Joseph A. Schumpeter: Heinrich Mannstaedt, Die kapitalistische Anwendung der Maschinerie (1909)

Schumpeter’s review of Mannstaedt’s 1905 book turns a dispute over machinery and employment into a criticism of theoretical method. Its central contention is that Marx and his classical opponents share an analytical framework that contemporary economics must move beyond. Mannstaedt’s defense of compensation theory against Marx’s account of machinery and the industrial reserve army therefore cannot settle the question merely by returning to Ricardo, Senior, Mc Culloch, and J. St. Mill.

Daher ist es auch für die Beurteilung Marx' von entscheidender Bedeutung, daß wir heute eben nicht mehr auf dem Boden der Klassiker stehen, und es kann unmöglich befriedigen, wenn man seine Resultate lediglich mit den Mitteln der Klassiker diskutiert.

English translation: Hence it is also of decisive importance for the appraisal of Marx that today we simply no longer stand upon the ground of the classical economists, and it cannot possibly be satisfactory if one discusses his results merely with the means of the classical economists.

This methodological objection structures the review’s main discussion. Schumpeter treats Marx’s methods, results, and theoretical architecture as profoundly classical, locating the difference largely in the disposition with which Marx approaches economic phenomena. Mannstaedt consequently remains within the framework of the theory he contests. His examination of Ricardo’s numerical examples does not supply the deeper analysis Schumpeter demands; conversely, his criticism of Ricardo is too severe, because Ricardo accomplished what his historical situation and purpose allowed.

The substantive issue is the unequal relation between technical progress and workers’ interests. Schumpeter grants that compensation theory has arguments in its favor, but insists that these do not erase a crucial distinction: expanding means of production may increase labor demand proportionately, or they may become competitors of workers. This contrast explains the economic and social paradox surrounding technical progress. His position preserves the force of the objection without endorsing all its formulations:

Ganz unrecht haben die Gegner der Kompensationstheorie wohl nicht, wenngleich auch sie ihre Sache übertrieben haben. Aber wie weit reicht das Recht auf beiden Seiten?

English translation: The opponents of the compensation theory are probably not altogether in the wrong, even though they too have overstated their case. But how far does the right extend on both sides?

The unresolved task is to determine the extent to which each side is right, rather than simply to vindicate or refute Marx. Schumpeter judges that Mannstaedt has not accomplished this task. The review’s significance lies in separating a persuasive restatement of inherited arguments from a genuine advance in explaining technological displacement.

The closing paragraph nevertheless credits the book with scholarly value:

Die Verdienste seiner Arbeit liegen in den Referaten über die von ihm berücksichtigten Autoren, die sich durch Sorgfalt auszeichnen und im einzelnen manchen verbreiteten Irrtümern über die Theorien der letzteren entgegenwirken können, auch viele gute Bemerkungen dazu bringen.

English translation: The merits of his work lie in the accounts of the authors he takes into consideration, which are distinguished by carefulness and can in particular points counteract many widespread errors about the theories of the latter, and also contribute many good observations upon them.

Schumpeter thus distinguishes theoretical insufficiency from careful exposition. He compares the work’s contribution with Professor Nicholson’s, observes renewed interest in the theoretical problem, and briefly notes Mannstaedt’s attempt to verify his results statistically. These acknowledgments qualify, without reversing, the central verdict: accurate accounts of earlier economists are valuable, but resolving the employment effects of machinery requires analysis beyond their conceptual instruments.