ABSTRACT

This third chapter consists of two texts taken from Joseph Schumpeter's first book, The Nature and Essence of Economic Theory, which established his reputation as an economist but was only translated into English for the first time in 2010. In these texts, Schumpeter attempts to provide a general and relevant picture of the field of theoretical economics as it developed in the context of the German Historical School's opposition to the “new system” in economics (the Marginalist School). In particular, Schumpeter explains that these approaches are both inheritors of the classical system. In his chapter on MI, where he formalizes the term and associates the approach with the contributions of the marginalist school of economics (of which Menger is the founder on the Austrian side), he clarifies the crucial distinction between methodological individualism and political or moral individualism.