Harvard Economics Professor Joseph Schumpeter (1883-1950) was arguably the most perceptive and prophetic economist of all time. Schumpeter wrote about the importance of the entrepreneur for innovation and so-called “creative destruction” in capitalism, but he also recognised the inexorable tendency toward welfare-state socialism in democracy, the latest manifestation of which in Australia is the NDIS. Recently I spoke with fellow Queensland economist Dr Brendan Markey-Towler about Schumpeter’s theory of economic growth and its influence on the sub-field of Evolutionary Economics, which sees the economy as a constantly evolving system. Our conversation has been published as Episode 88 of my Economics Explored podcast.
Brendan and I had a wide-ranging conversation on the insights of Evolutionary Economics, the importance of the entrepreneur to economic growth, and the interaction of private and public sectors in the innovation process (e.g. we owe the US Government for GPS but the fundamental, life-altering innovations using it have come from the private sector).
On the perspective of Evolutionary Economics, Brendan notes in the first ten minutes of our conversation:
…you constantly need to be introducing novelty, you constantly need to be introducing new ways of doing things, new ways of producing, new ways of finding the best cost structure, new ways of serving your customers, new ways of treating your employees, new ways of organising your production structures, in order to out compete each other, and that is the health of markets. That’s what is evolutionary economics’ big difference from neoclassical economics, as it emphasises the importance of differentiation and variety to the health of markets.
Brendan has a PhD in economics from the University of Queensland and is the co-author with Nicholas Johnson of the 2020 book Economics of the Fourth Industrial Revolution Internet, Artificial Intelligence and Blockchain, published by Routledge. Brendan has written a popular Medium article on Evolutionary Economics: What is evolutionary economics.
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