I. Introduction, 417. — II. Industrial research and development: invention and innovation, 418. — III. Schumpeter's theory of innovation, 421. — IV. Conclusion: innovation a normal business procedure, 427

IT seems that a really great man in our field is known chiefly by one contribution which may or may not be his main achievement. As Malthus suggests population and Ricardo rent or perhaps the law of comparative advantage, so economic development, innovation, and entrepreneur are the catch words associated with Schumpeter. Such associations may be correct and may even have a function. Yet in the case of every great name in economics they are at best a small part of what constitutes the greatness. At worst they are a caricature. For what matters is not merely the one or the other idea, however great, however significant. What matters is the place of the idea in the vision of the genius, the theory in the literal sense: the view of things as a whole. Schumpeter, in his own writings, repeats this again and again: If a statement has logical flaws, it must be discarded. If it is free of logical mistakes, it receives its meaning only from its context. This viewpoint not only gives the clue to Schumpeter's open-mindedness and tolerance toward other men's ideas, his willingness and ability to see every point of view; it not only explains how he could understand everything and yet cling to his own view; it is essential to the real understanding of his theory

This article deals with conventional approach in the preparation of financial statements. The adoption of last in first out (LIFO) inventory methods and is now widely urging that the cost of fixed assets be abandoned as the basis for the computation of the allowable depreciation charge. Both of these innovations have been defended with the assertion that the conventional methods show "dollar" income, but that such income is misleading, and that the adoption of some other method will tend to show "economic" or "true" income. It might be well to inquire into the trend as now evidenced and into the desirability of that trend. Thus until all business transactions are by some means converted from the basis of monetary units to purchasing-power or some other method of reporting "economic income," it seems that accounting statements will best serve their purpose by adhering to the usual and accepted standard of measure, the dollar. This would involve the repudiation of the LIFO inventory method in order that all accounts would then reflect monetary income on an objective basis

This is an era of experimentation and exploration in accounting. It parallels and is a portion of the same process which has given rise to innovations and developments in the social science of economics. Accounting like its sister science economics has belatedly begun to recognize that although the solution to each problem in the economic scene is limited and bounded by action taken relative to the solution of large problems, nevertheless, great potentialities for increase in economic well-being are possible through objective, piece-meal attacks on problems concerning the economy's units of activity, i.e., problems of individual business entities. To accomplish the many objectives of modern accounting-provision of data for financial statements, control, and special decisions of management-the art and science of accounts must be made more flexible, must be broadened, and must be deepened to accept within its ken increasing responsibilities for analysis and interpretation. The inordinate emphasis that has been placed upon single-purpose accounts and principles relating to such accounts must be replaced by a more scientific attempt to utilize accounts constructed so as to be of varied usefulness. Financial accounting as a device leading to the preparation of a questionable income statement and a more questionable balance sheet had its heyday in the first half of the present century. Accounting as a tool which embraces techniques of the statistician, the objective experimentalism of the engineer, and the concepts of the economist has great potentialities for serving the forward-looking purposes of management and investors beset on every hand by change in the social and economic scene. To be of greatest assistance in the solution of problems of private and public enterprise, there is a need for a broadened concept of the role of the accountant and accounts