and medieval Christianity pioneered an economics of property rights that had no precedent in antiquity. The early Church Fathers Tertullian, Ambrose, and John Chrysostomos successively evolved conceptions of the right to own property as a prerequisite for poor relief, and the basis of the right to own property was later formulated by Pope John XXII to settle a dispute on this issue instigated by Francis of Assisi. This article challenges assessments advanced by Joseph Schumpeter, Jacob Viner, and Frank Knight, who argued that the doctrines of Christianity were devoid of economics, and draws attention to the work of Georg Ratzinger (1844–1899), who first expounded how in early Christianity property rights and poor relief were linked.     

Management and the representative firm revisited: the modern significance of Marshall's evolutionary economics

In an essay written in honour of Peter Swann, it is second nature to discuss some aspects of the economics of innovation, as that is the very challenging area of economic life where he has added so much to our understanding. I will attempt to do this by posing the problem of how innovation fits into the theory of value. Innovation research continues apace, but its broader systemic implications for how we understand the dynamics of capitalism are in danger of being overlooked. But two important economists, Schumpeter and Marshall, have seen the problem differently and built innovation into their theoretical schemes from the start. Marshall's theory of evolutionary change provides a natural focus for our discussion, and this is reflected in his treatment of management, in his use of the representative firm and in the variation-cum-selection dynamics of his open competitive process. We treat each of these topics and show how his evolutionary dynamics can be expressed in the Fisher/Price dynamics of evolutionary change. More generally, the key to economic development is the uneven nature of innovation and it is the uneven nature that gives economic transformation its evolutionary character. This, I suggest, is the proper legacy of Marshalls economics.     

Single vs simultaneous equation models in capital asset pricing: The role of firm-related variables

An alternative modeling system that more adequately describes the returns-generating process than the usual single equation CAPM is provided in this paper. Firm-related variables are introduced directly into the model using a simultaneous equation system while avoiding the estimation problems of previous attempts. While not empirically testing this system with the single-equation “multi-beta” models, the relationships between the alternative processes are explored.     

Hans Singer's debts to Schumpeter and Keynes

This essay discusses Hans Singer's intellectual formation andthe influences on his early writings and on his post-1947 developmenteconomics. It asks what impact the unusual experience of studyingwith both Schumpeter and Keynes had upon his subsequent economicthinking and practice. It argues that the influence of boththese mentors was surprisingly small, compared with that ofSpiethoff and Clark. Singer repaid his debts to Schumpeter andKeynes, but by working in the new currency of development economics,some of which was his own coinage. His motivation for this vasteffort was derived from the social egalitarianism of figuressuch as William Beveridge, Archbishop Temple and R. H. Tawney,rather than the liberalism of Schumpeter and Keynes.