Joseph A. Schumpeter · 1927
Joseph A. Schumpeter’s reply to Willem Valk, originally published in 1927, defends marginal productivity theory by clarifying its analytical foundations and its relationship to value imputation and market price determination. The supplied German text is a reprint or republication whose publication year is undocumented. Schumpeter’s central contention is that Valk constructs an opposition between approaches that, properly formulated, are compatible. He leaves aside the broader question of the causal significance of marginal productivity.
Nicht jede Differenz in der Auffassung, Bewertung und Verwendung der einzelnen gedanklichen Hilfsmittel der Theorie verdient erörtert zu werden.
English translation: Not every difference in the conception, the evaluation and the employment of the individual conceptual tools of theory deserves to be discussed.
This opening qualification makes the reply an exercise in consequential clarification rather than disagreement for its own sake. Schumpeter challenges the classification of theoretical techniques as separate “schools,” particularly when mathematical expression is mistaken for a substantive doctrine. His disagreement over Cassel likewise concerns the status of simplifying and popularizing Walras: accessibility does not by itself establish a fundamental theoretical contribution.
In unserer Wissenschaft kommt hinzu, daß kritische wie weiterbauende Versuche nicht einfach, wie anderwärts, an die jeweils vollkommensten sondern an die am leichtesten zugänglichen Formulierungen anknüpfen, so daß Erledigtes immer wieder aufgerührt wird.
English translation: In our science there is the further fact that critical as well as constructive attempts do not simply, as elsewhere, attach themselves to the most perfect formulations in each case, but to the most easily accessible ones, so that matters already settled are stirred up again and again.
The methodological concern is cumulative progress. Criticism directed at accessible but technically imperfect formulations can reopen questions already resolved in more developed versions. Schumpeter accordingly distinguishes the achievements of Austrian imputation theory from shortcomings in its mathematical formulation. Its basic principle—that productive resources derive their value from the consumption goods they make possible—also underlies the marginal analysis of Walras, Marshall, and Wicksell.
Marginal productivity, in this account, concerns the relation between a small additional quantity of a productive input and the resulting additional output. Valuing that output in money connects the technical increment to factor remuneration under free competition, with discounting where appropriate. The claim does not assign the entire product to every indispensable factor. It isolates the consequences of variation at the margin.
Die bekannte, lange Zeit für unüberwindlich gehaltene Schwierigkeit, die in dem physisch ununterscheidbaren Zusammenwirken aller Produktionsfaktoren beim Entstehen des Produkts liegt, hat die Grenzanalyse ebenso überwunden wie die alte Wertantinomie.
English translation: The well-known difficulty, long held to be insuperable, which lies in the physically indistinguishable cooperation of all factors of production in the coming into being of the product, has been overcome by marginal analysis just as the old antinomy of value was.
Joint physical production therefore does not preclude analytical differentiation. This distinction supports Schumpeter’s comparison of two routes to factor valuation. Imputation traces productive-resource values back to the goods they help produce; direct market analysis examines transactions between resource owners and entrepreneurs under quantitative constraints. The market approach is simpler for developed exchange economies, but imputation reveals how entrepreneurial demand expresses consumer valuations and clarifies the meaning of costs across different economic arrangements.
For Schumpeter, these routes need not compete. Setting owners’ valuations for their own use of resources at zero makes direct market pricing a special case of the broader imputation framework. Technical relations represented through production coefficients can also be expressed through marginal productivity: incrementally formulated, the relevant coefficient is its reciprocal. Valk’s association of mathematical theory with fixed coefficients thus restricts the theory unnecessarily; Schumpeter points to Pareto’s more general treatment.
The final argument addresses product exhaustion and the practical possibility of varying factors independently. Schumpeter maintains that correctly defined marginal magnitudes avoid Valk’s objection that factor valuations exceed the available product. Given Valk’s concession concerning the logical consistency of Clark’s construction, the remaining issue concerns realism: how far can inputs vary when labour and capital are committed to particular uses?
Schumpeter answers by distinguishing adjustment periods, invoking Marshall’s quasi-rent, considering choices before investment, and noting the scope for small changes within existing plants. Infinitesimal analysis is constitutive of the theory, not an improvised defence. What counts as a small increment depends on the scale of the problem; indivisibilities require particular analysis rather than blanket rejection. His conclusion is consequently both defensive and provisional: marginal productivity theory remains open to eventual supersession, but its refinement requires precise formulations, not an artificial division between compatible analytical methods.
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