In the beginning of the present book, Paul Samuelson (1981a, 1) was quoted suggesting that Schumpeter at the end of his life “would have traded his Popeship for a Keynesian revolution.” The preceding chapters have reconstructed the type of scientific revolution Schumpeter tried to promote. His main ambition was to complement the reformed branch of equilibrium economics with a new evolutionary branch of the science of economics. Since Schumpeter's evolutionary economics was largely a personal affair, he only became the “Pope” of the reformation of equilibrium economics. He became a ‘heterodox Pope’, however, since his dual research programme not only led to praise of Samuelson's (1947) Foundations of Economic Analysis, but also to the recognition of its inadequacy with respect to his wished-for establishment of evolutionary economics as a viable branch of the science of economics. Actually, Schumpeter's ambition seems to have been to write a book that could have had the title ‘Foundations of Evolutionary Economic Analysis’. Such a book would probably have emphasised not only evolutionary economic theory, but also the related statistics and history. As a co-founder of the Econometric Society, he seems to have hoped that the econometric alliance between theoretical and statistical studies would help to develop evolutionary economics. The underdevelopment of his evolutionary analysis, however, served to drive ambitious theoreticians and econometricians away from him. The major thing he could do was to point out that they thereby ignored crucial facts about capitalist economic evolution.

I have a deep interest in the close relationship between modern science and the study of the internal dimensions of the human mind, which I consider to be spirituality. The reason is quite simple. Because we have this body, we feel pleasures and pains that relate to sensory experience. It is very urgent, very important to understand these sensory experiences. In fact these experiences are something very immediate to us and determine our moods, our feelings of happiness or sorrow. So we have to pay close attention to them to understand how they are felt, perceived, and how in turn they influence our minds. And just as we pay importance to the mind we have to pay equal importance to the physical body upon which all the sensorial experience of pain and pleasures register and in which they arise. So we have the physical body and the mind; the two are closely interconnected. Now, as I said, we experience these sensory perceptions in our body. This is what makes us sentient beings. At the same time we also have this sophisticated mind. Physical pain and pleasure is one thing, but we also create mental pains and pleasures. Some of these are purely the creations of the mind, existing only at the mental level. These sensations, the source of pain or pleasure, satisfaction or unhappiness, I think, are solely created by the mind. Between these two, that is physical and mental sensations, I think the experiences of pain and pleasure on the mental level are superior, more powerful.

The present appendix deals with some of the analytical problems that Schumpeter faced in his treatment of the evolutionary processes that take place between and within ‘industries’. The suggested solutions are treated under the headings the ecological approach (Section D.1) and the statistical approach (Section D.2). Although these solutions do not include economic variables like profit and credit, they can nevertheless be classified as relating to, respectively, evolutionary mesoeconomics and evolutionary microeconomics (Dopfer and Potts, 2008). The theoretical, historical, and statistical analysis of the capitalist engine requires a lot of other analytical tools. For instance, there is an obvious need of developing the tools for evolutionary macroeconomics. Furthermore, the algorithmic reconstruction of evolutionary processes and their implementation in computer simulation models have proved crucial (Nelson and Winter, 1982; Andersen, 1994). Nevertheless, a short presentation of the ecological approach and the statistical approach serves to demonstrate that formalisation can clarify existing concepts of evolutionary analysis and suggest new concepts.

The ecological approach to evolutionary analysis

Schumpeter's treatment of the process of creative destruction in the historical parts of Business Cycles (see Section 8.2) included much attention to the structure of the “industrial organism”. When we take the structure of this “organism” into account, it becomes clear that he was considering a much more complex process of creative destruction than the one covered by the reconstructions of the Mark I and Mark II models of the capitalist engine (see Section 9.5). It also becomes clear that he seriously needed analytical tools for handling this complexity.

The present chapter focusses on the socio-economic and scientific problems that Schumpeter wanted to confront in Entwicklung I. The theoretical problems can roughly be specified as concerning the economic functioning of capitalism (see Figure 5.1 on the next page). Although the specification of these theoretical problems of capitalism is crucial for the understanding of his evolutionary research programme, they have not normally been treated explicitly by economists. For instance, Schumpeter (History, 552n) later remarked that “while the term Capitalist gained citizenship in the economist's lingo, the term Capitalism was, throughout the nineteenth century, hardly used except by Marxists and writers directly influenced by Marxism.” The developments within the economics of the twentieth century have not really changed this situation. The major exception is Schumpeter's own contribution that depicted the major characteristic of capitalism as being its promotion of economic evolution.

The missing treatment of the problems of interest to Schumpeter was remarked by William Baumol's (2002, p. x) in his book on capitalism as an “innovation machine”. Baumol emphasised that, when developing the book, he was “unable to find anything that deals directly with my subject … with the exception of very brief discussions by Marx, Engels, and Schumpeter”. This comment demonstrates that even Baumol follows the all-dominant practice of focussing on a few of Schumpeter's statements in Development and Capitalism. In contrast, the present book tries to demonstrate that major parts of these books, and of most of his other works, are closely related to Baumol's topic.

Although Schumpeter made several attempts of elaborating and applying the basic model of the capitalist engine that he had presented in Entwicklung I and Development, the results of his major effort are found in Business Cycles. This book has roots back to his student years. At that time, members of the historical school (like Sombart and Spiethoff) had begun to focus on the problem of crises and cycles. Furthermore, this problem seems to have been a hot issue in Vienna among the participants in the seminars of the economic theoretician Böhm-Bawerk and the statistician and economic historian Inama-Sternegg. It is thus hardly surprising that Schumpeter put it at the top of his research agenda from the very beginning (see Section 5.4). However, he thereby not only set himself apart from the older generation of neoclassical economists who tended to ignore crises and cycles. It later became clear that his evolutionary theorising about business cycles was also radically different from the studies of business cycles that boomed in the 1920s and 1930s. The most obvious difference is that while nearly everybody else considered business cycles pathological, Schumpeter considered the phenomenon as part of the healthy process of economic evolution under capitalist conditions. Actually, his two-stroke model of the capitalist engine (see Figure 6.2 on page 149) suggested that waves are essential for capitalist economic evolution.

The coherence of the present book would have increased if Schumpeter's History of Economic Analysis could, in some way, have been presented as an extension of Development, Cycles, and Capitalism. However, he did not extend the evolutionary trilogy into a quatrology. Actually, the 1260 pages of History do not even contain the elements of a smaller book on the ‘History of Evolutionary Economic Analysis’. In order to exploit the potentials of History, we have to step back from Schumpeter's evolutionary trilogy and consider his double programme for the science of economics. This programme had in Wesen been described as the refinement of equilibrium economics and the creation of evolutionary economics. Since he could not describe the history of something that does not yet exist, the historical addendum to his research programme had to focus on equilibrium economics. The first version of Schumpeter's complement emerged before World War I in Doctrine. His early task, commissioned by Max Weber, had been to overcome the confusing battle of methods. The self-assigned task of History seems to have been to overcome the confusion of the period 1926–39, which, in Section 10.2, was called the years of high theory and high econometrics. After this period, “[t]he field looks like a big building plot all covered with ruins and half-completed new structures” (S1948b, 95).

In a previous book called Evolutionary Economics: Post-Schumpeterian Contributions (Andersen, 1994, 1), I emphasised the need for “a ‘dialogue’ with older, verbal studies of economic evolution”. Although several of the great economists of the past can be seen as contributors to such verbal studies, the title of the book suggested that I was primarily thinking of Joseph A. Schumpeter. It seemed clear to me that Schumpeter, early in life, had chosen what can today be classified as evolutionary economics as the field in which he would make a great contribution to the progress of his chosen science. Actually, he seems to have wanted to do for economics what Darwin had done for biology: to develop a theory that supports the study of the historical process of the evolution of economic life. However, he rejected to work along Darwinian lines. Instead, he combined broad evolutionist perspectives with the tools of neoclassical economics and the German historical school. Furthermore, he recognised that the full explanation of economic evolution is dependent on the explanation of socio-political evolution, so he also worked to promote evolutionary sociology. Although his attempts to develop these areas and to include them into the body of economics and other social sciences cannot be described as unconditional successes, his unique efforts were not made in vain. His vision of the evolutionary process and the concepts that he used to implement this vision are still able to challenge and inspire.

According to the Schumpeter's theory of scientific creativity, the initial “period of sacred fertility” produces the fundamental vision and the fundamental results that are “subsequently worked out” (S1921, 87). He also suggested that “the roots of great scientific achievements, especially those of a theoretical nature, predominantly lie in the twenties of their author's life” (DBA, 16–17; omitted in S1914c). In Schumpeter's case, the especially fertile years covered the period 1903–13. During these years, he had not only produced Wesen and Entwicklung I but also developed many related ideas. The subsequent development of his early results primarily took place after he had resumed academic life in 1925. In the intermediate years, he had been involved in politics and private banking—including his short and rather unsuccessful service as the Austrian Minister of Finance (see Appendix A). Now he established himself as an internationally recognised professor of economics—first at the University of Bonn in Germany from 1925 to 1932; and then at Harvard University from 1932 until his death in 1950. At the University Bonn he radically revised Theorie der wirtschaftlichen Entwicklung and prepared to extend its analyses of the evolutionary functions of money and business cycles. Nevertheless, the three books from which his evolutionary economics and evolutionary sociology are today primarily known were published during his Harvard period. These books are The Theory of Economic Development from 1934; Business Cycles from 1939; and Capitalism, Socialism and Democracy from 1942.

Acharya Jagadish Chandra Bose – the scientist who brought the ancient Indian wisdom of spiritualism into the domain of science. This was the predominant image of the Acharya in colonial India.

In post-colonial India, J C Bose is remembered as the first of the Indian scientists who attempted to build up an Indian structure of science – as the propounder of ‘alternative sciences’ whose idiom sounds flat and out of date today – at best, a flawed genius. Bose is almost a ‘forgotten scientist’ who failed to create a tradition of his own. ‘Bose – the acharya’ is no more an idiom than his spiritual statements are believed to be.

Those who hail Bose and those who denounce him are equally fascinated by the quote cited above. These were the concluding lines of Bose's scientific lecture delivered at the Royal Society, London in 1900. Scriptural citation in the peroration of a scientific lecture is not a common practice. Hence, it is often held that Bose's science was not science alone.