Schumpeter and the meanings of rationality

This paper discusses various meanings of rationality distinguished by Schumpeter – as well as related concepts like rationalization – and connects them with widely remarked tensions or dilemmas in The Theory of Economic Development and other substantive works. The well-known contrast between Schumpeter’s commitment to equilibrium economics and his heterodox, evolutionary vision is analyzed on the basis of the notions of ‘rationality of the observer’ and ‘rationality in the observed’, developed in his article on The Meaning of Rationality in the Social Sciences. Schumpeter’s thesis of the obsolescence of the entrepreneurial function – already present in The Theory of Economic Development – is also scrutinized, by investigating the coherence between his conceptions of rationality and of rationalization. This topic is, in turn, connected with Schumpeter’s assessment of the socialist calculation debate.