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Creative destruction:

A fun quote from Joseph A. Schumpeter's Capitalism, Socialism, and Democracy (I'm reading from the 3rd edition from 1950):

The conclusions alluded to at the end of the preceding chapter [unsympathetic to capitalism] are in fact almost completely false. Yet they follow from observations and theorems that are almost completely true. Both economists and popular writers have once more run away with some fragments of reality they happened to grasp. These fragments themselves were mostly seen correctly. Their formal properties were mostly developed correctly. But no conclusions about capitalist reality as a whole follow from such fragmentary analyses. If we draw them nevertheless, we can be right only by accident. That has been done. And the lucky accident did not happen.

This is from p. 82 (footnote omitted).

Anderson (mail) (www):
Y'know, that has long been on my "ought to read this ... ???" list.

Is it really that good? Is it dated? Horribly so?
10.4.2006 1:13pm
Mike BUSL07 (mail) (www):
In college I was asked to write an essay comparing the views of Schumpeter to the views of Lenin. I was a freshman. I did what was asked, but in my conclusion I really trashed Lenin - something along the lines of, "categorically discredited communist drivel." I got a C (from the TA who graded the papers). I later found out he was a member of the CPUSA.
10.4.2006 1:32pm
BobH (mail):
The danger of deductive reasoning: conclusion only as good as premises. Or, more pithily: garbage in, garbage out.
10.4.2006 3:35pm
Bret (mail):
BobH,

I think maybe you refer to Inductive reasoning here?
10.4.2006 4:22pm
Bret (mail):
Nevermind, I retract my previous question.
10.4.2006 4:23pm
Sasha Volokh (mail) (www):
I actually haven't read the book. I was only citing it because I say something in a paper that's tangentially related to the concept of creative destruction, so I was thumbing through the chapter on that in the book to get the right page numbers for the footnote.

Nonetheless, it's a good thing to have on one's queue. I would read it, had I but world enough.
10.4.2006 4:25pm
Mike :
Parts of it are dated -- for example, long sections devoted to history of socialism -- and the better discussions of Marx are likely found elsewhere.

The good stuff, the "creative destruction" and proto-public choice analysis, is mostly found in part II (Can Capitalism Survive?) and part IV (Socialism and Democracy).

I would recommend reading these sections.
10.4.2006 4:31pm
Anderson (mail) (www):
Thanks, Mike!
10.4.2006 4:47pm
Jay Myers:
BobH:

The danger of deductive reasoning: conclusion only as good as premises. Or, more pithily: garbage in, garbage out.

But the premises are stated to be essentially true in this case. "Yet they follow from observations and theorems that are almost completely true. ... These fragments themselves were mostly seen correctly. Their formal properties were mostly developed correctly. But no conclusions about capitalist reality as a whole follow from such fragmentary analyses." The problem is that this is an example of inductive reasoning, which in the most general sense is extrapolating from what is known to what is not known. Unfortunately, the truth of the conclusions do not inevitably follow from the truth of the premises. In other words, you can have Correct Stuff In, Garbage Out. Even more unfortunately, inductive reasoning is the basis of science.
10.5.2006 3:07am
Gil (mail) (www):
John P,

I worry about making these kinds of judgments about other people's subjective values.

To many people, the home is sacred. It represents years of work and sacrifice and dreams and customization. It's tightly bound up with their sense of identity. Maybe you think forcing them to sell at market prices is on the lighter side of burdensome, but it shouldn't be up to you, or up to their neighbors, or up to a planning board.

Most people don't think market rates are just compensation for their homes. If you want to get an estimate for how many people think this is true, just drive around your neighborhood and count the houses that are NOT for sale.

Eminent domain should be severely limited, if not eliminated, and this decision moves us in the wrong direction.
10.5.2006 12:18pm
Gil (mail) (www):
The above comment was not mine. At least, it isn't what I typed today. Something must have gone wrong when I logged in.

My comment was that induction is not the basis of science, and I referenced Popper.
10.5.2006 12:22pm
Sasha Volokh (mail) (www):
Gil -- you're sure that wasn't a comment you made on June 26, 2005, in response to a different post here?

http://volokh.com/posts/1119745796.shtml#5200
10.7.2006 4:48pm
Gil (mail) (www):
I'm sure it is.

But, I hadn't thought about that comment in about a year and it wasn't in my buffer or on my computer anywhere. This blog comment system must have spewed it out erroneously when I logged in to enter the recent comment. What ended up in the comments was the old comment rather than the new one.
10.7.2006 6:22pm