The aim of this chapter is to show that the dynamics of Schumpeterian economics, in addition to explain the creation of wealth, also implicitly contain the elements of a theory of relative poverty. It is argued that the German tradition of economics, of which Schumpeter is a part, has always encompassed the necessary elements of a theory of uneven growth. List, Marx, and Schumpeter have all emphasized different aspects of this uneven growth. This contrasts sharply with the Anglo-Saxon tradition which, particularly since the 1890s, has produced theories of growth and trade which imply an even, converging distribution of world activity and income.

The organization of the chapter is as follows: Section 1 contrasts Anglo-Saxon and German economic traditions from the point of view of theories of uneven growth vs. theories of even growth. Section 2 raises the question of the relationship between technical change and underdevelopment, and identifies two key mechanisms which create uneven distribution of the gains from technical change. The two are (I) the consequences of the extremely uneven advance of the ‘technological frontier’ and (II) Classical and Collusive spreads of technological gains. Section 3 shows how these mechanisms work to create three cases of ‘Schumpeterian underdevelopment’ in the Caribbean. In Section 4 it is claimed that the factors identified in Section 2 may create conflicting interests between the two parts that every individual plays in economic life, that of producer and that of consumer. It is claimed that these are identical only under the assumptions of neo-classical economics and in special cases of what is labelled symmetrical trade. Finally, in Section 5, the policy conclusions of these findings are discussed. It is showed how the conflicting interests of man-the-consumer and man-the-producer, produced by classical and collusive spreads of technical change, were central to the creation of US industrial policy in the early nineteenth century.

Anglo-Saxon vs. German economics: Theories of even vs. theories of uneven growth

Friedrich List, Karl Marx and Joseph Alois Schumpeter are the German economists who have had a major influence on economic policy outside the German-speaking area. The theories of Marx and Schumpeter are deeply rooted in the traditions of the German Historical School of Economics, and although Friedrich List antedates what is generally seen as the starting point of the older historical school, his approach is clearly that of a ‘proto-historical school’.