ABSTRACT
Joseph Schumpeter's research in the fall and winter of 1935 and into 1936 addressed economic theory and its testing, not economic policy. Schumpeter had views about where depressions came from and why the present depression was so severe and had lasted so long, but his analysis sought theoretical explanations, not a remedy. As his academic life settled into a comfortable routine, Schumpeter's personal life finally started to revive, and serious romance once again entered his world. Jean Baptiste Say's Law is a theorem, a true statement about a theoretical economy in equilibrium, and does not necessarily apply in a real economy away from equilibrium. Economists often forgot this, believing that Say's Law necessarily prevailed in the real economy. The old economics did not provide the justification for what political leaders and the populace had already decided upon as the depression's remedy—government spending.
