Policy and Complex Systems
We return to the importance of system-wide technological and economic discontinuities . Schumpeter foresaw and articulated clearly the political and social implications of such discontinuity in his later works , especially Business Cycles and Capitalism , Socialism and Democracy — very much in the spirit of the systems approach that he first sketched out in the “ missing Chapter 7 .” Schumpeter ’ s idea of “ creative destruction ” has its roots in the very nature of capitalism . 79
The disruptive nature of these events is evident and consistent with the logic of endogenous and system-wide discontinuous change . These changes are not driven by demand , but instead are “ forced by producers on consumers .” 80
A broader societal view brings up additional policy concerns such as the welfare impacts of “ the gales of creative destruction ,” 81 that have been expressed in the form of organized resistance to new technologies . A contemporary example of this phenomenon is the global debate on the adoption of transgenic crops . 82
Human Capabilities
An equally important source of system-wide disruptive force arising from Schumpeter ’ s theory is the role of human capabilities . The various tasks that
Schumpeter ascribes to the entrepreneur cannot be performed without paying special attention to this role . Similarly , the illustrative case of railroads was an example of the importance of technical competence . Such capabilities are equally needed where society is simply adapting to change . But according to Schumpeter , human capabilities are even more critical when a society is engaged in creative economic responses . 83
To Schumpeter , the quality of human resources was critical to the execution of the entrepreneurial function . Models of “ derived development ” would not appreciate the significance of building capacity in emerging countries . Indeed , when they did , the emphasis was on building up a cadre of functionaries for the public service . Technical fields such as science , technology , and engineering were largely considered irrelevant to emerging countries except in limited areas where they supported assimilation of imported products or inevitable areas of adaptive research such as plant breeding . Even more critical was the low priority given to higher education in general and higher technical education in particular .
The three areas raised here — systems approaches to economic development ; inspirational and practical roles of infrastructure investments in development ; and the role of human capabilities — were evident challenges in the early phases of development studies .
79
Schumpeter , Capitalism , Socialism and Democracy , 83 .
80
Schumpeter , Business Cycles , 73 .
81
C . Schubert , “ How to Evaluate Creative Destruction : Reconstructing Schumpeter ’ s Approach ,” Cambridge Journal of Economics 37 ( 2 ) ( March 2013 ): 227 – 250 , at 229 ; and C . Schubert , “ Is Novelty Always a Good Thing ? Towards an Evolutionary Welfare Economics ,” Journal of Evolutionary Economics 22 , 3 ( 2012 ):
585 – 619 .
82
On the political juxtaposition of activists vs . corporations , see , for example , R . Schurman and W . Munro , Fighting for the Future of Food : Activists versus Agribusiness ( Minneapolis : University of Minnesota Press , 2010 ). For an evolutionary interpretation of resistance to innovation , see J . Mokyr , “ Technological Inertia in Economic History ,” The Journal of Economic History 52 ( 2 ) ( 1992 ): 325 – 338 ; and J . Mokyr , “ Punctuated
Equilibria and Technological Progress ,” American Economic Review 80 ( 2 ) ( 1990 ): 350 – 354 .
83
Schumpeter , “ The Creative Response in Economic History ,” 150 . 18