Prices In Motion: Towards A Schumpeterian Price Theory

Abstract

To Schumpeter, endogenous development is an essential characteristic of capitalism that disrupts the equilibrium of the circular flow of the economy. Price equilibrium in the circular flow is displaced by an analysis of prices in motion. The diversion of productive inputs from their existing employment through competition from entrepreneurs and the process of creative destruction both impact on prices throughout the economy and generate business cycles. While Schumpeters theory of the business cycle and, implicitly, his price theory, have been heavily criticized, this article suggests a way forward to a revised theory of prices in motion.

Schumpeter's Price Theory, by HarryBloch (Routledge, Abingdon, 2017), pp. xiii+174.

“…Attention was drawn to this problem by Harry Bloch and Stan Metcalfe at the International Schumpeter Society Conference in 2014 in Jena, sparking my personal interest in the problem of recovering a price theory from evolutionary models (Markey‐Towler, ). I am very glad Professor Bloch has now provided an extended discussion in Schumpeter's Price Theory of his research program addressing this problem (including Bloch, , ; Bloch & Metcalfe, ) which I have followed with some interest. This volume is a valuable contribution to the literature on price theory, and will be of substantial interest to anyone interested in the recovery of a compelling theory of prices from evolutionary economics models, or price theory in general.…”