%0 Journal Article %T The Impact of New %A David Chandler Thomas %A James E. McClure %J The American Economist %@ 2328-1235 %D 2019 %R 10.1177/0569434518774774 %X Closed-system circular flow models have been ubiquitous in economics for at least half a century. Because these models account for neither new-product R&D, nor the attendant leakages and injections, they obscure understanding of (a) the distinction between new-product and process R&D, (b) the circular flow leakages and injections attending new-product R&D, and (c) Schumpeterian ¡°creative destruction¡± and ¡°swarming.¡± To shed light upon these matters, we present an open-system circular flow model and a price theoretic explanation of the swarming overinvestment that characterizes business cycle downturns. JEL Classifications: B20, O31, E3 %K circular flow %K new-product R&D %K process R&D %K leakages %K injections %K Hayek %K Keynes %K Knight %U https://journals.sagepub.com/doi/full/10.1177/0569434518774774