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Combining Keynes and Schumpeter. Ingvar Svennilson's Contribution to the Swedish Growth School and Modern Economics

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Abstract

In a study of European growth in the interwar period, the Swedish economist Ingvar Svennilson integrated a Keynesian theory of cumulative growth with a Schumpeterian analysis of economic transformation. Svennilson emphasised that innovations and the use of new technologies had been stimulated by high demand and production growth. Svennilson’s strong commitment to "Vendoorn's Law" which actually was "Svennilson's Law", made it difficult to incorporate him in a Schumpeterian tradition. A synthesis between Keynes and Schumpeter with Svennilson as a mediator was also prevented by the decisive role of entrepreneurship and the critique of Keynesian models in works by Schumpeter and the Swedish growth school. However, a synthesis has been facilitated by neo-Schumpeterian theories of demand-led innovations and cumulative economic processes. Svennilson’s study has been superseded by later contributions to economics except for a theory of a negative, "Keynesian", relationship between unemployment and growth and an exceptional "un-Verdoornian" theory that high aggregate demand may lead to crowding-out of new firms from capital markets. Besides, Svennilson's integration of short run and long run macro analysis and of theoretical and empirical work is still a fruitful research strategy in economics.

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  • Erixon, Lennart, 2003. "Combining Keynes and Schumpeter. Ingvar Svennilson's Contribution to the Swedish Growth School and Modern Economics," Research Papers in Economics 2003:8, Stockholm University, Department of Economics.
    • Handle: RePEc:hhs:sunrpe:2003_0008
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    Cited by:

    1. Lundquist, Karl-Johan & Olander, Lars-Olof & Svensson Henning, Martin, 2008. "Creative destruction and economic welfare in Swedish regions: spatial dimensions of structural change, growth and employment," SRE-Discussion Papers 2008/03, WU Vienna University of Economics and Business.
    2. Erixon, Lennart, 2009. "Development Blocks, Faulty Investment and Structural Tensions – The Åkerman- Dahmén Theory of the Business Cycle," Research Papers in Economics 2009:9, Stockholm University, Department of Economics.
    3. Daniele Tavani & Luke Petach, 2021. "Firm beliefs and long-run demand effects in a labor-constrained model of growth and distribution," Journal of Evolutionary Economics, Springer, vol. 31(2), pages 353-377, April.
    4. Karl-Johan Lundquist & Lars-Olof Olander & Martin Svensson Henning, 2008. "Creative destruction and economic welfare in Swedish regions: Spatial dimensions of structural change, growth and employment," SRE-Disc sre-disc-2008_03, Institute for Multilevel Governance and Development, Department of Socioeconomics, Vienna University of Economics and Business.

    More about this item

    Keywords

    Innovations; Cumulative Growth; Productivity Growth; Verdoorn’s Law; Swedish Growth School;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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