Austrian Capital Theory and Dynamic Analysis ofSchumpeter vs. Hayek

Abstract

Following the Austrian approach, both Schumpeter and Hayek view capital as advance. However, Schumpeter is more interested in the equilibrium breaking process due to technical innovation, whereas Hayek concerns about the equilibrating process toward stationary state. Schumpeter avoids applying the dynamic analysis in the usual sense to capitalist development, which is basically unstable. On the other hand, Hayek tries not only to analyze the adjustment process but also to refine the intertemporal equilibrium concept.