Economic History Association

The Creative Response in Economic History

Author(s): Joseph A. Schumpeter
Source: The Journal of Economic History, Vol. 7, No. 2 (Nov., 1947), pp. 149-159
Published by: Cambridge University Press on behalf of the Economic History Association
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JOURNAL

THE
VOL.

VII

OF

ECONOMIC

HISTORY

I947

NOVEMBER

NO.

History
in Economic
Response
The Creative
I

ECONOMIC historiansand economictheoristscan make an interestingand sociallyvaluablejourneytogether,if they will. It would

be an investigationinto the sadlyneglectedareaof economicchange.
As anyonefamiliarwith the historyof economicthoughtwill immediatelyrecognize,practicallyall the economistsof the nineteenthcentury and manyof the twentiethhave believeduncriticallythat all that
is needed to explain a given historicaldevelopmentis to indicate
conditioningor causalfactors,such as an increasein populationor the
supplyof capital.But this is sufficientonly in the rarestof cases.As a
rule, no factor acts in a uniquely determinedway and, wheneverit
does not, the necessityarisesof going into the details of its modus
operandi,into the mechanismsthroughwhich it acts. Exampleswill
illustratethis. Sometimesan increasein populationactuallyhas no
othereffectthan thatpredicatedby classicaltheory-a fall in per capita
real income;'but, at othertimes,it may havean energizingeffectthat
inducesnew developmentswith the resultthat per capitareal income
rises.Or a protectiveduty may have no other effect than to increase
the priceof the protectedcommodityand, in consequence,its output;
but it may also induce a complete reorganizationof the protected
industrywhich eventuallyresultsin an increasein output so great as
to reducethe pricebelow its initiallevel.
What has not been adequatelyappreciatedamong theoristsis the
1 Even within the assumptions of classical theory this is not necessarily true; but we need
not go into this.

149
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150

Joseph A. Schumpeter

distinctionbetweendifferentkinds of reactionto changesin "condition."Wheneveran economyor a sectorof an economyadaptsitself

to a change in its data in the way that traditionaltheory describes,
whenever,that is, an economyreactsto an increasein populationby
simplyaddingthe new brainsand hands to the working force in the
existing employments,or an industryreactsto a protectiveduty by
expansionwithin its existing practice,we may speak of the development as adaptiveresponse.And wheneverthe economyor an industry
or some firmsin an industrydo somethingelse, somethingthat is outsideof the rangeof existingpractice,we may speakof creativeresponse.
First,
Creativeresponsehas at least three essentialcharacteristics.
all
of
possession
full
in
is
who
from the standpointof the observer
relevantfacts,it can alwaysbe understoodex post;but it can practically
neverbe understoodex ante; that is to say, it cannotbe predictedby
applyingthe ordinaryrules of inferencefrom the pre-existingfacts.
This is why the "how"in what hasbeencalledabovethe "mechanisms"
must be investigatedin each case. Secondly,creativeresponseshapes
the whole courseof subsequenteventsand their "long-run"outcome.
It is not true that both types of responsesdominateonly what the
leaving the ultimateoutcometo
economistloves to call "transitions,"
be determinedby the initialdata.Creativeresponsechangessocialand
economicsituationsfor good, or, to put it differently,it createssituationsfrom which thereis no bridgeto thosesituationsthat might have
emergedin its absence.This is why creativeresponseis an essential
elementin the historicalprocess;no deterministiccredoavailsagainst
this. Thirdly, creativeresponse-the frequencyof its occurrencein a
group,its intensityand successor failure-has obviouslysomething,be
that muchor little,to do (a) with qualityof the personnelavailablein
a society,(b) with relativequality of personnel,that is, with quality
availableto a particularfield of activityrelativeto quality available,
at the sametime, to others,and (c) with individualdecisions,actions,
and patternsof behavior.Accordingly,a studyof creativeresponsein
The
businessbecomescoterminouswith a study of entrepreneurship.
mechanismsof economicchange in capitalistsocietypivot on entreWhetherwe emphasizeopportunityor conditions,
preneurialactivity.'2
the responsesof individualsor of groups,it is patentlytrue that in
capitalistsociety objective opportunitiesor conditions act through
2 The function itself is not absent from other forms of society; but capitalist entrepreneurship
is a sufficientlydistinct phenomenon to be singled out.

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The Creative Response in Economic History

151

entrepreneurial
activity,analysisof which is at the very least a highly
importantavenue to the investigationof economic changes in the
capitalistepoch.3This is compatiblewith widely differentviews about
its importanceas an "ultimatecause."
Seen in this light, the entrepreneurand his functionare not difficult
is simplythe doing of new
to conceptualize:the definingcharacteristic
thingsor the doing of things that arealreadybeing done in a new way
(innovation).4It is but natural,and in factit is an advantage,that such
a definitiondoesnot drawany sharpline betweenwhat is and what is
not "enterprise."
For actual life itself knows no such sharp division,
thoughit showsup the typewell enough.It shouldbe observedat once
that the "newthing"need not be spectacularor of historicimportance.
It need not be Bessemersteel or the explosionmotor. It can be the
Deerfootsausage.To see the phenomenoneven in the humblestlevels
of the businessworld is quite essentialthough it may be difficult-to
find the humbleentrepreneurs
historically.
Distinction from other functions with which enterpreneurshipis
frequentlybut not necessarilyassociated-justas "farmership"
is frequentlybut not necessarilyassociatedwith the ownershipof land and
with the activityof a farm hand-does not presentconceptualdifficultieseither.One necessarydistinctionis that betweenenterpriseand
management:evidentlyit is one thing to set up a concernembodying
a new idea and anotherthing to head the administrationof a going
concern,howevermuch the two may shadeoff into each other.Again,
it is essentialto note that the entrepreneurial
function,though facilitated by the ownershipof means, is not identical with that of the
capitalist.5New light is urgentlyneeded on the relationbetweenthe
3 Arthur H. Cole has opened new vistas in this area in his presidential address before the
Economic History Association, "An Approach to the Study of Entrepreneurship,"THE TASKS OF
ECONOMIC HISTORY (Supplemental Issue of THE JOURNAL OF ECONoMIc HISTORY), VI (1946),
I-15.

4 An exact definition can be provided by means of the concept of production functions. On

this, see Oscar Lange, "A Note on Innovations," Review of Economic Statistics, XXV (1943),
I9-25.
5 It is sometimes held that entrepreneurship,although it did not require antecedent ownership of capital (or very little of it) in the early days of capitalism, tends to become dependent
upon it as time goes on, especially in the epoch of giant corporations. Nothing could be
further from the truth. In the course of the nineteenth century, it became increasingly easier to
obtain other people's money by methods other than the partnership, and in our own time
promotion within the shell of existing corporationsoffers a much more convenient access to the
entrepreneurialfunctions than existed in the world of owner-managed firms. Many a would-be
entrepreneur of today does not found a firm, not because he could not do so, but simply
because he prefers the other method.

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152

Joseph A. Schumpeter

two, especiallybecauseof the cant phrasesthat are currenton this

topic.In the third place,it is particularlyimportantto distinguishthe
entrepreneur
from the "inventor."Manyinventorshave becomeentrepreneursand the relativefrequencyof this case is no doubt an interesting subject to investigate,but there is no necessaryconnection
betweenthe two functions.The inventorproducesideas,the entrepreneur "getsthings done,"which may but need not embody anything
that is scientificallynew. Moreover,an idea or scientificprincipleis
not, by itself, of any importancefor economicpractice:the fact that
Greeksciencehad probablyproducedall that is necessaryin orderto
constructa steamengine did not help the Greeksor Romansto build
a steamengine; the fact that Leibnitzsuggestedthe idea of the Suez
Canal exerted no influencewhatever on economic history for two
hundredyears.And as differentas the functionsare the two sociological and psychologicaltypes.6Finally,"gettingnew things done"is not
only a distinctprocessbut it is a processwhich producesconsequences
that are an essentialpart of capitalistreality.The whole economic
historyof capitalismwould be differentfrom what it is if new ideas
had been currentlyand smoothlyadopted,as a matterof course,by all
firmsto whosebusinessthey were relevant.But they were not. It is in
mostcasesonly one man or a few men who see the new possibilityand
areableto copewith the resistancesand difficultieswhich actionalways
meetswith outsideof the rutsof establishedpractice.This accountsfor
the large gains that successoften entails,as well as for the lossesand
vicissitudesof failure.These things are important.If, in every individual case,the difficultiesmay indeed be called transitional,they are
transitionaldifficultieswhich are never absentin the economy as a
whole and which dominatethe atmosphereof capitalist,life permanently. Hence it seems appropriateto keep "invention"distinctfrom
"innovation."
The definitionthat equatesenterpriseto innovationis a veryabstract
one. Some classificationsthat are richer in content may be noticed
becauseof theirpossibleuse in drawingup plansfor specificpiecesof
research.Thereis the obviousclassification-historical
and systematicof the phenomenaof enterpriseaccordingto institutionalforms, such
as the medievaltradingcompany,the later"charteredcompanies,"the
partnership,the modern"corporation,"
and the like, on all of which
I The relation between the two has attracted interest before. See, e.g., F.
W. Taussig,
Inventors and Money-Makers(New York: The Macmillan Company, i9i5).

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The Creative Response in Economic History 153

thereexistsa vast amountof historicalwork.7The interactionof instiactivity,the "shaping"influenceof
tutionalforms and entrepreneurial
the formerand the "bursting"influenceof the latter,is, as has already
been intimated,a majortopic for furtherinquiry.Closely connected
with this classificationis the old one accordingto fields of activity-.
commerce,industry,finance8-which has been refinedby the following distinctions:enterprisethat introduces"new"commodities;enterprise that introducestechnologicalnovelties into the productionof
"old"commodities;enterprisethat introducesnew commercialcombinationssuch as the openingup of new marketsfor productsor new
sourcesof supplyof materials;enterprisethat consistsin reorganizing
an industry,for instance,by making a monopolyout of it?
But there are other classificationsthat may prove helpful. We may
classify entrepreneursaccording to origins and sociologicaltypes:
feudal lords and aristocraticlandowners,civil servants-particularly
important,for instance,in Germany after the Thirty Years' War,
especiallyin mining-farmers, workmen, artisans,membersof the
learnedprofessions,all embarkedupon enterpriseas has often been
noticed,and it is highly interestingfrom severalpointsof view to clear
performances
up this matter.Or we may try to classifyentrepreneurial
accordingto the precisenatureof the "function"filled and the aptitudes(some may even add motivation)involved.Sinceall this presumably changed significantly in the course of the capitalist epoch,
economichistoriansare particularlyqualifiedfor work on this line.
Though the phrase"gettinga new thing done"may be adequately
it coversa greatmany differentactivitieswhich, as the
comprehensive,
observerstressesone morethan anotheror as his materialdisplaysone
7 Gustav von Schmoller introduced the subject into his general treatise (Grundriss) of 1904.
But the novelty consisted only in the systematic use he made of the result of historical research.
Less systematically,the subject had entered general treatises before.
8 Financial institutions and practices enter our circle of problems in three ways: they are
'auxiliary and conditioning"; banking may be the object of entrepreneurialactivity, that is to
say, the introduction of new banking practices may constitute enterprise; and bankers (or other
"financiers") may use the means at their command in order to embark upon commercial and
industrial enterprise themselves (for example, John Law). See the recent book by Fritz
Redlich, The Molding of American Banking-Men and Ideas (New York: Hafner Publishing

Company,I947).
9This case emphasizes the desirability, present also in others, of divesting our idea of
entrepreneurial performance of any preconceived value judgment. Whether a given entrepreneurial success benefits or injures society or a particular group within society is a question
that must be decided on the merits of each case. Enterprise that results in a monopoly position,
even if undertaken for the sole purpose of securing monopoly gains, is not necessarily antisocial in its total effect although it often is.

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154

Joseph A. Schum peter

morethan another,may, locally,temporarily,or generally,lend differIn some cases,or to some observers,it

ent colorsto entrepreneurship.
may be the activityof "settingup" or "organizing"that standsout
from the others;in other cases,or for other observers,it may be the
breakingdown of the resistancesof the environment;in still other
cases,or for still otherobservers,simplyleadershipor, again,salesmanship. Thus, it seemsto me, there was a type of entrepreneurin early
capitalistindustrythat is best describedas.a "fixer."Modernhistory
vested in a company
furnishesmany instancesof entrepreneurship
promotor.'0The typicalindustrialentrepreneurof the nineteenthcentury was perhapsthe man who put into practicea novel method of
productionby embodyingit in a new firm and who then settleddown
of a company,if he was successful,
into a positionof owner-manager
or of stockholdingpresidentof a company,gettingold and conservative
in the process.In the large-scalecorporationof today,the questionthat
is neverquite absentariseswith a vengeance,,namely,who shouldbe
In a well-knownbook, R. A. Gordon
consideredas the entrepreneur.
has presentedmuch interestingmaterialbearingupon this question."
II
The economicnature,amount, and distributionof the returnsto
activityconstituteanotherset of problemson which
entrepreneurial
investigationmay be expectedto shed much-neededlight. Conceptual
difficultiesconfrontus here even beforewe come up againstthe still
more formidabledifficultiesof fact finding. For the "profit"of the
Englishclassics,which was analyzedby J. S. Mill into wages of management,premiumsfor risk, and intereston owned capital, was a
returnto normalbusinessactivityand somethingquite differentfrom,
though influencedby, the gain of successfulenterprise'in our senseof
the term. What the latter is can best be explainedby consideringa
specialcase.Supposethat a man, realizingthe possibilityof producing
acceptablecaviarfrom sawdust,sets up the ExcelsiorCaviarconcern
and makes it -a success.If this concernis too small to influencethe
pricesof eitherthe productor the factorsof production,he will sell the
10In a sense, the promotor who does nothing but "set up" new business concerns might
be consideredas the purest type of entrepreneur.Actually, he is mostly not more than a financial
agent who has little, if any, title to entrepreneuriship-no more than the lawyer who does
the legal work involved. But there are important exceptions to this.
11 Robert A. Gordon, Business Leadership in the Large Corporation (Washington, D.C.:

The BrookingsInstitution,I945).

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The Creative Response in Economic History

155

formerand buy the latterat currentprices.If, however,he turns out

the unit of caviarmore cheaplythan his competitors,owing to his
use of a much cheaperraw material,he will for a time, that is, until
other firms copy his method, make (essentiallytemporary) surplus
gains. These gains are attributableto personalexertion.Hence they
might be called wages. They may with equal justicebe attributedto
the fact that,for a time, his methodis exclusivelyhis own. Hence they
might alsobe calledmonopolygains.But whetherwe electto call them
wages or monopolygains, we must add immediatelythat they are a
special kind of wages or monopoly gains that differ in important
respectsfrom what we usuallymean to denoteby these terms.And so
we had bettercall them simply entrepreneurial
gains or profit.However, it should be observedthat if this venture means a "fortune,"
this fortunedoes not typicallyarisefrom the actualnet receiptsbeing
savedup and investedin the sameor some otherbusiness.Essentially,
it emergesas a capital gain, that is, as the discountedvalue of the
streamof prospectiveexcessreturns.
In this simple'case, which, however, does constitutea type, the
investigatoris not confrontedwith difficultiesotherthan thoseinvolved
in fact finding.Also, it is clearwhat happenswith that surplusgain:
in this case the entrepreneurial
gain goes to the entrepreneur,12and
we can also see, if we have the facts,how, to use a currentphrase,the
"fruitsof the progressinvolved are handed to consumersand workmen." The speed of this processof "handingon" varieswidely, but
it would alwayswork, in isolatedcaseslike the one under discussion,
througha fall in the price of the productto the new level of costs,
which is boundto occurwhenevercompetitionstepsup to the successful concern.But even here we meet the practiceof innovatorsstriving
to keep theirreturnsaliveby meansof patentsand in otherways.The
gains describedabove shade off into gains from purposiverestriction
of competitionand createdifficultiesof diagnosisthat are sometimes
Cumulationof carefullyanalyzedhistoricalcasesis
insurmountable.3'
12 It should be obvious that this does not mean that the whole social gain resulting from
the enterprise goes to the entrepreneur. But the question of appraisal of social gains from
entrepreneurship,absolute and relative to the entrepreneurialshares in them, and of the social
costs involved in a system that relies on business interests to carry out its innovations, is so
complex and perhaps even hopeless that I beg to excuse myself from entering into it.
13 Still more difficult is, of course, responsible appraisal, that is to say, appraisal that is not
content with popular slogans. Measures to keep surplus gains alive no doubt slow up the
process of "handing on the fruits of progress." But the knowledge that such measures are
available may be necessary in order to induce anyone to embark upon certain ventures. There

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Joseph A. Schumpeter

156

the best means of shedding light on these things, of supplyingthe

theoristwith strategicassumptions,and banishingslogans.
If innovationsare neither individuallysmall nor isolated events,
complicationscrowd upon us. Entrepreneurialactivity then affects
wage and interestrates from the outset and becomesa factor-the
fundamentalfactorin my opinion-in boomsand depressions.This is
one reason,but not the only one, why entrepreneurial
gainsare not net
returns (i) to the whole set of people who attemptentrepreneurial
ventures,(2) to the industrialsectorin which innovationoccurs,(3)
to the capitalistintereststhat financeentrepreneurial
activityand to
the capitalistclassas a whole.
Concerningthe firstpoint, I might have made my specialcasemore
realisticby assumingthat severalor many people try their hands at
producingthat caviarbut that all but one fail to producea salable
productbefore the successof this one presentsan exampleto copy.
The gains of the successfulentrepreneurand of the capitalistswho
finance him-for whenevercapitalfinancesenterprisethe interestis
paid out of the entrepreneurial
gains, a fact that is very importantfor
our grasp of the interestphenomenon-should be relatednot to his
effort and their loan but to the effort and the loans of all the entrepreneursand capitalistswho made attemptsand lost. The presenceof
gains to enterpriseso great as to impressus as spectacularand, from
the standpointof society,irrationalis then seen to be compatiblewith
a negative return to entrepreneursand financing capitalistsas a
group.14

It is similarlyclearthat entrepreneurial
gain is not a net accretion
to the returnsof the industrialsectorin which it occurs.The impact
of the new productor method spells losses to the "old"firms. The
competitionof the man with a significantlylowercost curveis, in fact,
the really effective competitionthat in the end revolutionizesthe
industry.Detailedinvestigationof this processwhich may take many
forms might teach us much about the actual working of capitalism
thatwe are but dimly perceivingas yet.
also may be other compensating advantages to such measures, particularly where rapid introduction into general use of new methods would involve severe dislocations of labor, and where
entrepreneurialgains are important sources of venture capital.
14 Whether this actually is so in any particular case is, of course, extremely difficult to
establish. The successes stand out, statistically and otherwise; the failures are apt to escape
notice. This is one of the reasons why economists seem' so much impressed by peak successes.
Another reason for faulty appraisal is neglect of the fact that spectaculargains may stimulate
more effectively than would the same sum if more equally distributed. This is a question that
no speculation can decide. Only collection of facts can tell us how we are to frame our theory.

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The Creative Response in Economic History 157

Concerningthe thirdpoint,while we havea fair amountof information about how the working class fares in the processof economic
change, in respectto both real wages and employment,we know
much less about that elusive entity, capital,that is being incessantly
destroyedand re-created.That the theorist'steaching, accordingto
from decliningto risingindustries,is unrealiswhichcapital"migrates"
tic is obvious:the capital"invested"in railroadsdoes not migrateinto
but will perishin and with the railtruckingand air transportation
roads.Investigationinto the historiesof industries,concerns,and firms,
includingsurveysof sectorsin orderto point out how long a typical
firm stays in businessand how and why it drops out, might dispel
many a preconceivednotion on this subject.
III
one more,set of problemson which
like
to
touch
Finally,I should
we may expect light from historicalanalysis,namely, the problems
that comewithin the rangeof the question:doesthe importanceof the
function decline as time goes on? There are serious
entrepreneurial
reasonsfor believing that it does. The entrepreneurialperformance
involves,on the one hand, the ability to perceivenew opportunities
that cannotbe provedat the momentat which actionhas to be taken,
and, on the other hand, will power adequateto break down the
resistancethat the socialenvironmentoffersto change.But the range
of the provableexpands,and actionupon flashesor hunchesis increasingly replacedby actionthat is basedupon "figuringout."And modern
milieusmay offerless resistanceto new methodsand new goods than
usedto be the case.So far as this is so, the elementof personalintuition
and force would be less essentialthan it was: it could be expectedto
yield its placeto the teamworkof specialists;in otherwords,improvement could be expectedto become more and more automatic.Our
impressionto this effectis reinforcedby parallelphenomenain other
fields of activity.For instance,a moderncommanderno doubtmeans
less in the outcomeof a war than commandersmeant of old, and for
the same reasons-;campaignshave becomemore calculablethan they
usedto be and thereis less scopefor personalleadership.
But this is at presentonly an impression.It is for the historianto
establishor to refuteit. If, however,it shouldstandup underresearch,
this would be a resultof the utmostimportance.We shouldbe led to
expect that the whole mechanism of economic developmentwill
change significantly. Among other things, the economy would
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158

Joseph A. Schum peter

progressivelybureaucratize
itself. There are, in fact, many symptoms
of this. And consequenceswould extend far beyond the field of
economic phenomena. Just as warrior classes have declined in
importanceever since warfare-and especiallythe managementof
armies in the field-began to be increasingly"mechanized,"so the
businessclass may declinein importance,as its most vital figure,the
entrepreneur,
progressively
loseshis mostessentialfunction.This would
mean a differentsocialstructure.
Therefore,the sociologyof enterprisereachesmuch furtherthan is
implied in questions concerning the conditions that produce and
shape,favoror inhibitentrepreneurial
activity.It extendsto the structure and the very foundationsof, at least, capitalistsociety or the
capitalistsector of any given society.The quickestway of showing
this startsfrom recognitionof the facts that, just as the rise of the
bourgeoisclass as a whole is associatedwith successin commercial,
industrial,and financialenterprise,so the rise of an individualfamily
to "capitalist"status within that class is typically5 associatedwith
entrepreneurial
success;and that the elimination,of a family from the
"capitalist"classis typicallyassociatedwith the loss of those attitudes
and aptitudesof industrialleadershipor alertnessthat enterour picture
of the entrepreneurial
type of businessman.
Now these facts, if they are facts, might teach us a lot about such
fundamentalproblemsas the natureof the classstructureof capitalist
society; the sort of class civilizationwhich it develops and which
differsso characteristically
from the classcivilizationof feudalsociety;
its schemaof values; its politics, especiallyits attitudesto state and
churchand war; its performanceand failures;its degreeof durability.
But a greatdeal of work needsto be done in orderto arriveat scientificallydefensibleopinionsabout all these and cognatethings. First
of all, these "facts"must be established.How far is it reallytrue, for
instance,that entrepreneurs,while not forming a social class themselvesbut originatingin almostall existingstrata,do "feed"or renew
the capitaliststratum?To put it differently,does the latter recruit
itself throughentrepreneurial
successes?Or, to put it still differently,
15 That is to say, successful entrepreneurshipis that method of rising in the social scale
that is characteristicof the capitalist blueprint. It is, of course, not the only method. First,
there are other possibilities within the economic sphere, such as possession of an appreciating
natural agent (for example, urban land) or mere speculation or even, occasionally, success in
mere administrationthat need not partake of the specifically entrepreneurialelement. Secondly,
there are possibilities outside the business sphere, for business success is no more the only
method of rising in capitalist society than knightly service was in feudal society.

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The Creative Response in Economic History

159

does the "typical"historyof industrialfamilieslead back to entrepreneurialperformancesthat "created"a concernwhich then, for a time,
with
yielded capitalisticsurplusesby being merely "administrated"
more or less efficiency?How much statisticaltruth is there in the
slogan:"Threegenerationsfrom overallsto overalls"?Secondly,what
is, as measuredby observableresults,the economicand cultural,also
political,importanceof the further fact that, though the entrepreneurialfunctioncannotbe transmittedby inheritance,except,possibly,
by biologicalinheritance,the financialor industrialpositionthat has
been createdcan? How much truthis therein the contentionthat the
industrialfamily interestis, in capitalistsociety,the guardianof the
nation'seconomicfuture?
These questions,which could be readily multiplied, have often
attractedattention.Everytextbookof economichistorycontainssome
materialaboutthe originsof entrepreneurs
of historicalstanding,and
a number of studies have been inspired by full awarenessof the
importanceof the answersfor our understandingof capitalistsociety
But thesestudiesarefew and that
and of the waysin which it works."6
attentionhasbeendesultory.We do not know enoughin orderto form
valid generalizationsor even enoughto be surewhetherthere are any
generalizationsto form. As it is, most of us as economistshave some
opinionson thesematters.But theseopinionshavemoreto do with our
preconceivedideas or ideals than with solid fact, and our habit of
illustratingthem by strayinstancesthat have come under our notice
is obviouslybut a poorsubstitutefor seriousresearch.Veblen's-or, for
that matter,Bucharin's-Theoryof the LeisureClassexemplifieswell
what I mean.It is brilliantand suggestive.But it is an impressionistic
essaythat does not come to gripswith the real problemsinvolved.Yet
there is plenty of material.A great and profitabletask awaits those
who undertakeit.
JOSEPH A. SCHUMPETER
HarvardUniversity
-16 An example is the study by F. J. Marquis and S. J. Chapman on the managerial stratum
,of the Lancashirecotton industry in the Journal of the Royal Statistical Society, LXXV, Pt. III
(1912).

293-306.

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