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96-493: Fordism was the dominant model of production organization from the 1910s to the 1960s, which led to the massive growth of the American manufacturing sector and the establishment of the US as an industrial powerhouse. It was characterized by the assembly-line model , perfected by Henry Ford . Some post-Fordist theorists argue that the end of the superiority of the US economy is explained by

192-483: A US citizen . At the beginning of World War II , the FBI investigated him and his wife, Elizabeth Boody (a prominent scholar of Japanese economics) for Nazi sympathies, but found no evidence of such leanings. At Harvard, Schumpeter was considered a memorable character, erudite, and even showy in the classroom. He became known for his heavy teaching load and his personal and painstaking interest in his students. He served as

288-527: A "veil" and (2) those who thought monetary institutions were important and money could be a separate driving force. Both Schumpeter and Keynes were among the latter. Schumpeter's most popular book in English is probably Capitalism, Socialism and Democracy . While he agrees with Karl Marx that capitalism will collapse and be replaced by socialism , Schumpeter predicts a different way this will come about. While Marx predicted that capitalism would be overthrown by

384-411: A 'rule by the people' concept both unlikely and undesirable. Instead, he advocated a minimalist model, much influenced by Max Weber , whereby democracy is the mechanism for competition between leaders, much like a market structure. Although periodic votes by the general public legitimize governments and keep them accountable, the policy program is very much seen as their own and not that of the people, and

480-622: A capital levy as a way to tackle the war debt and opposed the socialization of the Alpine Mountain plant. In 1921, he became president of the private Biedermann Bank. He was also a board member at the Kaufmann Bank. Problems at those banks left Schumpeter in debt. His resignation was a condition of the takeover of the Biedermann Bank in September 1924. From 1925 until 1932, Schumpeter held

576-753: A chair at the University of Bonn , Germany. He lectured at Harvard in 1927–1928 and 1930. In 1931, he was a visiting professor at the Tokyo College of Commerce . In 1932, Schumpeter moved to the United States, and soon began what would become extensive efforts to help fellow central European economists displaced by Nazism . Schumpeter also became known for his opposition to Marxism and socialism, which he thought would lead to dictatorship, and even criticized Franklin Roosevelt's New Deal . In 1939, Schumpeter became

672-406: A change was that it cut down on the manpower necessary for the factory to operate, and it deskilled the labour itself, cutting down on costs of production. There are four levels of Fordism, as described by Bob Jessop . The Ford Motor Company was one of several hundred small automobile manufacturers that emerged between 1890 and 1910. After five years of producing automobiles, Ford introduced

768-645: A clean break from Fordism, including overcoming its inconsistencies, but the latter implies that elements of the Fordist ROA continued to exist. The Regulation School preferred the term After-Fordism (or the French Après-Fordisme ) to denote that what comes after Fordism was or is not clear. In Post-Fordist economies: The mass-produced robots in Karel Čapek 's play R.U.R. have been described as representing "the traumatic transformation of modern society by

864-536: A crisis point at which the Mode of Regulation will no longer support it, and society will be forced to find new rules and norms, forming a new Mode of Regulation. This will begin a new Regime of Accumulation, which will eventually reach a crisis, and so forth. Proponents of Regulation theory include Michel Aglietta , Robert Boyer , Bob Jessop , and Alain Lipietz . Proponents of the flexible specialization approach (also known as

960-403: A few variables. Then they could argue that one caused the other in a simple monotonic fashion. This led to the belief that one could easily deduce policy conclusions directly from a highly abstract theoretical model. In this book, Joseph Schumpeter recognized the implication of a gold monetary standard compared to a fiat monetary standard . In History of Economic Analysis , Schumpeter stated

1056-493: A higher degree Juglar wave. If each of these were in phase; more importantly, if the downward arc of each was simultaneous so that the nadir of each was coincident, it would explain disastrous slumps and consequent depressions. As far as the segmentation of the Kondratiev Wave, Schumpeter never proposed such a fixed model. He saw these cycles varying in time – although in a tight time frame by coincidence – and for each to serve

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1152-466: A history of naming columns after significant figures or symbols in the covered field, including naming its British affairs column after former editor Walter Bagehot and its European affairs column after Charlemagne . The initial Schumpeter column praised him as a "champion of innovation and entrepreneurship" whose writing showed an understanding of the benefits and dangers of business that proved to be far ahead of its time. Schumpeter's thoughts inspired

1248-430: A minimalist definition, states which other scholars say have experienced democratic backsliding and which lack civil liberties, a free press, the rule of law and a constrained executive, would still be considered democracies. For Schumpeter, the formation of a government is the endpoint of the democratic process, which means that for the purposes of his democratic theory, he has no comment on what kinds of decisions that

1344-437: A nation come from entrepreneurs or wild spirits. He coined the word Unternehmergeist , German for "entrepreneur-spirit", and asserted that "... the doing of new things or the doing of things that are already being done in a new way" stemmed directly from the efforts of entrepreneurs. Schumpeter developed Mark II while a professor at Harvard . Many social economists and popular authors of the day argued that large businesses had

1440-504: A negative effect on the standard of living of ordinary people. Contrary to this prevailing opinion, Schumpeter argued that the agents that drive innovation and the economy are large companies that have the capital to invest in research and development of new products and services and to deliver them to customers more cheaply, thus raising their standard of living. In one of his seminal works, Capitalism, Socialism and Democracy , Schumpeter wrote: As soon as we go into details and inquire into

1536-520: A new development paradigm: financialization through and thanks to the rise of the new economy. In terms of the development of the 'technical and political class-composition', in the post-Fordist era the crisis explains at the same time 'high points of the capitalist development' and how new technological tools develop and work altogether (money form, linguistic conventions, capital and language). Post-Fordism brought on new ways of looking at consumption and production. The saturation of key markets brought on

1632-702: A range of loosely related products and each workshop usually had five to fifty workers and often less than ten. The range of products in each region reflected the post-Fordist shift to economies of scope. Additionally, these workshops were known for producing high quality products and employing highly skilled, well-paid workers. The workshops were very design-oriented and multidisciplinary, involving collaboration between entrepreneurs, designers, engineers and workers. There were several post- World War II changes in production in Japan that caused post-Fordist conditions to develop. First, there were changes to company structure, including

1728-1012: A result, Japan became one of the main users of robots and CNC . Over time, these six changes in production in Japan were institutionalized. The main criticism of post-Fordism asserts that post-Fordism mistakes the nature of the Fordist revolution and that Fordism was not in crisis, but was simply evolving and will continue to evolve. Other critics believe that post-Fordism does exist, but coexists with Fordism. The automobile industry has combined Fordist and post-Fordist strategies, using both mass production and flexible specialization. Ford introduced flexibility into mass production, so that Fordism could continue to evolve. Those who advocate post-Fordism, however, note that criticism that focuses primarily on flexible specialization ignores post-Fordist changes in other areas of life and that flexible specialization cannot be looked at alone when examining post-Fordism. Another criticism

1824-412: A rise in part-time, temp, self-employed, and home workers. Politically, class-based political parties declined and social movements based on region, gender, or race increased. Mass unions began to vanish and were instead replaced by localized plant-based bargaining. Cultural and ideological changes included the rise in individualist modes of thought and behavior and a culture of entrepreneurialism. Following

1920-463: A single firm manning the assembly line from raw materials to finished products, the production process became fragmented as individual firms specialized in their areas of expertise. As evidence for this theory of specialization, proponents claim that Marshallian "industrial districts," or clusters of integrated firms, have developed in places like Silicon Valley, Jutland, Småland, and several parts of Italy. The new- Schumpeterian approach to post-Fordism

2016-399: A specialisation in economics. In 1909, after some study trips, he became a professor of economics and government at the University of Czernowitz in modern-day Ukraine . In 1911, he joined the University of Graz , where he remained until World War I . In 1913–1914, Schumpeter taught at Columbia University as an invited professor. This invitation marked, according to Wolfgang Stolper ,

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2112-480: A specific purpose. In Schumpeter's theory, Walrasian equilibrium is not adequate to capture the key mechanisms of economic development. Schumpeter also thought that the institution enabling the entrepreneur to buy the resources needed to realize his vision was a well-developed capitalist financial system, including a whole range of institutions for granting credit . One could divide economists among (1) those who emphasized "real" analysis and regarded money as merely

2208-513: A technique of labor discipline and workplace organization, based upon supposedly scientific studies of human efficiency and incentive systems. It attracted European intellectuals, especially in Germany and Italy, from the fin de siècle to World War I . After 1918, however, the goal of Taylorist labor efficiency thought in Europe moved to "Fordism", the reorganization of the entire productive process by

2304-526: A tendency towards crisis, change and instability as well as an ability to stabilize institutions, rules, and norms. The theory is based on two key concepts. "Regimes of Accumulation" refer to systems of production and consumption, such as Fordism and post-Fordism. "Modes of Regulation" refer to the written and unwritten laws of society which control the Regime of Accumulation and determine its form. According to regulation theory, every Regime of Accumulation will reach

2400-497: A treatise of circular flow which, excluding any innovations and innovative activities, leads to a stationary state. The stationary state is, according to Schumpeter, described by Walrasian equilibrium . The hero of his story is the entrepreneur. The entrepreneur disturbs this equilibrium and is the prime cause of economic development, which proceeds cyclically along with several time scales. In fashioning this theory connecting innovations, cycles, and development, Schumpeter kept alive

2496-721: A turn against mass consumption and a pursuit of higher living standards. This shift brought a change in how the market was viewed from a production standpoint. Rather than being viewed as a mass market to be served by mass production , the consumers began to be viewed as different groups pursuing different goals who could be better served with small batches of specialized goods. Mass markets became less important while markets for luxury, custom, or positional goods became more significant. Production became less homogeneous and standardized and more diverse and differentiated as organizations and economies of scale were replaced with organizations and economies of scope . The changes in production with

2592-455: A violent proletarian revolution, which occurred in the least capitalist countries, Schumpeter believed that capitalism would gradually weaken itself and eventually collapse. Specifically, the success of capitalism would lead to corporatism and to values hostile to capitalism, especially among intellectuals. "Intellectuals" are a social class in a position to critique societal matters for which they are not directly responsible and to stand up for

2688-507: Is a strong link between post-Fordism and the rise of information technology . Post-Fordist production prioritizes increased flexibility, in particular lean production and just-in-time production methods. This creates an economic geography of greater interaction between suppliers and manufacturers. For labor markets, this has necessitated a shift from the division of labor to being more adaptable to different roles in production, however, it has also led to more involvement in and knowledge of

2784-531: Is also associated with a number of important conceptual shifts (see sections above). Fordism Fordism is an industrial engineering and manufacturing system that serves as the basis of modern social and labor-economic systems that support industrialized, standardized mass production and mass consumption . The concept is named after Henry Ford . It is used in social , economic , and management theory about production , working conditions , consumption , and related phenomena, especially regarding

2880-558: Is based upon the theory of Kondratiev waves (also known as long waves). The theory holds that a "techno-economic paradigm" ( Perez ) characterizes each long wave. Fordism was the techno-economic paradigm of the fourth Kondratiev wave, and post-Fordism is thus the techno-economic paradigm of the fifth, which is dominated by information and communication technology. Notable Neo-Schumpeterian thinkers comprise Carlota Perez and Christopher Freeman , as well as Michael Storper and Richard Walker. In Italy, post-Fordism has been theorised by

2976-431: Is characterized by the following attributes: Post-Fordist consumption is marked by individualism and consumer choice . Patterns of consumption are oriented toward lifestyle and identity and consumption is a key part of the culture. The consumer has become a 'global dictator' which determines the organization of production and retailers seek to process consumer data to react to patterns of consumer demand. As such, there

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3072-518: Is considered Capitalism, Socialism and Democracy . Schumpeter was born in 1883 in Triesch , Habsburg Moravia (now Třešť in the Czech Republic , then part of Austria-Hungary ), to German-speaking Catholic parents. Both of his grandmothers were Czech . Schumpeter did not acknowledge his Czech ancestry; he considered himself an ethnic German . His father, who owned a factory, died when Joseph

3168-473: Is mediated through a succession of relationships that have yet to be explored systematically in the context of the long wave. New inventions are typically primitive, their performance is usually poorer than existing technologies and the cost of their production is high. A production technology may not yet exist, as is often the case in major chemical and pharmaceutical inventions. The speed with which inventions are transformed into innovations and diffused depends on

3264-457: Is not happening on any great scale, and smaller firms have always existed alongside mass production. Another main criticism is that we are too much in the midst to judge whether or not there really is a new system of production. The term "post-Fordism" is gradually giving way in the literature to a series of alternative terms such as the knowledge economy , cognitive capitalism , the cognitive-cultural economy and so on. This change of vocabulary

3360-512: Is that indomitable force which neither knows nor recognizes obstacles; which continues on a task once started until it is finished, even if it is a minor task; and without which serious constructive work is inconceivable...The combination of the Russian revolutionary sweep with American efficiency is the essence of Leninism." Hughes describes how, as the Soviet Union developed and grew in power, both

3456-589: Is that post-Fordism relies too heavily on the examples of the Third Italy and Japan. Some believe that Japan is neither Fordist nor post-Fordist and that vertical disintegration and mass production go hand in hand. Others argue that the new, smaller firms in Italy did not develop autonomously, but are a product of the vertical disintegration of the large Fordist firms who contracted lower value-added work to smaller enterprises. Other criticisms argue that flexible specialization

3552-484: Is therefore in a sense a means to ensure circulation among elites. However, studies by Natasha Piano of the University of Chicago emphasize that Schumpeter had substantial disdain for elites as well. The field of entrepreneurship theory owed much to Schumpeter's contributions. His fundamental theories are often referred to as Mark I and Mark II. In Mark I, Schumpeter argued that the innovation and technological change of

3648-526: The Austrian School of economics without major qualifications while others maintain the opposite. Schumpeter was also influenced by Léon Walras and the Lausanne School , calling Walras the "greatest of all economists". The Austrian sociologist Rudolf Goldscheid 's concept of fiscal sociology influenced Schumpeter's analysis of the tax state. A 2012 paper showed that Schumpeter's writings displayed

3744-553: The First World War and the Fordist assembly line." A religion based on the worship of Henry Ford is a central feature of the technocracy in Aldous Huxley 's Brave New World , where the principles of mass production are applied to the generation of people as well as to industry. Joseph Schumpeter#Business cycles Joseph Alois Schumpeter ( German: [ˈʃʊmpeːtɐ] ; February 8, 1883 – January 8, 1950)

3840-446: The Model T , which was simple and light but sturdy enough to drive on the country's primitive roads. The mass production of this automobile lowered its unit price, making it affordable for the average consumer. Furthermore, Ford substantially increased his workers' wages to combat rampant absenteeism and employee turnover, which approached 400% annually, which had the byproduct of giving them

3936-570: The Soviet Union , in the 1920s and the 1930s, enthusiastically embraced Fordism and Taylorism by importing American experts in both fields as well as American engineering firms to build parts of its new industrial infrastructure. The concepts of the Five-Year Plan and the centrally- planned economy can be traced directly to the influence of Taylorism on Soviet thinking. Hughes quotes Joseph Stalin 's Foundations of Leninism : "American efficiency

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4032-452: The University of Wuppertal , Germany. According to University President Professor Lambert T. Koch , "Schumpeter will not only be the name of the Faculty of Management and Economics, but this is also a research and teaching programme related to Joseph A. Schumpeter." On September 17, 2009, The Economist inaugurated a column on business and management named "Schumpeter". The publication has

4128-633: The "high point of his worldly success". He taught economic theory and met Irving Fisher and Wesley Clair Mitchell . Columbia awarded him an honorary doctorate. In 1918, Schumpeter was a member of the Socialisation Commission established by the Council of the People's Deputies in Germany. In March 1919, he was invited to take office as Minister of Finance in the Republic of German-Austria . He proposed

4224-427: The 20th century. It describes an ideology of advanced capitalism centered around the American socioeconomic systems in place in the post-war economic boom. Fordism is "the eponymous manufacturing system designed to produce standardized, low-cost goods and afford its workers decent enough wages to buy them." It has also been described as "a model of economic expansion and technological progress based on mass production:

4320-546: The Russian Nikolai Kondratiev 's ideas on 50-year cycles, Kondratiev waves . Schumpeter suggested a model in which the four main cycles, Kondratiev (54 years), Kuznets (18 years), Juglar (9 years), and Kitchin (about 4 years) can be added together to form a composite waveform . A Kondratiev wave could consist of three lower-degree Kuznets waves. Each Kuznets wave could, itself, be made up of two Juglar waves. Similarly two (or three) Kitchin waves could form

4416-642: The Soviets and the Americans chose to ignore or deny the contribution of American ideas and expertise. The Soviets did so because they wished to portray themselves as creators of their own destiny and not indebted to their rivals, while the Americans did so because they did not wish to acknowledge, during the Cold War, their part in creating a powerful rival. The period after Fordism has been termed Post-Fordist and Neo-Fordist. The former implies that global capitalism has made

4512-406: The US, in 1937, at the age of 54, Schumpeter married the American economic historian Dr. Elizabeth Boody (1898–1953), who helped him popularize his work and edited what became their magnum opus, the posthumously published History of Economic Analysis . Elizabeth assisted him with his research and English writing until his death. Schumpeter claimed that he had set himself three goals in life: to be

4608-617: The actual and expected trajectory of performance improvement and cost reduction. Schumpeter identified innovation as the critical dimension of economic change. He argued that economic change revolves around innovation, entrepreneurial activities, and market power. He sought to prove that innovation-originated market power can provide better results than the invisible hand and price competition. He argued that technological innovation often creates temporary monopolies, allowing abnormal profits that would soon be competed away by rivals and imitators. These temporary monopolies were necessary to provide

4704-513: The areas of large-scale mass production, such as Turin , Milan , and Genoa , and the Second Italy described the undeveloped South. The Third Italy, however, was where clusters of small firms and workshops developed in the 1970s and 1980s in the central and northeast regions of the country. Regions of the Third Italy included Tuscany , Umbria, Marche, Emilia-Romagna , Veneto , Friuli , and Trentino-Alto Adige/Südtirol . Each region specialized in

4800-401: The book Schumpeter's Vision: Capitalism, Socialism and Democracy After 40 Years , noted that Schumpeter saw any political system in which the power was fully monopolized as fascist. In the same book, Schumpeter expounded on a theory of democracy that sought to challenge what he called the "classical doctrine". He disputed the idea that democracy was a process by which the electorate identified

4896-446: The common good, and politicians carried this out for them. He argued this was unrealistic, and that people's ignorance and superficiality meant that they were largely manipulated by politicians, who set the agenda. Furthermore, he claimed that even if the common good was possible to find, it would still not make clear the means needed to reach its end, since citizens do not have the requisite knowledge to design government policy. This made

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4992-462: The computer was very important to the technology of flexible specialization. Not only could the computer change the characteristics of the goods being produced, but it could also analyze data to order supplies and produce goods in accordance with current demand. These types of technology made adjustments simple and inexpensive, making smaller specialized production runs economically feasible. Flexibility and skill in labor were also important. The workforce

5088-467: The economists Nicholas Georgescu-Roegen and Hyman Minsky and John Kenneth Galbraith and former chairman of the Federal Reserve, Alan Greenspan . Future Nobel Laureate Robert Solow was his student at Harvard, and he expanded on Schumpeter's theory. Today, Schumpeter has a following outside standard textbook economics, in areas such as economic policy, management studies, industrial policy, and

5184-524: The end of Fordism. Post-Fordist consumption is marked by increased consumer choice and identity. As such, retailers seek to collect consumer data through increased information technology to understand trends and changing demand. Production networks, therefore, demand greater flexibility in their workforce, leading to more varied job roles for employees and more individualized labour relations, and more flexible modes of production to react to changing consumer demand, such as lean manufacturing . Post-Fordism

5280-490: The faculty advisor of the Graduate Economics Club and organized private seminars and discussion groups. Some colleagues thought his views were outdated by Keynesianism , which was fashionable; others resented his criticisms, particularly of their failure to offer an assistant professorship to Paul Samuelson , but recanted when they thought him likely to accept a position at Yale University . This period of his life

5376-506: The following: "An 'automatic' gold currency is part and parcel of a laissez-faire and free-trade economy. It links every nation's money rates and price levels with the money rates and price levels of all the other nations that are 'on gold.' However, gold is extremely sensitive to government expenditure and even to attitudes or policies that do not involve expenditure directly, for example, in foreign policy, certain policies of taxation, and, in general, precisely all those policies that violate

5472-454: The government can take to be a democracy. Schumpeter faced pushback on his theory from other democratic theorists, such as Robert Dahl , who argued that there is more to democracy than simply the formation of government through competitive elections. Schumpeter's view of democracy has been described as " elitist ", as he criticizes the rationality and knowledge of voters, and expresses a preference for politicians making decisions. Democracy

5568-503: The greatest economist in the world, to be the best horseman in all of Austria, and the greatest lover in all of Vienna . He said he had reached two of his goals, but he never said which two, although he is reported to have said that there were too many fine horsemen in Austria for him to succeed in all his aspirations. Schumpeter died in his home in Taconic, Connecticut , at the age of 66, on

5664-569: The ideal. Later, under the inspiration of Gramsci, Marxists picked up the Fordism concept in the 1930s and developed Post-Fordism in the 1970s. Robert J. Antonio and Alessandro Bonanno (2000) trace the development of Fordism and subsequent economic stages, from globalization to neoliberal globalization, during the 20th century, and emphasized the United States role in globalization. "Fordism," for Gramsci, meant routine, intensified labor to promote production. Antonio and Bonanno argue that Fordism peaked in

5760-455: The incentive for firms to develop new products and processes. The World Bank 's "Doing Business" report was influenced by Schumpeter's focus on removing impediments to creative destruction . The creation of the report is credited in part to his work. Schumpeter was married three times. His first wife was Gladys Ricarde Seaver, an Englishwoman nearly 12 years his senior (married 1907, separated 1913, divorced 1925). His best man at his wedding

5856-565: The individual items in which progress was most conspicuous, the trail leads not to the doors of those firms that work under conditions of comparatively free competition but precisely to the door of the large concerns – which, as in the case of agricultural machinery, also account for much of the progress in the competitive sector – and a shocking suspicion dawns upon us that big business may have had more to do with creating that standard of life than with keeping it down. As of 2017 Mark I and Mark II arguments are considered complementary. Schumpeter

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5952-408: The influence of Francis Galton 's work. According to Christopher Freeman (2009), "the central point of his whole life work [is]: that capitalism can only be understood as an evolutionary process of continuous innovation and ' creative destruction '". Schumpeter's scholarship is apparent in his posthumous History of Economic Analysis , Schumpeter thought that the greatest 18th-century economist

6048-471: The intellectual and social climate needed for thriving entrepreneurship will be replaced by some form of " laborism ". This will exacerbate " creative destruction " (a borrowed phrase to denote an endogenous replacement of old ways of doing things by new ways), which will ultimately undermine and destroy the capitalist structure. Schumpeter emphasizes throughout this book that he is analyzing trends, not engaging in political advocacy . William Fellner, in

6144-703: The interests of other classes. Intellectuals tend to have a negative outlook on capitalism, even while relying on it for prestige because their professions rely on antagonism toward it. The growing number of people with higher education is a great advantage of capitalism, according to Schumpeter. Yet, unemployment and a lack of fulfilling work will lead to intellectual critique, discontent, and protests. Parliaments will increasingly elect social democratic parties, and democratic majorities will vote for restrictions on entrepreneurship. Increasing workers' self-management , industrial democracy and regulatory institutions would evolve non-politically into " liberal capitalism ". Thus,

6240-436: The labor process and greater autonomy over work. There is an increase in non-standard forms of employment. According to geographer Ash Amin , post-Fordism is commonly divided into three schools of thought: the regulation school, flexible specialization, and neo-Schumpeterianism. The regulation approach (also called the neo- Marxist or French Regulation School) was designed to address the paradox of how capitalism has both

6336-499: The long wave of workerism or autonomia . Major thinkers of this tendency include the Swiss-Italian economist Christian Marazzi , Antonio Negri , Paolo Virno , Carlo Vercellone , Maurizio Lazzarato . Marazzi's Capital and Language takes as its starting point the fact that the extreme volatility of financial markets is generally attributed to the discrepancy between the "real economy" (that of material goods produced and sold) and

6432-697: The long-cycles hypothesis, stressing the initiating role of innovations, commands the widest attention today. In Schumpeter's view, technological innovation is the cause of both cyclical instability and economic growth. Fluctuations in innovation cause fluctuations in investment and those cause cycles in economic growth. Schumpeter sees innovations as clustering around certain points in time that he refers to as "neighborhoods of equilibrium" when entrepreneurs perceive that risk and returns warrant innovative commitments. These clusters lead to long cycles by generating periods of acceleration in aggregate growth. The technological view of change needs to demonstrate that changes in

6528-477: The manufacture of standardized products in huge volumes using special purpose machinery and unskilled labor." Although Fordism was a method used to improve productivity in the automotive industry, the principle could be applied to any kind of manufacturing process. Major success stemmed from three major principles: The principles, coupled with a technological revolution during Henry Ford's time, allowed for his revolutionary form of labor to flourish. His assembly line

6624-459: The mass production of a single product, firms now needed to build intelligent systems of labor and machines that were flexible and could quickly respond to the whims of the market. The technology associated initially with flexible production was the numerical control technology, which was developed in the United States in the 1950s; however, the CNC, developed in Japan, later replaced it. The development of

6720-594: The means to become customers. That led to massive consumption. In fact, the Model T surpassed all expectations because it attained a peak of 60% of the automobile output within the United States. The production system that Ford exemplified involved synchronization, precision, and specialization within a company. Ford and his senior managers did not use the word "Fordism" themselves to describe their motivations or worldview, which they did not consider an " ism ". However, many contemporaries framed their worldview as one and applied

6816-445: The more speculative monetary-financial economy. But this distinction has long ceased to apply in the post-Fordist New Economy, in which both spheres are structurally affected by language and communication. In Capital and Language Marazzi argues that the changes in financial markets and the transformation of labor into immaterial labor (that is, its reliance on abstract knowledge, general intellect, and social cooperation) are two sides of

6912-429: The moving assembly line, standardization, and the mass market. The grand appeal of Fordism in Europe was that it promised to sweep away all the archaic residues of precapitalist society, by subordinating the economy, society, and even the human personality to the strict criteria of technical rationality. The Great Depression blurred the utopian vision of American technocracy , but World War II and its aftermath revived

7008-451: The name Fordism to it. The term gained prominence when it was used by Antonio Gramsci in 1934 in his essay "Americanism and Fordism" in his Prison Notebooks . Since then, it has been used by a number of writers on economics and society, mainly but not exclusively in the Marxist tradition. According to historian Charles S. Maier , Fordism proper was preceded in Europe by Taylorism ,

7104-472: The need for small-batch production and quick changeover of product lines to serve the demand for a wide range of products in a relatively small market. Because of informal price-fixing , competition was based not on price but rather on product differentiation . As a result, production became less standardized and more specialized, particularly across different companies. Fifth, Japan began to build long-term supply and subcontracting networks, which contrasted with

7200-428: The needs of the product being assembled. In reality, the assembly line had existed before Ford, although not in quite the same effectiveness as he would create. His real accomplishment was recognizing the potential by breaking it all down into its components, only to build it back up again in a more effective and productive combination, thereby producing an optimum method for the real world. The major advantages of such

7296-456: The neo-Smithian approach) believe that fundamental changes in the international economy, especially in the early 1970s, forced firms to switch from mass production to a new tactic known as flexible specialization. Instead of producing generic goods, firms now found it more profitable to produce diverse product lines targeted at different groups of consumers, appealing to their sense of taste and fashion. Instead of investing huge amounts of money in

7392-486: The night of January 7, 1950. For some time after his death, Schumpeter's views were most influential among various heterodox economists , especially Europeans, who were interested in industrial organization, evolutionary theory, and economic development, and who tended to be on the other end of the political spectrum from Schumpeter and were also often influenced by Keynes, Karl Marx, and Thorstein Veblen . Robert Heilbroner

7488-616: The participatory role of individuals is usually severely limited. Schumpeter defined democracy as the method by which people elect representatives in competitive elections to carry out their will. This definition has been described as simple, elegant and parsimonious, making it clearer to distinguish political systems that either fulfill or fail these characteristics. This minimalist definition stands in contrast to broader definitions of democracy, which may emphasize aspects such as "representation, accountability, equality, participation, justice, dignity, rationality, security, freedom". Within such

7584-591: The post-World War II decades of American dominance and mass consumerism but collapsed from political and cultural attacks on the people in the 1970s. Advances in technology and the end of the Cold War ushered in a new "neoliberal" phase of globalization in the 1990s. Antonio and Bonanno further suggest that negative elements of Fordism, such as economic inequality, remained, allowing related cultural and environmental troubles, which inhibited America's pursuit of democracy to surface. Historian Thomas Hughes has detailed how

7680-490: The principles of [classical] liberalism. This is the reason why gold is so unpopular now and also why it was so popular in a bourgeois era." Schumpeter's relationships with the ideas of other economists were quite complex in his most important contributions to economic analysis – the theory of business cycles and development. Following neither Walras nor Keynes, Schumpeter starts in The Theory of Economic Development with

7776-420: The rate of innovation govern changes in the rate of new investments and that the combined impact of innovation clusters takes the form of fluctuation in aggregate output or employment. The process of technological innovation involves extremely complex relations among a set of key variables: inventions, innovations, diffusion paths, and investment activities. The impact of technological innovation on aggregate output

7872-669: The replacement of independent trade unions with pro-management, company-based unions; the development of a core of permanent male multi-skilled workers; and the development of a periphery of untrained temporary and part-time employees, who were mostly female. Second, after World War II, Japan was somewhat isolated because of import barriers and foreign investment restrictions, and as a result, Japan began to experiment with production techniques. Third, as imported technologies became more available, Japan began to replicate, absorb, and improve them, with many improvements deriving from modifications for local conditions. Fourth, Japan began to concentrate on

7968-500: The shift from Fordism to post-Fordism were accompanied by changes in the economy, politics, and prominent ideologies. In the economic realm, post-Fordism brought the decline of regulation and production by the nation-state and the rise of global markets and corporations. Mass marketing was replaced by flexible specialization, and organizations began to emphasize communication more than command. The workforce changed with an increase in internal marketing, franchising, and subcontracting and

8064-481: The shift in production and acknowledging the need for more knowledge-based workers, education became less standardized and more specialized. Prominent ideologies that arose included fragmentation and pluralism in values, post-modern eclecticism, and populist approaches to culture. One of the primary examples of specialized post-Fordist production took place in a region known as the Third Italy . The First Italy included

8160-632: The study of innovation . Schumpeter was probably the first scholar to develop theories about entrepreneurship . For instance, the European Union's innovation program, and its main development plan, the Lisbon Strategy , are influenced by Schumpeter. The International Joseph A. Schumpeter Society awards the Schumpeter Prize. The Schumpeter School of Business and Economics opened in October 2008 at

8256-534: The vertically integrated, Fordist American corporations. Sixth, because small and medium-size manufacturers produced a wide range of products, there was a need for affordable multipurpose equipment as opposed to the specialized, costly production machinery in Fordist industries in the United States . Technology for flexible production was significant in Japan and particularly necessary for smaller producers. The smaller producers also found it necessary to reduce costs. As

8352-444: Was Turgot rather than Adam Smith , and he considered Léon Walras to be the "greatest of all economists", beside whom other economists' theories were "like inadequate attempts to catch some particular aspects of Walrasian truth". Schumpeter criticized John Maynard Keynes and David Ricardo for the "Ricardian vice". According to Schumpeter, both Ricardo and Keynes reasoned in terms of abstract models, where they would freeze all but

8448-464: Was an Austrian political economist . He served briefly as Finance Minister of Austria in 1919. In 1932, he emigrated to the United States to become a professor at Harvard University , where he remained until the end of his career, and in 1939 obtained American citizenship . Schumpeter was one of the most influential economists of the early 20th century, and popularized the term " creative destruction ", coined by Werner Sombart . His magnum opus

8544-452: Was characterized by hard work and comparatively little recognition of his massive two-volume book Business Cycles. However, Schumpeter persevered, and in 1942 published what became the most popular of all his works, Capitalism, Socialism and Democracy , reprinted many times and in many languages in the following decades, as well as cited thousands of times. The source of Schumpeter's dynamic, change-oriented, and innovation-based economics

8640-424: Was his friend and Austrian jurist Hans Kelsen . His second was Anna Reisinger, 20 years his junior and daughter of the concierge of the apartment where he grew up. As a divorced man, he and his bride converted to Lutheranism to marry. They married in 1925, but within a year, she died in childbirth. The loss of his wife and newborn son came only weeks after Schumpeter's mother had died. Five years after arriving in

8736-403: Was now divided into a skill-flexible core and a time-flexible periphery. Flexibility and variety in the skills and knowledge of the core workers and the machines used for production allowed for the specialized production of goods. Modern just-in-time manufacturing is one example of a flexible approach to production. Likewise, the production structure began to change on the sector level. Instead of

8832-517: Was one of Schumpeter's most renowned pupils, who wrote extensively about him in The Worldly Philosophers . In the journal Monthly Review , John Bellamy Foster wrote of that journal's founder Paul Sweezy , one of the leading Marxist economists in the United States and a graduate assistant of Schumpeter's at Harvard, that Schumpeter "played a formative role in his development as a thinker". Other outstanding students of Schumpeter's include

8928-480: Was only four years old. In 1893, Joseph and his mother moved to Vienna . Schumpeter was a loyal supporter of Franz Joseph I of Austria . Schumpeter was educated at the Theresianum and began his career studying law at the University of Vienna under Eugen von Böhm-Bawerk , an economic theorist of the Austrian School . In 1906, he received his doctoral degree from the University of Vienna's faculty of law, with

9024-442: Was revolutionary though not original as it had previously been used at slaughterhouses. His most original contribution to the modern world was breaking down complex tasks into simpler ones, with the help of specialised tools. Simpler tasks created interchangeable parts that could be used the same way every time. That allowed for a very adaptable flexibility, creating an assembly line that could change its constituent components to meet

9120-439: Was the historical school of economics . Although his writings could be critical of that perspective, Schumpeter's work on the role of innovation and entrepreneurship can be seen as a continuation of ideas originated by the historical school, especially the work of Gustav von Schmoller and Werner Sombart . Despite being born in Austria and having trained with many of the same economists, some argue he cannot be categorized with

9216-482: Was the most influential thinker to argue that long cycles are caused by innovation and are an incident of it. His treatise on how business cycles developed was based on Kondratiev's ideas which attributed the causes very differently. Schumpeter's treatise brought Kondratiev's ideas to the attention of English-speaking economists. Kondratiev fused important elements that Schumpeter missed. Yet, the Schumpeterian variant of

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