Business cycles, growth and economic policy: Schumpeter and the Great Depression
Muriel Dal Pont Legrand  1, 2@  , Harald Hagemann  3, *@  
1 : Université de Nice Sophia Antipolis  -  Site web
Universsité de Nice
2 : Groupe de Recherche en Droit, Economie et Gestion  (GREDEG)  -  Site web
CNRS : UMR7321, Université Nice Sophia Antipolis (UNS), Université Nice Sophia Antipolis [UNS]
250, Rue Albert Einstein 06560 Valbonne -  France
3 : Institute of Economics, University of Hohenheim
* : Auteur correspondant

Joseph A. Schumpeter over the years developed different lines of research in order to capture how growth and cycle dynamics intertwine. Among other considerations, Schumpeter considered this process of Creative Destruction as “the essential fact about capitalism” since it is clearly beneficial for long-run development. As we all know, creative destruction is a complex phenomenon, the outcome of a liquidation process and of the reallocation of productive resources during recessions (and particularly in the depression phase), both mechanisms which can have rather damaging economic consequences in the short run.

For that reason, and also for his earlier position on the non-necessity to intervene in order to help the economy to escape the Great Depression, Schumpeter is generally interpreted as a non-interventionist, a view which - we think - can be nuanced. A careful investigation of his contributions may indeed reveal a modulation in his conclusion(s) on the necessity/efficiency for/of economic policy during economic crises. Not only the long depression and its social costs could have been arguments in favor of government intervention but one cannot also eliminate the possibility that his own theoretical view changed. In the light of his business cycles and crisis theories, the paper proposes to focus on his conclusions in terms of economic policy, scrutinizing systematically the arguments he uses in order to criticize ( and alternatively to consider) economic policy conclusions which may favor public economic policy.

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