Schumpeter’s review of Hawtrey’s The Economic Problem (1926) weighs an ambitious inquiry into conscious economic coordination against the demands of scientific neutrality and analytical precision. Its movement is from a methodological reservation, through criticism of the book’s organization, to particular economic arguments and a qualified closing acknowledgment of its importance.
Hawtrey seeks to analyze contemporary economic life for its possibilities of deliberate collective action and planned organization, proceeding from criticism of existing motives and institutions toward purposes of his own. Schumpeter objects to this conception of economics as a retreat from the hard-won separation of science and value judgment. Yet he immediately limits the objection: Hawtrey’s actual analysis remains sober and is not distorted by his declared aims.
Aber dieser Protest kann genau so formal bleiben, wie des Autors Rückfall beinahe nur in seiner diesbezüglichen Erklärung besteht, denn in seinem Text analysiert er ruhig und sachlich, nirgends tritt die Zielsetzung störend oder gar verfälschend hervor.
English translation: But this protest can remain just as formal as the author's relapse consists almost solely in his declaration to that effect, for in his text he analyses calmly and objectively; nowhere does the setting of aims come forward disturbingly or even falsifyingly.
The more serious difficulty is structural. Thirty brief, essay-like chapters, followed by conclusions, attempt to encompass almost the whole of social science. Markets, population, the state, family, imperialism, collectivism, and nationalization receive treatment too compressed to advance their problems. Schumpeter finds neither new results nor productive methods or perspectives; breadth becomes superficiality, despite his high regard for Hawtrey’s abilities.
His detailed criticisms make analytical adequacy, rather than agreement over policy, the decisive criterion. The discussion of costs disappoints especially in an economist trained in Marshall’s tradition. On entrepreneurial profit, Hawtrey correctly recognizes the inadequacy of explanations based on risk or remuneration for managerial work and identifies profit as a major source of capital formation. But his alternative explanation fails to satisfy Schumpeter. Remarks on state railway operation approach a conceptual error, while the claim that profit and interest tend to absorb a growing share of national income lacks the extensive analysis it requires.
Tatsächlich wird nicht einmal ein Versuch eines theoretischen oder statistischen Nachweises gemacht.
English translation: In fact not even an attempt at a theoretical or statistical demonstration is made.
This demand for demonstration is balanced by selective praise. Schumpeter finds the chapters on protective tariffs, consumption, consumer choice, and taxation and saving instructive, though he objects to dismissiveness toward predecessors and to formulations that may mislead practical judgment.
The review closes by asking whether scrutiny of details does justice to a large intellectual undertaking. Schumpeter nevertheless insists that accumulated weaknesses diminish both the book’s value and its usefulness. His final concession preserves the distinction between an important task and its insufficient execution:
Immer freilich bleibt es das Werk eines hochbegabten Mannes und ein bedeutsamer Versuch, Aufgaben zu lösen, die unsere Zeit uns stellt.
English translation: Always, to be sure, it remains the work of a highly gifted man and a significant attempt to solve tasks which our age sets us.
The review’s significance lies in this double standard of judgment: socially urgent questions deserve ambitious treatment, but urgency and intellectual range cannot substitute for conceptual precision and theoretical or statistical support.
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