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Exploring post-Schumpeterian economics-Nicholas Georgescu-Roegen as a stepping stoneTakashi SEO

t-seo@staff.kanazawa-u.ac.jp
2 May 2024

Exploring post-Schumpeterian economics- Nicholas Georgescu-Roegen as a stepping stone –Takashi SEO
Kanazawa University, Japant-seo@staff.kanazawa-u.ac.jp

Abstract

Joseph Alois Schumpeter (1883-1950) advocated for understanding as
forgiveness and remained unaffiliated with any specific school of thought.
Despite leading the “Harvard Circle,” he didn’t establish a distinct
Schumpeterian school. However, his ideas significantly influenced modern
evolutionary economics, leading to the emergence of the neo-Schumpeterianschool. This prompts inquiries into the relationship between Schumpeter’sideas and the development of the neo-Schumpeterian school. Recent concerns
about the future of heterodox economics underscore challenges in theoreticaldevelopment. This study seeks to reassess Schumpeter's concept of "economic
evolution" and its resonance with the neo-Schumpeterian school, comparing itwith Nicholas Georgescu-Roegen’s ideas. It aims to identify any disparities in
the neo-Schumpeterian’s interpretation and discuss methodological andepistemological aspects of “post-Schumpeterian economics”.

Key words: economic evolution, Joseph Alois Schumpeter, Nicholas GeorgescuRoegen, bioeconomics, neo-Schumpeterian school

JEL classification: B15, B25, O33, O43

This work was supported by JSPS KAKENHI Grant Number 24K04804.

11. Introduction

Joseph Alois Schumpeter (1883-1950) is widely known for his assertion, as
stated at the beginning of Schumpeter ([1908] 2010), that “to understand is toforgive1”. He did not align himself with any particular school of thought, nor
did he actively seek to form one, showing a general indifference to the formationof schools of thought2. The latter part of his academic career coincided withwhat has been called the “golden age” of the economics department at Harvard
University (Tsuru, 1993), during which the “Harvard Circle”, a research groupformed by Schumpeter together with his colleagues and students, came into
being. However, unlike the Keynesian school that emerged directly from theKeynes Circus at Cambridge University, the Harvard Circle did not lead to theformation of a distinct Schumpeterian school. Schumpeter’s exceptional
successors, led by Paul A. Samuelson, ventured into their own domains rather
than strictly adhering to Schumpeter’s areas of study. As a result, Schumpeter
has been classified as a unique heterodox economist, often described as a “lonewolf” (Ito and Nei, 1993).

Nevertheless, Schumpeter is regarded as one of the intellectual sources ofmodern evolutionary economics, with the term ‘Neo-Schumpeterian school’already established to refer to discussions and scholars who incorporate his
ideas and vision as core elements. Comparing the relationship between
Schumpeter and the neo-Schumpeterian school with that between Keynes andthe Keynesian school (especially the post-Keynesians), it can be said that while
there is no continuity in terms of personal connections, sporadic references to
Schumpeter ([1908] 2010), p. ix.
In Haberler (1950), for example, Schumpeter said in a lecture to students at
the University of Bonn: “I have never tried to bring about a Schumpeter school.
There is none and it ought not to exist. ... Economics is not a philosophy but ascience. Hence there should be no ‘schools’ in our field” (p. 372).

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2

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Schumpeter are made in discussions of economic theory and policy, much likehis disciples, the neo-Schumpeterian school has also diverged from Schumpeter
to pursue its own development3.

This raises questions about the characteristics of the neo-Schumpeterianschool: What is its relationship to Schumpeter’s own achievements? Is
Schumpeter’s economic thought really inherited by the neo-Schumpeterianschool? These questions were vigorously debated at the time of the emergenceof the neo-Schumpeterian school, and there is a wealth of existing research on
the subject. Although they appear to be historical points of contention,
revisiting these questions may shed light on the future direction of theestablished Neo-Schumpeterian school.

Furthermore, recent concerns about the future of modern heterodox economics
have been raised by Hodgson (2019). Hodgson suggests that a lack of theoreticaldevelopment, particularly in relation to the theories associated with Nelson
and Winter (1982), poses a challenge to contemporary evolutionary economics,
including the neo-Schumpeterian school. While acknowledging the significant
differences between Schumpeter’s era of capitalism and the present, thecontemporary relevance of the research findings of the neo-Schumpeterianschool should be recognised. However, given Schumpeter’s ambitious
conception of an integrated economic system combining theory, history andstatistics, and his ultimate goal of constructing “economic sociology” (theuniversal social science), it seems timely to re-evaluate Schumpeter’s ambitious
ideas as well as the “Schumpeterian thinking” that underlies the historical
Shionoya (1998) examines the research trends of the neo-Schumpeterianschool to determine whether various concepts characteristic of biologicalevolution can be found in Schumpeter’s theory of economic development.
Shionoya himself concludes that this is not an economic system that can beinterpreted through biological metaphors (pp. 188-189).

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origins of the school.

Against this academic background, the aim of this study is to re-examine
Schumpeter’s concept of “economic evolution”, which is a common element
underlying the aforementioned questions, and to consider how to bridge thisconcept with the notion of “economic evolution” generally shared by the neoSchumpeterian school. Adopting a perspective from the history of economics,
this study hypothesises that Nicholas Georgescu-Roegen (1906-1994) is one of
the successors who inherited Schumpeter’s concept of “economic evolution” anddeveloped his own economics (ultimately leading to contemporary ecologicaleconomics). Thus, the study compares and examines the concepts of “economic
evolution” proposed by Schumpeter and Georgescu-Roegen on the basis ofprimary sources. Furthermore, this study hypothesises that there may be somemisalignmentordeviation

betweenthe

neo-Schumpeterianschool’sunderstanding of Schumpeter’s “economic evolution” and that of Schumpeter
himself. Therefore, this study aims to discuss the methodological andepistemological research of “post-Schumpeterian economics”, which seems totake a different direction from that of the neo-Schumpeterian school, based on
the results of the comparison between Schumpeter’s and Georgescu-Roegen’s“economic evolution” carried out in this study.

In the following sections, we will first organise and compare Schumpeter’s andGeorgescu-Roegen’s concepts of “economic evolution” on the basis of primarysources. Next, we will discuss the discrepancies or deviations in the neoSchumpeterian school’s understanding of Schumpeter’s “economic evolution”.
Finally, based on the results of this study, we will comment on themethodologicalandepistemologicalresearchof“post-Schumpeterian

economics”, which seems to take a different direction from the neoSchumpeterian school. Finally, we will briefly summarise the results of this4

study.

2. Schumpeter and Georgescu-Roegen’s Personal Relationship

Born in 1883 in what is now the Czech Republic, Schumpeter developed his
own economic system under the influence of the Austrian School of pureeconomic theory and the German Historical School. After experiences inacademia at the University of Czernowitz and the University of Graz, as wellas an excursion into politics and finance, he returned to academia at the
University of Bonn. During his European years, he wrote works such as The

Nature and Essence of Economic Theory (1908, hereafter ‘Essence’) and The
Theory of Economic Development (1912, hereafter ‘Development’), laying thefoundations of economic theory early in his career. Despite briefly leaving
academia due to failures in politics and finance, he emigrated to the UnitedStates in 1932 and became a prominent figure in the economics department at
Harvard University until his death in 1950. During his time in the US, he wrote
works such as Business Cycles (1939, hereafter referred to as Business) and

Capitalism, Socialism, and Democracy (1942), attempting to integrate his
established economic theory with statistics and history, while envisioning theestablishment of “economic sociology” (a comprehensive social science), a goalthat remained unfulfilled.

Born in Romania in 1906, Georgescu-Roegen began his research career inmathematics and statistics. He met Schumpeter by chance and was greatly
influenced by him when he visited Harvard University in 1934 on a Rockefeller
Foundation fellowship to apply his statistical methods to economic indicators.
Although his stay at Harvard lasted only about a year and a half until 1936,
Schumpeter’s influence was significant. Georgescu-Roegen himself said in his
autobiography that he was “the only true Schumpeterian, I believe. My only5

degree in economics is from the Universitas Schumpeterriana” (Szenberg ed.,
1992, p. 130) 4 . Schumpeter appreciated Georgescu-Roegen’s mathematicaltalents and offered him the co-authoring of a book on the theoretical apparatusof economics and an appointment at Harvard University. However, GeorgescuRoegen returned to his native Romania and Schumpeter’s plans did notmaterialise 5 . In Romania, Georgescu-Roegen became acutely aware of theinadequacy of neoclassical economic analysis in understanding agricultural
economies and gained a new perspective on the importance of institutions ineconomic analysis6. His conception of bioeconomics (or institutional economics)
can be said to have emerged from his experiences in his homeland. He returnedto the United States in 1948 after the Second World War and spent 27 years at
Vanderbilt University. His collection of essays, Analytical Economics (1966),
included papers on mathematical economics written during his time atAndersen (2009) sees Schumpeter’s system as more than just a school of
economics, as Schumpeter expressed it in terms of a ‘university’ rather than a‘school’. This perspective suggests that Schumpeter’s system goes beyond being
categorised as just a school of economics, which relates to the use of the label‘post-Schumpeterian economics’ in this study.
5 The footnote to the preface of the German fourth edition of The Theory of
Economic Development (1935) reveals plans to publish a ‘Theoretical
Apparatus of Economics’ (‘Theoretischer Apparat der Ökonomie’) as areplacement for the second edition of Essence (Entwicklung, 4th edition, p. xiv.
See also Shionoya 2004). Given Georgescu-Roegen’s time at Harvard, one canspeculate that the co-authored work Schumpeter hoped for with him refers tothis unrealised book.
6 Kuwata (2015) also points this out (p. 103). Moreover, the following passage
from Georgescu-Roegen (1976), quoted there, expresses it vividly: “What caused
me to look at the economic process from an unorthodox viewpoint is the peculiar
nature of the economy of my native country, Romania, at the time when I
returned from my training in the Western schools with a formidable
armamentarium of mathematical standard economics. To begin with, I
despaired at discovering that that armamentarium could hardly help me
penetrate the economic problems of that country. Romania’s institutions were
not adapted to the Western principle of profit maximization, a fact which at
first appeared to me and, most certainly, to any Western observer as crassorganizational ineptitude” (p. xi).
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Harvard, criticising neoclassical economics on technical and epistemologicalgrounds. It is important to note, however, that his intention was to show howmathematics should be properly applied to the study of human intentions andactions in economics, rather than to reject mathematics altogether7. In addition,
his 1976 collection of essays, Energy and Economic Myths, reprinted work,
particularly on bioeconomics and institutional economics, in response to his
major work, The Entropy Law and the Economic Process, published five years
earlier. Since the 1970s, his research has focused on the re-evaluation andconcretisation of material economic cycles characterised by qualitative change
and irreversibility, applying the second law of thermodynamics, making him
one of the pioneers of modern ecological economics.

Although Schumpeter and Georgescu-Roegen had only a short period of directcontact at Harvard University, their research relationship on “economic
evolution” seems to have been quite intimate, as can be seen from theirbiographies. Several similarities can be identified. First, both were deeplyinterested in the unique concept of “economic evolution” within economics.
Although this is self-evident, both sought to transcend the mainstream
economic theories of the time, such as general equilibrium theory or
neoclassical behaviourism, and to establish their own dynamic theories(although not necessarily rejecting them outright), aiming to open up new fields
of economic sociology and bioeconomics (particularly strong tendencies inSchumpeter’s case) through the practical application of a “new synthesis” toexisting theoretical components of economics. On the other hand, both
temporarily left academia and developed an understanding of the need for new
fields by experiencing or observing the realities of economic society. In the caseof Georgescu-Roegen, as noted above, his experiences in his native Romania

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Georgescu-Roegen (1992), 155-156.

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were a major turning point in his approach, while recent research suggests that
Schumpeter, particularly his experiences in the financial industry in Vienna,
had a significant influence on his ultimately unfinished theories of money andcredit (Peneder and Resch, 2021).

3.

ReconfirmationofSchumpeter’s

theoryofeconomic

evolution:

literature tracking

There is already a wealth of previous research on Schumpeter’s theory of
economic evolution. In this study, we aim to reconfirm Schumpeter’s theory of
economic evolution by tracing the process of its establishment, picking up as
much as possible on references to it in his major works.

First, we will examine Schumpeter’s seminal work, Essence, published in 1908.
In this work, Schumpeter clearly evaluates Marshall’s biological analogy andrejects its application. This is articulated in the fifth part of the book, where
the general epistemological and methodological aspects of pure economic theory
are discussed in a coherent manner.

The only reason that compels him [Marshall] to give preference to the
biological analogy over the mechanical one was the striving to bring the
moment of development into our discipline. ... This is correct. But
unfortunately, Marshall does not say that, but rather only indicates the
motive that economy is a “science of life.” (Schumpeter [1908] 2010, p. 393)

Essence discusses static theory within Schumpeter’s dichotomy of economic
analysis, relying heavily on Walrasian general equilibrium theory. Unsatisfied
with this, however, Schumpeter alludes to the content to be discussed in depth
in his next major work, and in the final part of the same book alludes to8Marshall’s inspiration regarding biological analogy 8 . Marshall, like
Schumpeter, was aware of the limitations of mechanistic reasoning, butultimately failed to develop the biological analogy to overcome them. Both
Schumpeter and Marshall wanted to develop a dynamic theory of development
and growth over time, although they started from a static theory. The difference
lies in Marshall’s struggle to integrate mechanistic and biological analogies9,
whereas Schumpeter remained relatively faithful to the dichotomy of static anddynamic. The following quotation seems to illustrate this well.

[O]ur discipline can still be very close to biology epistemologically, andneither receive stimuli from it, nor can it give such to it ... as long as atreatment of the economical phenomena by themselves and without going
into their most inner being, is able to offer us more than such an entering,as long as an independent discipline of economy even therefore exists, isalso independent, and suffices for itself. (ibid., p. 394)

Next we turn to Schumpeter’s second major work, Development, published in
1911. Although this work does not contain direct and extensive references tobiological evolution or evolutionary thought in the main text, Schumpeter is

Marshall’s active emphasis on biological reasoning is evident in the following
quote: “The Mecca of the economist lies in economic biology rather than in
economic dynamics. But biological conceptions are more complex than those of
mechanics; a volume on Foundations must therefore give a relatively large
place to mechanical analogies ... But in fact it [the present volume] is concerned
throughout with the forces that cause movement: and its key-note is that ofdynamics rather than of statics” (Marshall [1890] 2013, pp. xxv-xxvi). “Themain concern of economics is thus with human beings who are impelled for goodand evil, to change and progress. Fragmentary statical hypotheses are used as
temporary auxiliaries to dynamical - or rather biological - conceptions: but thecentral idea of economics, even when its Foundations alone are: underdiscussion, must be that of living force and movement” (ibid., p. xxvi).
9 See Hodgson (1993a), (1993b) and Shionoya (1998) for discussions ofMarshall’s economic biology.
89

positioned as one of the pioneers of modern evolutionary economics.
Furthermore, the basis for the neo-Schumpeterian school’s adherence toSchumpeter lies in his theory of economic development. Thus, there has been asignificant accumulation of diverse previous research on this topic10. In thisstudy, we limit our focus to Schumpeter’s reliance on Marx to reaffirm theevolutionary nature of Schumpeter’s theory of economic development. This isbecause Engels, an ally of Marx, in his eulogy at Marx’s funeral, praised Marx’s
achievements by comparing them to Darwin’s theory of evolution, which seems
to be a clue to the question of the link with Schumpeter’s biological evolutionof economic development, which was heavily based on Marx: “Just as Darwin
discovered the law of the development of organic nature, so Marx discovered
the law of development of human history ... the degree of economic development
attained by a given people or during a given epoch form the foundation uponwhich the state institutions, the legal conceptions, art, and even the ideas on
religion, of the people concerned have been evolved, and in the light of which
they must, therefore, be explained, instead of vice versa, as had hitherto been
the case11”.

A notable starting point is therefore the “Preface to the Japanese Edition”(1937). Schumpeter states the purpose of the book and makes it clear that theintentions and ideas of his theory of development are exactly the same as thoseof Marx’s economic thought: “I was trying to construct a theoretic model of theprocess of economic change in time, or perhaps more clearly, to answer thequestion how the economic system generates the force which incessantly
transforms it12”.
Apart from those mentioned in the text, see e.g. A Navigational Guide in
Dopfer et al. eds. (2024), Introduction and Part 1 in Hanusch and Pyka eds.
(2007), and for a more concise and comprehensive review see Fagerberg (2003).
11 Engels (1883), pp. 467-468.
12 Schumpeter ([1937] 2006), p. 165.
1010

[W]hat distinguishes him from the economists of his [Marx’s] own time andthose who preceded him, was precisely a vision of economic evolution as a
distinct process generated by the economic system itself. (Schumpeter[1937] 2006, p. 166)

This passage, probably the most frequently quoted extract, underlines
Schumpeter’s belief that within static equilibrium there is a force inherent in
the economic system itself which disturbs the equilibrium achieved. He
believed that there must be a pure theory of economic change, distinct from thepure theory of steady state that he found in Marx’s economic theory. The
following passage seems to encapsulate this idea most clearly.

The only major attempt at the problem of development is that of Karl
Marx. ...... Apart from this achievement, Marx alone has another to showwith regard to ‘development’. He attempted to treat the development of
economic life itself with the means of economic theory. His theory ofaccumulation, his theory of pauperisation, his theory of collapse really doarise from purely economic thought processes and his gaze is always
directed towards the goal of conceptually penetrating the development of
economic life as such and not merely its cycle at a certain point in time.
But the bases of his theory are nevertheless of a thoroughly static nature after all, they are the bases of the classics. And even if the tone breathes
development and the moment of statics recedes in terms of representation,
the classical building remains in his hands what it is by nature.
(Schumpeter [1911] 1987, p. 84-85, translated by author)

This passage can be read as a tribute to Marx’s method of theoreticalconstruction, which aimed to develop a process of development that emerged

11endogenously from the static theoretical framework of classical economics, as
Schumpeter himself had sought to do. Thus, building on the static theory
constructed in his earlier work, The Essence, Schumpeter sets out to explore
the endogenous factors of development. Recent research suggests that
Schumpeter’s goal of an endogenous growth theory was understood as a theory
in which “the process of self-transformation of the socio-economic system thatis reflected both in quantitative and qualitative changes and in changes in themodus operandi of the system as a whole”. The actors that make up such asystem are the “entrepreneurs” who practice innovation and initiate theprocess of creative destruction, the “bankers” who take risks to provide funds
for innovative practices, the “producers and hedonic consumers” who adapt toinnovation and trigger waves of imitation, the “workers” who react passively tothe changes they face, the “intellectuals” who interpret the socio-economic
system and make judgements, and the “government” that intervenes in theeconomic process (Kurz 2024, p. 12). Through the interaction of their actions in
the irreversible flow of time, the economic process evolves quantitatively andqualitatively, forming the framework of Schumpeter’s theory of development.

From the above, it would seem that Schumpeter’s concept of economic evolution
is not derived from biological evolution, but in particular from Marx’s vision ofcapitalist development. Witt (2002), who examined how evolutionary
Schumpeter’s theory of development is, confirmed that evolutionary thought
itself is a product of philosophical and social scientific debates of the lateeighteenth and early nineteenth centuries. He suggests that modern
evolutionary concepts, based on Darwin’s theory of natural selection and its
successful extensions in biology, should be discussed on the basis of generalised
evolutionary concepts rather than attempts at evolutionary economics, whichcharacterise evolutionary approaches in economics while referring to Darwin’s
theory (p. 9). His general definition of evolution is “self-transformation through12the passage of time of the system under consideration”. He goes on to list three
specific conditions that evolutionary theory in any academic field should meet:“dynamic”, “historical” and “self-transformation explanation” (p. 10). In thelight of such arguments, it can be said that Schumpeter, unlike Marshall before
him, is not bound by Darwin’s theory of evolution or biological analogy, and that
he made his own breakthrough in addressing the dynamic issues with which
Marshall struggled.

Finally, Business, published in 1939, is seen as the culmination of Schumpeter’s
economic theory. Five years before the publication of this book, in 1934,
Schumpeter published the English edition of Development, with new footnotes
relating to his vision of ‘economic evolution’.

[W]hat we are about to consider is that kind of change arising from within
the system which so displaces its equilibrium point that the new one
cannot be reached from the old one by infinitesimal steps. Add successively
as many mail coaches as you please, you will never get a railway thereby.
(Schumpeter [1934] 2021, p. 79, n. 6)

The approach to development outlined here led to a specific change interminology from ‘development’ to ‘evolution’ explicitly in Business. Yagi (2008)
examines in detail the transition in Schumpeter’s usage from “development” to“evolution”, which became explicit from the mid-1930s onwards, based onliterature and materials, as Schumpeter, who had been cautious about using
biologicalanalogies,

began

to

use

“evolution”

explicitly

insteadof“development”. Of course, “evolution” in this context does not refer to biologicalevolution or its analogy, but to a concept specific to the economic and social
sphere.

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The changes in the economic process brought about by innovation, together
with all their effects, and the response to them by the economic system, weshall designate by the term Economic Evolution. Although this term is
objectionable on several counts, it comes nearer to expressing our meaning
than does any other, and it has advantage of avoiding the associations
suggested by the cognate term Progress, particularly the complacency thelatter seems to imply. (Schumpeter [1939] 1964, p. 61)

Yagi (2008) also points out that while Schumpeter warned that the use of“evolution” should be distinguished from “progress”, it remains unclear
whether he was consciously avoiding associations with biological “evolution”
altogether. However, given the lack of active references to biological evolution,
it would be natural to understand Schumpeter’s “evolution” as synonymouswith “development” or economic evolution.

The following quotation highlights another perspective that is worth noting.

[F]irst, if we deal with, say, the organism of a dog, interpretation of what
we observe divides readily into two branches. We may be interested in theprocesses of life going on in the dog, such as the circulation of the blood, its
relation to the digestive mechanism, and so on. But however completely wemaster all their details, and however satisfactorily we succeed in linking
them up with each other, this will not help us to describe or understandhow such things as dogs have come to exist at all. Obviously, we have herea different process before us, involving different facts and concepts such as
selection or mutation or, generally, evolution. (ibid., p. 14)

This extract illustrates the kind of analysis that is possible when the dog is
studied. Even if one is well versed in the details of an organism such as a dog

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as an organisation, including its internal blood circulation or the structure ofits digestive system and its connections, this does not help in describing or
understanding how dogs came to be. This suggests that no matter how detailed
the observation of the functional differentiation of the internal organs or
tissues of a dog (viewed through the lens of biological evolution), it does not
explain anything about the organism itself as a unified entity, how it came to
be. This understanding of functional differentiation and its integrationsuggests that, in Marshall’s case too, he was trying to explain it by biologicalanalogy, whereas Schumpeter used examples from zoology not to explain
biological evolution but to suggest a logic for explaining the existence of theeconomy as an organism. In Business, he agreed to use “economic evolution”,
but this does not mean that it should be explained by biological analogy.

I’ll end the literature review of Schumpeter’s view of economic evolution here,
because with Business, Schumpeter’s unique economic evolution, as distinct
from biological evolution, and economic evolution would be used extensively
thereafter. I’d like to briefly mention the other major work after Business.

Capitalism, Socialism and Democracy, published in 1942, is considered to be a
discussion of economic sociology, the ultimate goal of Schumpeter’s researchplan. For example, Shionoya (1997) positions this work as an elaboration of theeconomic evolution introduced in Business as a theory of systemictransformation, while Development, which is often referred to by the neoSchumpeterian school and proponents of evolutionary economics, is seen as an“intermediate point” of Schumpeter’s economic system based on economic
evolution.

In connection with Business, although it is not Schumpeter’s main work, I
would also like to mention his article “Historical Approach to the Analysis ofBusiness Cycles” (1951), when considering the content of his view of economic

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evolution. As its subtitle indicates, Business aims to apply the theoreticalframework integrating the static and dynamic theories constructed in Essence
andDevelopment to the reality of economic society. Schumpeter’s

methodological analysis of economic evolution seems to emerge from his
attempt to integrate his own theory with statistical analysis and historicalconsiderations. In this work, the role of historical investigation is particularly
emphasised, as will be seen below.

It seems to me important, scientifically and practically, to bring out that
all these phenomena are accidental in the sense defined, yet play a rolethat may very well decide the fate of capitalism. Since this can be done only
by detailed historical case studies, the argument for the historicalapproach to business-cycle research seems established. In reality, however,
we have established only half of it and, so far as the scientific aspect isconcerned, the less important half. For historical research is required not
only to elucidate the nature and importance of the nonessentials dealt withso far, but also to elucidate the underlying cyclical process itself. This
underlying process, as depicted in the more important time series, suggests
indeed dynamical schemata that may be framed in such a way as to fit
practically any contour. (Schumpeter 1951, p. 152)

For Schumpeter, the accumulation of models of economic evolution (dynamic
models) and historical analysis are two indispensable elements, and therelationship between them is characterised by the concepts of shock and its
propagation. The addition of statistical analysis allows the results of historicalanalysis to be filled in with long-term time series data, thus revealing theoverall mechanism. In particular, historical analysis, according to Schumpeter,“filling the bloodless theoretical schemata and statistical contour lines with live
facts and toward making our meaning clearer and more vivid” (Schumpeter16[1939] 1964, p. 179), thus emphasising it more than theory and statistics13. In
this way, Schumpeter’s theory of economic evolution, whatever its success or
failure14, can be seen as completed in the analysis of business cycles, allowing
for a comprehensive view.

4. Georgescu-Roegen’s Biophysical Economics Concept: A Comparison with
Schumpeter

Georgescu-Roegen’s research seems to be divided into two main periods: anearly period (mainly in the 1930s) characterised by a rigorous critique of theuse of mathematical tools in the field of mathematical economics 15 and adeparture from neoclassical economics based on observations of the agrarian
economy in Romania, and a later period (from the 1970s) focused on a systemic
and institutional understanding of the relationship between the naturalenvironment and the economy from the perspective of the law of entropy. Whilethe latter aspect, especially its connection to recent discussions in ecologicaleconomics, has been acknowledged and explored, a re-examination ofGeorgescu-Roegen’s work in the light of a Schumpeterian perspective on

In Schumpeter’s posthumous work History of Economic Analysis (1954),
while maintaining the traditional view that Darwin’s theory of evolution had
little influence on the social sciences, he highly valued the historical sketches
added in the third edition of Charles Darwin’s The Origin of Species(Schumpeter 1954, p. 419, n. 19).
14 As is well-known, Business received a critical but quite accurate review from
Kuznets (1940).
15 Georgescu-Roegen wrote the following four articles during his Harvard years
in the 1930s: “Note on a proposition of Pareto,” Quarterly Journal of Economics,
XLIX (August 1935): 706-14; “Fixed coefficients of production and the marginal
productivity,” Review of Economic Studies, (October 1935): 40-9; “Marginalutility of money and elasticities of demand,” Quarterly Journal of Economics, L(May 1936): 533-9; “The pure theory of the consumer’s behavior,” Quarterly
Journal of Economics, L (August 1936): 545-93. All have been published in top
journals.
13

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“economic evolution”, which is the subject of this study, suggests a focus on the
period or periods when his ideas on biophysical economics emerged, probably
during a transitional phase from the early to the later period. Therefore, thissection aims to clarify Georgescu-Roegen’s evolutionary thinking by focusing
on two points: (1) what did Georgescu-Roegen absorb from Schumpeter? and (2)what is the nature of his biophysical economic concept constructed from thisabsorption? Building on previous research, we seek to elucidate his
evolutionary thought.

(1) Acceptance of Schumpeter’s theory of economic development
Let us first confirm Georgescu-Roegen’s direct assessment of Schumpeter.
Although there is no explicit discussion in the form of a separate paper or
chapter, Schumpeter is referenced throughout Georgescu-Roegen’s work. From
what I have read, there seems to be no instance where he refers to Schumpeter
in a negative light. It is therefore evident that Georgescu-Roegen fully accepts
Schumpeter’s claims and often cites them to support his own arguments after
interpreting them. For example, Georgescu-Roegen (1988) discusses notableaspects of Schumpeter’s theory of economic evolution in a manner similar to
the tracing of Schumpeter’s works in the previous section.

However, the new microbiology theory based on DNA explained only how
from a single cell, the fertilized ovum, an immense number of other cells
can be obtained to form a complete organism. Too bad that the new theory
not only does not help us to explain the development process, that is, howcells differentiate into muscles, nerves, kidneys, and so forth, but it also
actually constitutes a stumbling block on our way. (p. S294)

This argument corresponds to Schumpeter’s case for the dog as an organic
entity. And it suggests that Schumpeter was the first to propose the elements18

that underpin development. That is,[a]ccording to him, economic development constantly occurs because of theconstant flow of inventions that are the result of the normal activity of ourminds and serve as basis for practical innovations. This is how we havepassed from mail coaches to railway engines, to automobiles, and to rockets.
(p. S295)

This is an extension of Schumpeter’s example of the evolution fromstagecoaches to railways to modern times, demonstrating the contemporary
relevance of Schumpeter’s theory of economic evolution. Also,

after completing the classification of the general types of innovation,
Schumpeter pressed the point that innovation must not consist of a small,insignificant change. And to the dissatisfaction of all positivists of all walksof life, he argued that “small innovation” cannot possibly be defined
analytically

any

more

than

“entrepreneur”-

anotherfamousSchumpeterian concept - can. Evolution, which is what economic
development actually is, needs saltations, needs the emergence of
successful “monsters16.” (ibid.)

From the above, we can define what has been inherited from Schumpeter toGeorgescu-Roegen with regard to economic development, as both repeatedly
use the following passage to define it: “Economic life is a unique process that
goes on in historical time and in a disturbed environment17”.

This is a term coined by the biologist Richard Goldschmidt, which echoes
similar arguments made by Schumpeter.
17 Schumpeter (1951), p. 149.
16

19

(2) Link with the concept of biophysical economics
The genesis of Georgescu-Roegen’s concept of biophysical economics can betraced back to the realisation that the economic theories he had encounteredmainly in the United States (although he did not accept them uncritically) werecompletely inapplicable to his subsequent experiences in his native Romania(see, for example, Bobulescu (2012), sec. 3 and Kuwata (2015), sec. 2). He
reflects on this as follows.

[T]he fact is that only in the lands of plenty does the marginal principle
maximize a complex of product proper and chosen leisure. In the lands ofscarcity, however, people must work as long as they can, to the point of zeromarginal productivity of labor, as illustrated by the splendid institution,
not too old, of the gleaners. In conditions of scarcity, income distribution ismade not according to marginal pricing, but according to some institutionalrules. (Georgescu-Roegen 1992, p. 133)

From his observations in Romania, Georgescu-Roegen found evidence of thereality of agrarian societies without economic theory and the existence ofeconomic theories without reality. He also found evidence that underlying
economic behaviour are institutional backgrounds that vary with time andplace. Contrary to Schumpeter’s expectations, his experience on returning tohis homeland seems to have strengthened his appreciation of Schumpeterian
evolutionary thinking. Learning from history, or relying on history, can beunderstood in terms of the legacy of Schumpeter’s theory of economic evolution,
especially his analytical method of Business.

Let’s now examine whether the Schumpeterian evolutionary thinking acceptedby Georgescu-Roegen is related to his concept of biophysical economics in theway described above. Since Kozo Mayumi, who studied directly under

20

Georgescu-Roegen, has identified two pillars of biophysical economics, we canconfirm the Schumpeter connection on this basis. Mayumi (2009) points outthat the first pillar concerns external human evolution and qualitative,
irreversible changes in economic processes.

The first aspect of external evolution, inspired by the biologist A.J. Lotka,
represents a transition to an entirely new evolutionary style for humans,
beyond biological evolution and dependent on resources and currencies
generated from external energy. Georgescu-Roegen’s approach to this reality
through biophysical economics suggests that human existence is notdetermined solely by biology or economics, but rather by the internal logic
inherent in institutions such as markets, money (credit) and corporations,which emerge in response to the gradual evolution of human external nature.
Biophysical economics is therefore not just a new field within economics, but isconceived as a “new synthesis” that integrates evolutionary economics,
institutional economics and biophysical analyses such as energy (Mayumi,
2009, p. 1237). Schumpeter’s influence on this first pillar of biophysicaleconomics can be seen in his consideration of institutions, which form andevolve over historical time, adapting to change.

Regarding the second pillar of qualitative and irreversible changes in economic
processes, it is worth noting Georgescu-Roegen’s direct reference toSchumpeter in the section entitled “Biophysical Economic Evolution” inGeorgescu-Roegen (1992). Georgescu-Roegen first mentions Marshall, who isoften associated with economic biology, alongside Schumpeter for similarreasons. He then focuses on Schumpeter as an economist who developed aframework not only for economics but for understanding evolution in all fields.
Georgescu-Roegen explains Schumpeter’s vision of economic evolution as
constantly driven by discontinuous new axes of human ingenuity, and contrasts

21

it with the concept of growth by quantity addition. Schumpeter was the first to
use the term “development” in contrast to the concept of growth by quantity
addition, and he conceived of economic evolution as being constantly driven by
discontinuous innovations, products of the continuous inventive capacity of thehuman mind. Schumpeter’s influence on the economic development discussed
here is undeniable. According to Georgescu-Roegen, the continuous qualitativeand structural changes in economic processes due to the emergence of new axesof reference require the dialectical integration of Schumpeter’s discontinuous
concepts into traditional analysis in order to truly understand reality.

From these considerations it can be concluded that Schumpeter’s theory of
economic evolution and Georgescu-Roegen’s biophysical economics are
remarkably consistent in their evolutionary thinking, and it may be reasonable
to assume that the latter encompasses the former. As for the subsequentdevelopments that built on this foundation, while Schumpeter (perhaps) aimed
to construct an economic sociology but left it unfinished, Georgescu-Roegenwent on to develop a systemic methodology and model-building capable ofanalysing both the economy and the environment through the construction offlow-fund models. Although their specific interests may differ, GeorgescuRoegen can be considered one of the heirs of post-Schumpeterian economics inher anticipation of the construction of a field that includes not only economics
but also peripheral areas.

5. Comments on Callegari’s Concept of “Post-Schumpeterian Economics”

As noted above, the term 'post-Schumpeterian economics' is used in this study
to distinguish it from contemporary neo-Schumpeterian economics. Although
the term has been used in subtitles before, e.g. in Andersen (1994), it seems toemphasise the importance of modern evolutionary economics (Nelson and22Winter (1982) and its extensions) since the 1980s. Therefore, according to the
hypothesis of this study, it does not aim at bridging the "gap" between
Schumpeter and the neo-Schumpeterian school. In contrast, Beniamino
Callegari's "Foundations of Post-Schumpeterian Economics" (20-21), discussed
in this section, advocates the contemporary development of the Schumpeterianschool through a reaffirmation of its Schumpeterian foundations from an
ontological, analytical and methodological perspective, deliberately using theterm "post-Schumpeterian" in an era where the label "neo-Schumpeterian" isalready established. This awareness of these issues is also evident in this study.
At the beginning of his work, Callegari states the following18:

Being founded more than thirty years after Schumpeter’s passing, neoSchumpeterian economics initially held a weak connection to the originalcontribution.

While

most

founders

were

well

acquainted

with

Schumpeterian thought, the actual analytical use of the Schumpeterianframework was sparse, with original approaches being more prominent.
Schumpeter provided inspiration, and a degree of common ground, but
analytical heterogeneity dominated. Furthermore, the object of study of the
young

neo-Schumpeterianschoolwas

limitedincomparison

toSchumpeter’s, sporting a clear focus on technological innovation and microcompetitive dynamics, both analyzed primarily from an evolutionary
perspective. Monetary and financial aspects of development, in particular,
were conspicuously missing, leading to a rather partial revival of theoriginal contribution. (ibid., p. 1)

In order to reconstruct the ontological, analytical and methodologicalfoundations of post-Schumpeterian economics, Callegari focused on three
Callegari further calls them ‘spurious neo-Schumpeterian’ immediately after
this quote.

18

23

evolutionary thinkers: Schumpeter himself, Georgescu-Roegen and the French
philosopher Henri Bergson. His emphasis was on clarifying the relationshipbetween Schumpeter and Bergson, finding a Bergsonian foundation in
Schumpeter's ideas and locating it clearly. Georgescu-Roegen, on the other
hand, is positioned as an important mediator connecting them (ibid., p. 6)19.
However, the positioning of Georgescu-Roegen in this study is different. In thisstudy, Bergson is not mentioned at all, and due to the interests and preparationof the author, I would like to refrain from commenting on Callegari's newconcept of post-Schumpeterian economics at this point.

Regarding the relationship between Bergson and Schumpeter, references canbe found in Leontief (1950), Briefs (1960), Stolper (1994), but they mostly offer
intuitive observations that Schumpeter's economic evolution is closer toBergson's creative evolution than to biological evolution, without delving
further. As a relatively recent precursor study, we can mention Kusuki (2024),
who provides a literature-based argument for the proximity of the two from acreativity perspective, focusing on one aspect of Schumpeter's economic
evolution. Andersen (2009) also discusses Bergson's influence on Schumpeter,
noting that Bergson's ideas about time and consciousness seem directly
relevant to understanding Schumpeterian entrepreneurs and how toincorporate them into cyclical flow models. However, Andersen also argues that
Schumpeter avoided applying mathematics to the theory of development
because of the influence of Bergson's ontology, so Schumpeter’s contributions
However, in another passage, Andersen explained the relationship between
the three as follows: “Bergson, considering the analytical, arithmomorphic
approach a necessary and, properly supported, fertile analytical passage,
proposed to support it with philosophical discourse. Georgescu-Roegen is themost critical of the three, arguing for a radical methodological shift, bringing
dialectical reasoning to the fore and limiting the role played by arithmomorphic
concepts and analytical similes. Schumpeter’s own position is in the middle”(ibid., p. 33).

19

24

were “hidden in the cloud of semi-philosophical issues that emerged from
Schumpeter’s reference to Bergson’s strange book on Creative Evolution” (ibid.,
p. 314). The construction of Schumpeterian models using modern methods
developed by the neo-Schumpeterian school is understood as a theoreticaldevelopment in the direction obstructed by Bergson.

Callegari himself, while proposing to clearly position Bergsonian ontologicalconsiderations within the foundation of post-Schumpeterian economics, does
not seem to provide a direct and clear demonstration of the relationshipbetween Bergson and Schumpeter. But what does he mean by the Bergsonian
foundation for Schumpeter?

He begins by rejecting the commonly understood dichotomy (dualistic ontology)
as characteristic of Schumpeter's analytical approach, drawing on theliterature. He points out that Schumpeter's "separation of social and naturalscience is more instrumental than necessary, more analytical than ontological",
implying that Schumpeter saw a monistic essence beyond the dualistic
approach. This applies to the dichotomies found in Schumpeter's analysis, suchas between static and dynamic, creative and adaptive phenomena, and theevolution of the economy and the evolution of nature. Schumpeter saw amonistic essence beyond the dualistic approach. Thus, Schumpeter's Businessembodies Callegari's monistic ontology, including the confirmation of thisessence from the perspective of statistics and history.

After Schumpeter, Callegari moves on to Georgescu-Roegen, whom he positions
as a bridging figure between Schumpeter and Bergson. As mentioned in theprevious section of this study, Schumpeter's dichotomous analytical approachcorresponds to what Georgescu-Roegen calls dialectical concepts. In thisrespect, it can be said that Callegari and this study share the same view. But

25how can this lead to Bergson?

Callegari suggests that while Schumpeter and Bergson differ in theirapproaches to evolutionary economics and philosophy, they converge in theircreative interpretations of evolutionary processes. He notes that both thinkers
saw systemic approaches not as intellectual artefacts but as manifestations of
natural tendencies common to mind and matter. All phenomena, including
economic and social phenomena, can be seen as part of a monistic naturalprocess. Such processes include “two great tendencies, one, systemic order, andanother, creative evolution” (ibid.). Therefore, “despite a monist foundation, theanalytical process should accommodate a dualistic structure, reflecting bothanalytical and actual tendencies” (ibid.). This is what Callegari calls the
Bergsonian foundation of post-Schumpeterian economics. In contrast,
Georgescu-Roege's later scientific approach (Georgescu-Roegn 1971) could be
associated with a dialectical approach between closed and open systems.

The trio chosen by Callegari to lay the foundations of post-Schumpeterian
economics can indeed be seen as consistent in their analytical approach. Having
laid this foundation, Callegari moves on to examine creative agents,characterised by various imperfections, and their rationality. Furthermore, hedelves into the study of evolving systems due to their inherent imperfections.
With the exception of Bergson, the two economists discussed in this study
undoubtedly shared a vision similar to the one outlined above. However, theyenvisioned the study of systems beyond the economy, encompassing culture,society and even the global scale. Their methods of analysis included concrete
historical processes (such as institutions and institutional change) for
Schumpeter, and also included systemic modelling for Georgescu-Roegen. I'd be
happy to prepare a separate manuscript discussing these connections with thecontemporary neo-Schumpeterian school.

26

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