Policy and Complex Systems
He pointed to errors of interpretation such as “ identification of innovation with new technology .” 50
Rimmer raised interesting points regarding the impact of short-term pressure to show improvements in economic growth on the extent to which economists were likely to acknowledge the relevance of Schumpeter . This is an important point that downplays long-term investments such as technical training , institution-building , and technological innovation .
In a 1962 response to the decade-long debate , Laumas noted a false dichotomy between investment in infrastructure and improvement in the policy environment . He said that “ even though government action in creating infrastructure investment can be conceived to be conducive to the growth of private entrepreneurship , yet it gives rise to the possibility of uncertainties which may tend to vitiate the social climate .” 51 He underrated the important role that Schumpeter attached to infrastructure , especially railroads , in fostering entrepreneurship . Laumas also misread Schumpeter ’ s view on the significance of the size of the technological innovation , a common confusion between technical and economic change . 52
It appears on the surface that Nurske , Wallich , and Bonné shared some common interests in the role of industrial development . But they differ remarkably on the emphasis they place on the role of entrepreneurs . It is also evident from the debates that Schumpeter ’ s critics started with a commitment to the role of planning and did not adequately offer a convincing case on the absence of entrepreneurs in emerging countries . Their focus was on the supremacy of government intervention through government planning processes , paving the way for choosing the state rather than the private sector as the main recipient of development assistance . 53
Schumpeter ’ s critics carried the day and much of the conduct of development studies continues to stress the role government plays in ways that reduce the private sector ’ s freedom to operate . The influence of Wallich continued to be reflected in scholarly journals well into the 1960s . 54
Reassessing Hans Singer and the Birth of Development Studies
The rejection of Schumpeter ’ s ideas
by development economists was shared widely among leading founders of the field . Probably the most important player in this rejection was Hans Singer , a towering figure in development studies and architect of numerous United Nations ( UN ) agencies , programs ,
50
Ibid ., 434 .
51
P . S . Laumas , “ Schumpeter ’ s Theory of Economic Development and Underdeveloped Countries ,” Quarterly Journal of Economics 76 ( 4 ) ( November 1962 ): 422 – 450 .
52
For a rebuttal on this topic , see R . Wiles , “ Schumpeter and Underdeveloped Countries : Comment ,” Quarterly Journal of Economics 77 ( 4 ) ( 1963 ): 697 – 699 . As Schumpeter stated , “ It should be observed at once that the ‘ new thing ’ need not be spectacular or of historical importance . It need not be Bessemer steel or the explosion motor . It can be the Deerfoot sausage .” J . A . Schumpeter , “ The Creative Response in Economic
History ,” Journal of Economic History 7 ( 2 ) ( November 1947 ): 151 .
53
L . Mark , “ The Favored Status of the State Entrepreneur in Economic Development Programs ,” Economic Development and Cultural Change 7 ( 4 ) ( 1959 ): 656 .
54
For a rendition of Wallich , see R . C . Wiles , “ Professor Joseph Schumpeter and Underdevelopment ,” Review of Social Economy 25 ( 2 ) ( 1967 ): 196 – 208 .
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