ABSTRACT
In the stream of Schumpeterian studies which accompanied the 1983 centenary celebrations of J. A. Schumpeter’s birth and the fortieth anniversary of the publication of Capitalism, Socialism and Democracy, one major aspect of his multifaceted work has been neglected. This is the particular stand he took in Part III of the book on the famous ‘socialist calculation debate’ about the rationality of a hypothetical socialist economy. The famous ‘socialist calculation debate’ concerned the rationality of the centrally planned allocation of scarce means under state ownership of the means of production, as compared with that of the decentralized market under dispersed private ownership. Schumpeter was well aware that the Walrasian equilibrium is a static one. The chapter shows that the reason for Schumpeter’s particular stand in the socialist calculation debate was his early belief in the power of mathematical economics and his espousal of the Walrasian general equilibrium odel.
