The Theory of Economic Development

Groundbreaking economist Joseph A. Schumpeter (1883–1950) gained fame for his theory of “creative destruction,” which posits the economic obliteration of the old to make way for the entrepreneurial new. While this 1934 masterwork only alludes to that famous idea, it does introduce the concept of profit as “surplus value” and regards entrepreneurs as heroes in the capitalist saga. This classic treatise, despite its dense prose, remains required reading for students of economics and finance in academia, business and public policy.

The “Circular Flow”

Schumpeter notes that human beings interact socially and economically as they obtain goods and services. Workers and business owners produce goods via their labor, equipment and know-how. Experience teaches them how much to produce and when.