John Maynard Keynes has influenced Western governments to intervene in economic recessions and depressions and spend their way to recovery. An alternative view by the Austrian School, that markets should be freed to find their own level by trusting the spontaneous organising power of the price mechanism, is less popular. Co-founder Friedrich Hayek is now getting a boost from a rapper, who explains some of the basic principles.
It's time to ask Joseph Schumpeter to ride to the centre of the screen.
Schumpeter was unusual because he rejected abstract mathematical economic theory that attempted to simplify variables to prove that one caused the other. He included sociological understanding in his economic theories and recognised that economic cycles are more complex mathematically than previously thought.
Schumpeter championed the entrepreneur as the main driver of innovation and disrupter of business cycles in equilibrium. He believed that innovation came from within the economic structure and called this Creative Destruction. His views on the demise of capitalism paralleled those of Karl Marx, but with a different progression. Advanced capitalism would stagnate from within, by regulating society in such a way that the social and intellectual climate necessary for entrepreneurship to thrive would fade.
There's no rap song to Schumpeter yet, but someone has built a shrine to him in his own words.
Joseph Schumpeter wasn't just an academic and prolific author, but had been President of a bank and Finance Minister of a Socialist government, despite his more conservative/libertarian views.
Keynes versus Hayek Round 2 is here: