Modern Prophets: Schumpeter or Keynes? - Page 9

Schumpeter also knew that policies have to fit the short term. He learned this lesson the hard way - as minister of finance in the newly formed Austrian republic in which he, totally unsuccessfully, tried to stop inflation before it got out of hand. He knew that he had failed because his measures were not acceptable in the short term - the very measures that, two years later, a no economist, a politician and professor of moral theology did apply to stop the inflation, but only after it had all but destroyed Austria's economy and middle class.

But Schumpeter also knew that today's short-term measures have long-term impacts. They irrevocably make the future. Not to think through the futurity of short-term decisions and their impact long after "we are all dead" is irresponsible. It also leads to the wrong decisions. It is this constant emphasis in Schumpeter on thinking through the long-term consequences of the expedient, the popular, the clever, and the brilliant that makes him a great economist and the appropriate guide for today, when short-run, clever, brilliant economics - and short-run, clever, brilliant politics - have become bankrupt.

In some ways, Keynes and Schumpeter replayed the best-known confrontation of philosophers in the Western tradition - the Platonic dialogue between Parmenides, the brilliant, clever, irresistible sophist, and the slow-moving and ugly, but wise Socrates. No one in the interwar years was more brilliant, more clever than Keynes. Schumpeter, by contrast, appeared pedestrian - but he had wisdom. Cleverness carries the day. But wisdom endureth.