Theorie der wirtschaftlichen Entwicklung.

First edition, scarce, of the first statement of what was to become known as the "Schumpeterian system". In this work Schumpeter "replaced Marx's greedy, bloodsucking capitalist by the dynamic innovating entrepreneur as the linchpin of the capitalist system, responsible not just for technical progress but the very existence of a positive rate of profit on capital. Distinguishing between 'inventions' and 'innovations', he stressed the fact that scientific and technical inventions amount to nothing unless they are adopted, which calls for as much daring and imagination as the original act of discovery by the scientist or engineer. Furthermore, the 'innovations' that count for economic progress consist of much more than the new machines that capture popular attention: they take the form of new products, new sources of supply, new forms of industrial and financial organisation just as much as of new methods of production. The entrepreneur is frequently also the capitalist; nevertheless, in principle there is a world of difference between doing things in a new way and providing the capital required to finance a new venture. The capitalist earns 'interest', but the entrepreneur earns 'profit' and without the dynamic change created by the entrepreneur, the rate of profit would soon fall to zero... His theory of the entrepreneur has ever since been the starting point for every subsequent discussion of entrepreneurship" (Blaug).

Though dated 1912 on the title page, the book was actually published in 1911, the original printed wrappers being dated 1911 though often amended by hand to read 1912.