Economics Dictionary of ArgumentsHome
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| Investments: Investments refer to assets acquired with the expectation of generating income or appreciating in value over time. They encompass various vehicles such as stocks, bonds, real estate, and commodities. The aim is to achieve future financial gain through capital appreciation, dividends, interest, or rental income. See also Income, Economy, Value theory, Interest rates, Dicisions, Decision-making processes, Assets._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Joseph A. Schumpeter on Investments - Dictionary of Arguments
Sobel I 23 Investments/Schumpeter/Sobel/Clemens: The investments and expanded economic activity in the sector have two important effects. One, it pulls resources into the sector from other parts of the economy. This includes raw materials, capital, labour, and - critically for Schumpeter - entrepreneurs begin to shift their attention and resources into this sector. As Schumpeter explained: „Why do entrepreneurs appear, not continuously, that is singly in every appropriately chosen interval, but in clusters? Exclusively because the appearance of one or a few entrepreneurs facilitates the appearance of others, and these the appearance of more in ever-increasing numbers.“ (TED(1): 228). >Entrepreneurship/Schumpeter. As more and more resources are reallocated to the sector experiencing expansion, the prices for resources, again including raw materials, capital, and labour begin to rise. Schumpeter described it as follows: „the swarm-like appearance of new combinations easily and necessarily explains the fundamental features of periods of boom. It explains why increasing capital investment is the very first symptom of the coming boom, why industries producing means of production are the first to show supernormal stimulation ... It explains the appearance of new purchasing power in bulk, thereby the characteristic rise in prices during booms, which obviously no reference to increased need or increased costs alone can explain.“ (TED(1): 230) As the sector with the initial innovation expands and draws resources to it, prices outside the sector also begin to rise. Sobel I 24 Specifically, firms and entrepreneurs begin to invest in the additional sectors experiencing expansion because of the in crease in demand from the sector that initially experienced the innovation breakthrough. These can include, for instance, providers of raw materials and suppliers of intermediate goods and services. As more and more firms, both within the sector initially affected by the innovation as well as those in other sectors of the economy affected by the expansion, bid on resources, including labour, and compete for investment, prices generally start to rise. During this phase, unemployment declines while wages increase, explaining the general prosperity experienced across the economy during expansions. >Business cycle/Schumpeter, >Innovation/Schumpeter, >Creative destruction/Schumpeter. 1. Schumpeter, Joseph A. (1934). The Theory of Economic Development [TED]. Harvard University Press._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconSchum I Joseph A. Schumpeter The Theory of Economic Development An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle, Cambridge/MA 1934 German Edition: Theorie der wirtschaftlichen Entwicklung Leipzig 1912 Sobel I Russell S. Sobel Jason Clemens The Essential Joseph Schumpeter Vancouver 2020 |
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