ABSTRACT
This chapter deals with transportation, so the author focuses on his discussion of Schumpeter's theory of innovation on this topic. According to the model developed in Schumpeter's Business Cycles, the downturn of the US economy at the end of the 1920s was not the result of some 'meaningless and functionless disturbances of economic life and of the march of progress', but a normal reaction of the economic system during a long-lasting growth cycle. One could also speak of a debt cycle, this one largely based on the spread of the motorcar. To provide a full understanding of the Great Depression of the 1930s, the analysis provided here would have to be supplemented by other information on how competition between countries was accelerated by the First World War, on the role of trade barriers, international capital flows and so on. But that task lies beyond the ambition of the chapter.
