Monday, February 4, 2008

Schumpeter's view on theory and data

"I believe that there is an incessant give and take between historical and thoeoretical analysis and that, though for the investigation for the individual questions it may be necessary to sail for a time on one tack only, yet on the principle the two should never lose sight of each other." The combination of narrative, numbers, and theory could exercise a power that none of the three could do alone. Theories are stylized stories; but without real stories and statistics to back them up they lose much of their force. "Economic historians and economic theories can make an important and socially valuable journey toether, if they will.

Thomas McCraw, Prophet of Innovation (pp. 474-475).

Another theme that runs through Schumpeter's life was his desire to see economics more as a science and lamented the lack of mathematical rigor in the field. If he could only see it now - the pendulum may have swung too much the other way.

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