The elusive concept of innovation for Schumpeter, Marschak and the early econometricians

• It shows how Schumpeter elaborated his concept of endogenous innovation.
• It explores the concept of industrial mutation as an evolutionary metaphor for Schumpeter.
• It proves how this contrasted with the mechanical view of his fellow econometricians.
• It emphasises the changes of the concept of randomness in the debate.
• It shows how the econometricians compared their notion of innovation with other sciences.

The modern concept of innovation is a crucial part of the analysis of capitalism as an adaptive system, and it is due to Schumpeter. Consequently, Schumpeter's role as a “prophet of innovation” has been rightly emphasized. This paper contributes to that history presenting some of the difficulties Schumpeter suffered as a formal representation of innovation was proposed by his fellow econometricians, as proved by the case of one of such dialogs, that with Jacob Marschak, at the time the director of the Cowles Commission and vice-president and then president of the Econometric Society. It is shown how Schumpeter elaborated his concepts of endogenous innovation and of industrial mutation as contrasted to the mechanical view of his fellow econometricians. Finally, the paper emphasizes the changes of the concept of randomness through the debate.