Friedrich List & Joseph Schumpeter: Strange bedfellows in the pedigree of (development) economics?

Abstract

Arguing that Joseph Schumpeter generalized development economics, whereas List saw it as of limited scope, we take a closer look at List’s approach. We discover that, for List, theories are time- and space-bound, and historical and institutional parameters help define their applicability. When history and institutions matter, mere internal dynamics cannot be taken as the sole motor-force of development and change. While Schumpeter’s approach is associated with evolutionary economics, List’s is affiliated with institutional economics. Institutional economics and evolutionary economics are not exactly the same but they are not poles apart either. This holds the key to understanding the uneasy yet inevitable combination to which List and Schumpeter contribute in the context of contemporary development-friendly economics. It is in this vein that we attempt to compare, contrast and somewhat synthesize List and Schumpeter in terms of their conceptions of capitalist development and economic evolution.