Introduction

This chapter has three parts. I begin by endorsing Schumpeter's argument that understanding economic growth ought to be the central focus of economic analysis, and proposing that modern evolutionary economic theory has its central focus just there. In Part II, I turn to the origins of modern evolutionary economic theory as an endeavor inspired by Schumpeter. However, I propose that, while significant progress has been made by proceeding along established paths, the endeavor now is running into diminishing returns. Part III offers my thoughts on new directions that I think are highly valuable to pursue, in order to develop a truly illuminating theory of economic growth.

Economic growth as the appropriate central focus of economic analysis

The vast increases in living standards and productivity experienced by a significant part of the world's population clearly is the most dramatic and beneficial achievement of the market-oriented economies that began to emerge in the late eighteenth and early nineteenth centuries. Surely, the primary task of economic theory should be to illuminate how this miracle was accomplished, and the determinants of economic growth in the future.

This is not simply my point of view. It certainly was Schumpeter's. And Schumpeter's position on this was not radical. Indeed it reflected the writings of many of the great classical economists whose work preceded his. Thus reflect on Adam Smiths The Wealth of Nations. (1937; First published 1776). This book is basically an analysis of the factors driving the economic growth that was occurring in the United Kingdom in the late eighteenth century, along with a diagnosis as to why it was not occurring so effectively elsewhere.