Complexity , Innovation , and Development
Schumpeter offered a superior starting point for thinking about development . However , the preoccupation with planning , which is a narrow function of the state , resulted in the rejection of important ideas that would later help to drive East Asian economies . Japan , which adopted a different approach to economic recovery , demonstrated congruence with Schumpeter ’ s ideas . 84
One key aspect of building technological capabilities is the growing interest among developing countries to use existing technologies but to pursue alternative development pathways . To some extent this is driven by the desire to break out from some of the technological paradigms that have come with a wide range of social and ecological costs .
Role of Government
Schumpeter displayed a fascinating lack
of interest in discussing the policy implications of his work . Schumpeter ’ s understanding of the place of government in his theory of development is particularly important in light of efforts by his critics to view government as a substitute for the entrepreneur .
Schumpeter viewed the role of the state as belonging to the wider context of system-wide “ economic sociology ” and subject to the same principles covering the creation of new combinations . He avoided the deterministic discussion on the relationships between economic and political actors .
In fact , “ economic sociology ” dealt largely with “ economically relevant institutions , including habits and all forms of behavior in general , such as government , property , private enterprise , customary , or ‘ rational ’ behavior .” 85 Economic sociology gave Schumpeter the opportunity to explore institutional innovations that accompany technological change and economic transformation . These innovations are driven by internal interests that may or may not align with entrepreneurial activities in the private sector . 86 In addition , Schumpeter was acutely aware of institutional persistence : “ Social structures , types and attitudes are coins that do not readily melt . Once they are formed they persist , possibly for centuries …” 87 The implications of institutional persistence for development are quite evident but were not the subject of much intellectual interest among Schumpeter ’ s critics . 88
The fundamental implication of Schumpeter ’ s view is that government institutions have their own evolutionary dynamics that may not necessarily align with development objectives . Moreover , when established , such institutions are self-replicating . Many of the structural reform programs promoted by the World Bank and the International Monetary Fund in emerging countries were aimed at dealing with the issue of institutional persistence .
The real question , however , is not so much about substituting government for the entrepreneur . It is about finding ways
84
T . K . McCraw , “ Schumpeter Ascending ,” American Scholar 60 ( 3 ) ( 1991 ): 371 – 392 .
85
J . A . Schumpeter , “ The Communist Manifesto in Sociology and Economics ,” Journal of Political Economy 57 ( 3 ) ( June 1949 ): 203 – 204 .
86
A . Ebner , “ Institutions , Entrepreneurship , and the Rationale of Government : An Outline of the Schumpeterian Theory of the State ,” Journal of Economic Behavior and Organization 59 ( 4 ) ( 2006 ): 497 – 515 .
87
Schumpeter , Capitalism , Socialism and Democracy , 12 .
88
For example , despite being acknowledged as important , the issue is relegated to an appendix in Bonné , Studies in Economic Development , 261 – 271 .
19