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Joseph Alois Schumpeter (; February 8, 1883 – January 8, 1950) was an Austrian-born political economist. He served briefly as Finance Minister of German-Austria in 1919. In 1932, he emigrated to the United States to become a professor at
Harvard University Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of highe ...
, where he remained until the end of his career, and in 1939 obtained American citizenship. Schumpeter was one of the most influential economists of the early 20th century, and popularized the term "
creative destruction Creative destruction (German: ''schöpferische Zerstörung'') is a concept in economics which since the 1950s is the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of Karl Marx and pop ...
", which was coined by Werner Sombart.


Early life and education

Schumpeter was born in Triesch, Habsburg Moravia (now Třešť in the Czech Republic, then part of
Austria-Hungary Austria-Hungary, often referred to as the Austro-Hungarian Empire,, the Dual Monarchy, or Austria, was a constitutional monarchy and great power in Central Europe between 1867 and 1918. It was formed with the Austro-Hungarian Compromise of ...
) in 1883 to German-speaking
Catholic The Catholic Church, also known as the Roman Catholic Church, is the largest Christian church, with 1.3 billion baptized Catholics worldwide . It is among the world's oldest and largest international institutions, and has played a ...
parents. Both of his grandmothers were Czech. Schumpeter did not acknowledge his Czech ancestry; he considered himself an ethnic German. His father owned a factory, but he died when Joseph was only four years old. In 1893, Joseph and his mother moved to
Vienna en, Viennese , iso_code = AT-9 , registration_plate = W , postal_code_type = Postal code , postal_code = , timezone = CET , utc_offset = +1 , timezone_DST ...
. Schumpeter was a loyal supporter of
Franz Joseph I of Austria Franz Joseph I or Francis Joseph I (german: Franz Joseph Karl, hu, Ferenc József Károly, 18 August 1830 – 21 November 1916) was Emperor of Austria, King of Hungary, and the other states of the Habsburg monarchy from 2 December 1848 until ...
. After attending school at the
Theresianum Theresianum (or Theresian Academy; german: Theresianische Akademie) is a private boarding and day school governed by the laws for public schools in Vienna, Austria. It was founded in 1746 by Empress Maria Theresa of Austria. History Early ...
, Schumpeter began his career studying law at the
University of Vienna The University of Vienna (german: Universität Wien) is a public research university located in Vienna, Austria. It was founded by Duke Rudolph IV in 1365 and is the oldest university in the German-speaking world. With its long and rich hi ...
under the
Austrian Austrian may refer to: * Austrians, someone from Austria or of Austrian descent ** Someone who is considered an Austrian citizen, see Austrian nationality law * Austrian German dialect * Something associated with the country Austria, for example: ...
capital theorist Eugen von Böhm-Bawerk, taking his PhD in 1906. In 1909, after some study trips, he became a professor of economics and government at the University of Czernowitz in modern-day
Ukraine Ukraine ( uk, Україна, Ukraïna, ) is a country in Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inva ...
. In 1911, he joined the University of Graz, where he remained until
World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...
. In 1918, Schumpeter was a member of the Socialization Commission established by the
Council of the People's Deputies The Council of the People's Deputies (, sometimes translated as Council of People's Representatives or Council of People's Commissars) was the name given to the government of the November Revolution in Germany from November 1918 until February 1 ...
in Germany. In March 1919, he was invited to take office as Minister of Finance in the
Republic of German-Austria The Republic of German-Austria (german: Republik Deutschösterreich or ) was an unrecognised state that was created following World War I as an initial rump state for areas with a predominantly German-speaking and ethnic German population ...
. He proposed a capital levy as a way to tackle the war debt and opposed the socialization of the Alpine Mountain plant. In 1921, he became president of the private Biedermann Bank. He was also a board member at the Kaufmann Bank. Problems at those banks left Schumpeter in debt. His resignation was a condition of the takeover of the Biedermann Bank in September 1924. From 1925 to 1932, Schumpeter held a chair at the
University of Bonn The Rhenish Friedrich Wilhelm University of Bonn (german: Rheinische Friedrich-Wilhelms-Universität Bonn) is a public research university located in Bonn, North Rhine-Westphalia, Germany. It was founded in its present form as the ( en, Rhine ...
, Germany. He lectured at
Harvard Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher le ...
in 1927–1928 and 1930. In 1931, he was a visiting professor at The Tokyo College of Commerce. In 1932, Schumpeter moved to the United States and soon began what would become extensive efforts to help central European economist colleagues displaced by
Nazism Nazism ( ; german: Nazismus), the common name in English for National Socialism (german: Nationalsozialismus, ), is the far-right totalitarian political ideology and practices associated with Adolf Hitler and the Nazi Party (NSDAP) i ...
. Schumpeter also became known for his opposition to
Marxism Marxism is a Left-wing politics, left-wing to Far-left politics, far-left method of socioeconomic analysis that uses a Materialism, materialist interpretation of historical development, better known as historical materialism, to understand S ...
and socialism that he thought would lead to dictatorship, and even criticized President Franklin Roosevelt's
New Deal The New Deal was a series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the United States between 1933 and 1939. Major federal programs agencies included the Civilian Con ...
. In 1939, Schumpeter became a US citizen. In the beginning of
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
, the FBI investigated him and his wife, Elizabeth Boody (a prominent scholar of Japanese economics) for pro-Nazi leanings, but found no evidence of Nazi sympathies. At Harvard, Schumpeter was considered a memorable character, erudite, and even showy in the classroom. He became known for his heavy teaching load and his personal and painstaking interest in his students. He served as the faculty advisor of the Graduate Economics Club and organized private seminars and discussion groups. Some colleagues thought his views outdated by Keynesianism which was fashionable; others resented his criticisms, particularly of their failure to offer an assistant professorship to
Paul Samuelson Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he " ...
, but recanted when they thought him likely to accept a position at
Yale University Yale University is a private research university in New Haven, Connecticut. Established in 1701 as the Collegiate School, it is the third-oldest institution of higher education in the United States and among the most prestigious in the w ...
. This period of his life was characterized by hard work and comparatively little recognition of his massive 2-volume book ''Business Cycles.'' However, Schumpeter persevered, and in 1942 published what became the most popular of all his works, ''
Capitalism, Socialism and Democracy ''Capitalism, Socialism, and Democracy'' is a book on economics, sociology, and history by Joseph Schumpeter, arguably his most famous, controversial, and important work. It's also one of the most famous, controversial, and important books on ...
'', reprinted many times and in many languages in the following decades, as well as cited thousands of times.


Career


Influences

The source of Schumpeter's dynamic, change-oriented, and innovation-based economics was the
historical school of economics The historical school of economics was an approach to academic economics and to public administration that emerged in the 19th century in Germany, and held sway there until well into the 20th century. The professors involved compiled massive eco ...
. Although his writings could be critical of that perspective, Schumpeter's work on the role of innovation and
entrepreneurship Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...
can be seen as a continuation of ideas originated by the historical school, especially the work of Gustav von Schmoller and Werner Sombart. Despite being born in Austria and having trained with many of the same economists, some argue he cannot be categorized with the
Austrian School The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian scho ...
of economics without major qualifications while others maintain the opposite. The Austrian sociologist Rudolf Goldscheid's concept of fiscal sociology influenced Schumpeter's analysis of the tax state. A 2012 paper showed that Schumpeter's writings displayed the influence of
Francis Galton Sir Francis Galton, FRS FRAI (; 16 February 1822 – 17 January 1911), was an English Victorian era polymath: a statistician, sociologist, psychologist, Anthropology, anthropologist, tropical Exploration, explorer, geographer, Inventio ...
's work.


Evolutionary economics

According to
Christopher Freeman Christopher Freeman (11 September 1921 – 16 August 2010) a British economist, recognised as one of the founders of the post-war school of Innovation Studies. He played a lead role in the development of the neo-Schumpeterian tradition focusin ...
(2009), "the central point of his whole life work s that capitalism can only be understood as an evolutionary process of continuous innovation and '
creative destruction Creative destruction (German: ''schöpferische Zerstörung'') is a concept in economics which since the 1950s is the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of Karl Marx and pop ...
'".


''History of Economic Analysis''

Schumpeter's scholarship is apparent in his posthumous ''History of Economic Analysis'', although some of his judgments seem idiosyncratic and sometimes cavalier. For instance, Schumpeter thought that the greatest 18th century economist was
Turgot Turgot may refer to: * Turgot of Durham ( – 1115), Prior of Durham and Bishop of St Andrews * Michel-Étienne Turgot (1690–1751), mayor of Paris * Anne Robert Jacques Turgot Anne Robert Jacques Turgot, Baron de l'Aulne ( ; ; 10 May 172718 ...
rather than
Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——� ...
, and he considered
Léon Walras Marie-Esprit-Léon Walras (; 16 December 1834 – 5 January 1910) was a French mathematical economist and Georgist. He formulated the marginal theory of value (independently of William Stanley Jevons and Carl Menger) and pioneered the developme ...
to be the "greatest of all economists", beside whom other economists' theories were "like inadequate attempts to catch some particular aspects of Walrasian truth". Schumpeter criticized
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
and
David Ricardo David Ricardo (18 April 1772 – 11 September 1823) was a British political economist. He was one of the most influential of the classical economists along with Thomas Malthus, Adam Smith and James Mill. Ricardo was also a politician, and a ...
for the "Ricardian vice". According to Schumpeter, both Ricardo and Keynes reasoned in terms of abstract models, where they would freeze all but a few variables. Then they could argue that one caused the other in a simple
monotonic In mathematics, a monotonic function (or monotone function) is a function between ordered sets that preserves or reverses the given order. This concept first arose in calculus, and was later generalized to the more abstract setting of order ...
fashion. This led to the belief that one could easily deduce policy conclusions directly from a highly abstract theoretical model. In this book, Joseph Schumpeter recognized the implication of a gold monetary standard compared to a fiat monetary standard. In ''History of Economic Analysis'', Schumpeter stated the following: "An 'automatic' gold currency is part and parcel of a
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...
and free-trade economy. It links every nation's money rates and price levels with the money rates and price levels of all the other nations that are 'on gold.' However, gold is extremely sensitive to government expenditure and even to attitudes or policies that do not involve expenditure directly, for example, in foreign policy, certain policies of taxation, and, in general, precisely all those policies that violate the principles of lassicalliberalism. ''This'' is the reason why gold is so unpopular now and also why it was so popular in a
bourgeois The bourgeoisie ( , ) is a social class, equivalent to the middle or upper middle class. They are distinguished from, and traditionally contrasted with, the proletariat by their affluence, and their great cultural and financial capital. ...
era."


Business cycles

Schumpeter's relationships with the ideas of other economists were quite complex in his most important contributions to economic analysis – the theory of business cycles and development. Following neither Walras nor Keynes, Schumpeter starts in ''The Theory of Economic Development'' with a treatise of circular flow which, excluding any innovations and innovative activities, leads to a stationary state. The stationary state is, according to Schumpeter, described by Walrasian equilibrium. The hero of his story is the entrepreneur. The entrepreneur disturbs this equilibrium and is the prime cause of economic development, which proceeds in a cyclic fashion along with several time scales. In fashioning this theory connecting innovations, cycles, and development, Schumpeter kept alive the Russian Nikolai Kondratiev's ideas on 50-year cycles, Kondratiev waves. Schumpeter suggested a model in which the four main cycles, Kondratiev (54 years), Kuznets (18 years), Juglar (9 years), and Kitchin (about 4 years) can be added together to form a composite
waveform In electronics, acoustics, and related fields, the waveform of a signal is the shape of its graph as a function of time, independent of its time and magnitude scales and of any displacement in time.David Crecraft, David Gorham, ''Electro ...
. A Kondratiev wave could consist of three lower-degree Kuznets waves. Each Kuznets wave could, itself, be made up of two Juglar waves. Similarly two (or three) Kitchin waves could form a higher degree Juglar wave. If each of these were in phase; more importantly, if the downward arc of each was simultaneous so that the nadir of each was coincident, it would explain disastrous slumps and consequent depressions. As far as the segmentation of the Kondratiev Wave, Schumpeter never proposed such a fixed model. He saw these cycles varying in time – although in a tight time frame by coincidence – and for each to serve a specific purpose.


Keynesianism

In Schumpeter's theory, Walrasian equilibrium is not adequate to capture the key mechanisms of economic development. Schumpeter also thought that the institution enabling the entrepreneur to buy the resources needed to realize his vision was a well-developed
capitalist Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, price system, private ...
financial system, including a whole range of institutions for granting credit. One could divide economists among (1) those who emphasized "real" analysis and regarded money as merely a "veil" and (2) those who thought monetary institutions are important and money could be a separate driving force. Both Schumpeter and Keynes were among the latter.


Demise of capitalism

Schumpeter's most popular book in English is probably ''
Capitalism, Socialism and Democracy ''Capitalism, Socialism, and Democracy'' is a book on economics, sociology, and history by Joseph Schumpeter, arguably his most famous, controversial, and important work. It's also one of the most famous, controversial, and important books on ...
''. While he agrees with
Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
that capitalism will collapse and be replaced by
socialism Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes th ...
, Schumpeter predicts a different way this will come about. While Marx predicted that capitalism would be overthrown by a violent proletarian revolution, which actually occurred in the least capitalist countries, Schumpeter believed that capitalism would gradually weaken by itself and eventually collapse. Specifically, the success of capitalism would lead to
corporatism Corporatism is a collectivist political ideology which advocates the organization of society by corporate groups, such as agricultural, labour, military, business, scientific, or guild associations, on the basis of their common interests. The ...
and to values hostile to capitalism, especially among intellectuals. "Intellectuals" are a social class in a position to critique societal matters for which they are not directly responsible and to stand up for the interests of other classes. Intellectuals tend to have a negative outlook on capitalism, even while relying on it for prestige because their professions rely on antagonism toward it. The growing number of people with higher education is a great advantage of capitalism, according to Schumpeter. Yet, unemployment and a lack of fulfilling work will lead to intellectual critique, discontent, and protests. Parliaments will increasingly elect
social democratic Social democracy is a political, social, and economic philosophy within socialism that supports political and economic democracy. As a policy regime, it is described by academics as advocating economic and social interventions to promote so ...
parties, and democratic majorities will vote for restrictions on entrepreneurship. Increasing workers' self-management, industrial democracy and regulatory institutions would evolve non-politically into "
liberal capitalism Economic liberalism is a political and economic ideology that supports a market economy based on individualism and private property in the means of production. Adam Smith is considered one of the primary initial writers on economic liberali ...
". Thus, the intellectual and social climate needed for thriving
entrepreneurship Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...
will be replaced by some form of " laborism". This will exacerbate "
creative destruction Creative destruction (German: ''schöpferische Zerstörung'') is a concept in economics which since the 1950s is the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of Karl Marx and pop ...
" (a borrowed phrase to denote an
endogenous Endogenous substances and processes are those that originate from within a living system such as an organism, tissue, or cell. In contrast, exogenous substances and processes are those that originate from outside of an organism. For example, ...
replacement of old ways of doing things by new ways), which will ultimately undermine and destroy the capitalist structure. Schumpeter emphasizes throughout this book that he is analyzing trends, not engaging in political advocacy. William Fellner, in the book ''Schumpeter's Vision: Capitalism, Socialism and Democracy After 40 Years'', noted that Schumpeter saw any political system in which the power was fully monopolized as fascist.


Democratic theory

In the same book, Schumpeter expounded on a theory of democracy that sought to challenge what he called the "classical doctrine". He disputed the idea that democracy was a process by which the electorate identified the common good, and politicians carried this out for them. He argued this was unrealistic, and that people's ignorance and superficiality meant that in fact they were largely manipulated by politicians, who set the agenda. Furthermore, he claimed that even if the common good was possible to find, it would still not make clear the means needed to reach its end, since citizens do not have the requisite knowledge to design government policy. This made a 'rule by the people' concept both unlikely and undesirable. Instead, he advocated a minimalist model, much influenced by
Max Weber Maximilian Karl Emil Weber (; ; 21 April 186414 June 1920) was a German sociologist, historian, jurist and political economist, who is regarded as among the most important theorists of the development of modern Western society. His ideas p ...
, whereby democracy is the mechanism for competition between leaders, much like a market structure. Although periodic votes by the general public legitimize governments and keep them accountable, the policy program is very much seen as their own and not that of the people, and the participatory role of individuals is usually severely limited. Schumpeter defined democracy as the method by which people elect representatives in competitive elections to carry out their will. This definition has been described as simple, elegant and parsimonious, making it clearer to distinguish political systems that either fulfill or fail these characteristics. This minimalist definition stands in contrast to broader definitions of democracy, which may emphasize aspects such as "representation, accountability, equality, participation, justice, dignity, rationality, security, freedom". Within such a minimalist definition, states which other scholars say have experienced
democratic backsliding Democratic backsliding, also called autocratization, is the decline in the democratic characteristics of a political system, and is the opposite of democratization. Democracy is the most popular form of government, with more than half of the nat ...
and which lack civil liberties, a free press, the rule of law and a constrained executive, would still be considered democracies. For Schumpeter, the formation of a government is the endpoint of the democratic process, which means that for the purposes of his democratic theory, he has no comment on what kinds of decisions that the government can take to be a democracy. Schumpeter faced pushback on his theory from other democratic theorists, such as
Robert Dahl Robert Alan Dahl (; December 17, 1915 – February 5, 2014) was an American political theorist and Sterling Professor of Political Science at Yale University. He established the pluralist theory of democracy—in which political outcomes ar ...
, who argued that there is more to democracy than simply the formation of government through competitive elections. Schumpeter's view of democracy has been described as "elitist", as he criticizes the rationality and knowledge of voters, and expresses a preference for politicians making decisions. Democracy is therefore in a sense a means to ensure circulation among elites. However, studies by Natasha Piano (of the University of Chicago) emphasize that Schumpeter had substantial disdain for elites as well.


Entrepreneurship

Schumpeter was probably the first scholar to theorize about
entrepreneurship Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...
, and the field owed much to his contributions. His fundamental theories are often referred to as Mark I and Mark II. In Mark I, Schumpeter argued that the innovation and technological change of a nation come from the entrepreneurs or wild spirits. He coined the word ''Unternehmergeist'', German for "entrepreneur-spirit", and asserted that "... the doing of new things or the doing of things that are already being done in a new way" stemmed directly from the efforts of entrepreneurs. Schumpeter developed Mark II while a professor at
Harvard Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher le ...
. Many social economists and popular authors of the day argued that large businesses had a negative effect on the standard of living of ordinary people. Contrary to this prevailing opinion, Schumpeter argued that the agents that drive innovation and the economy are large companies that have the capital to invest in
research and development Research and development (R&D or R+D), known in Europe as research and technological development (RTD), is the set of innovative activities undertaken by corporations or governments in developing new services or products, and improving existi ...
of new products and services and to deliver them to customers more cheaply, thus raising their standard of living. In one of his seminal works, ''Capitalism, Socialism and Democracy'', Schumpeter wrote: Mark I and Mark II arguments are considered complementary.


Cycles and long wave theory

Schumpeter was the most influential thinker to argue that long cycles are caused by innovation and are an incident of it. His treatise on how business cycles developed were based on Kondratiev's ideas which attributed the causes very differently. Schumpeter's treatise brought Kondratiev's ideas to the attention of English-speaking economists. Kondratiev fused important elements that Schumpeter missed. Yet, the Schumpeterian variant of the long-cycles hypothesis, stressing the initiating role of innovations, commands the widest attention today.Freeman, Christopher, ed. Long Wave Theory, International Library of Critical Writings in Economics: Edward Elgar, 1996 In Schumpeter's view, technological innovation is the cause of both cyclical instability and economic growth. Fluctuations in innovation cause fluctuations in investment and those cause cycles in economic growth. Schumpeter sees innovations as clustering around certain points in time periods that he refers to as "neighborhoods of equilibrium", when entrepreneurs perceive that risk and returns warrant innovative commitments. These clusters lead to long cycles by generating periods of acceleration in aggregate growth. The technological view of change needs to demonstrate that changes in the rate of innovation govern changes in the rate of new investments and that the combined impact of innovation clusters takes the form of fluctuation in aggregate output or employment. The process of technological innovation involves extremely complex relations among a set of key variables: inventions, innovations, diffusion paths, and investment activities. The impact of technological innovation on aggregate output is mediated through a succession of relationships that have yet to be explored systematically in the context of the long wave. New inventions are typically primitive, their performance is usually poorer than existing technologies and the cost of their production is high. A production technology may not yet exist, as is often the case in major chemical and pharmaceutical inventions. The speed with which inventions are transformed into innovations and diffused depends on actual and expected trajectory of performance improvement and cost reduction.


Innovation

Schumpeter identified innovation as the critical dimension of economic change. He argued that economic change revolves around innovation, entrepreneurial activities, and market power. He sought to prove that innovation-originated market power can provide better results than the invisible hand and price competition. He argued that technological innovation often creates temporary monopolies, allowing abnormal profits that would soon be competed away by rivals and imitators. These temporary monopolies were necessary to provide the incentive for firms to develop new products and processes.


Doing Business

The
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Inte ...
's "Doing Business" report was influenced by Schumpeter's focus on removing impediments to
creative destruction Creative destruction (German: ''schöpferische Zerstörung'') is a concept in economics which since the 1950s is the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of Karl Marx and pop ...
. The creation of the report is credited in part to his work.


Personal life

Schumpeter was married three times. His first wife was Gladys Ricarde Seaver, an Englishwoman nearly 12 years his senior (married 1907, separated 1913, divorced 1925). His best man at his wedding was his friend and Austrian jurist Hans Kelsen. His second was Anna Reisinger, 20 years his junior and daughter of the
concierge A concierge () is an employee of a multi-tenant building, such as a hotel or apartment building, who receives guests. The concept has been applied more generally to other hospitality settings and to personal concierges who manage the errands of ...
of the apartment where he grew up. As a divorced man, he and his bride converted to
Lutheranism Lutheranism is one of the largest branches of Protestantism, identifying primarily with the theology of Martin Luther, the 16th-century German monk and Protestant Reformers, reformer whose efforts to reform the theology and practice of the Cathol ...
to marry. They married in 1925, but within a year, she died in childbirth. The loss of his wife and newborn son came only weeks after Schumpeter's mother had died. Five years after arriving to the US, in 1937, at the age of 54, Schumpeter married the American economic historian Dr. Elizabeth Boody (1898–1953), who helped him popularize his work and edited what became their magnum opus, the posthumously published ''History of Economic Analysis''. Elizabeth assisted him with his research and English writing until his death. Schumpeter claimed that he had set himself three goals in life: to be the greatest economist in the world, to be the best horseman in all of Austria, and the greatest lover in all of
Vienna en, Viennese , iso_code = AT-9 , registration_plate = W , postal_code_type = Postal code , postal_code = , timezone = CET , utc_offset = +1 , timezone_DST ...
. He said he had reached two of his goals, but he never said which two, although he is reported to have said that there were too many fine horsemen in Austria for him to succeed in all his aspirations.


Later life and death

Schumpeter died in his home in Taconic, Connecticut, at the age of 66, on the night of January 7, 1950.


Legacy

For some time after his death, Schumpeter's views were most influential among various heterodox economists, especially Europeans, who were interested in industrial organization,
evolution Evolution is change in the heritable characteristics of biological populations over successive generations. These characteristics are the expressions of genes, which are passed on from parent to offspring during reproduction. Variation ...
ary theory, and economic development, and who tended to be on the other end of the political spectrum from Schumpeter and were also often influenced by Keynes, Karl Marx, and Thorstein Veblen. Robert Heilbroner was one of Schumpeter's most renowned pupils, who wrote extensively about him in '' The Worldly Philosophers''. In the journal ''
Monthly Review The ''Monthly Review'', established in 1949, is an independent socialist magazine published monthly in New York City. The publication is the longest continuously published socialist magazine in the United States. History Establishment Following ...
'', John Bellamy Foster wrote of that journal's founder Paul Sweezy, one of the leading Marxist economists in the United States and a graduate assistant of Schumpeter's at Harvard, that Schumpeter "played a formative role in his development as a thinker". Other outstanding students of Schumpeter's include the economists Nicholas Georgescu-Roegen and
Hyman Minsky Hyman Philip Minsky (September 23, 1919 – October 24, 1996) was an American economist, a professor of economics at Washington University in St. Louis, and a distinguished scholar at the Levy Economics Institute of Bard College. His research ...
and John Kenneth Galbraith and former chairman of the Federal Reserve,
Alan Greenspan Alan Greenspan (born March 6, 1926) is an American economist who served as the 13th chairman of the Federal Reserve from 1987 to 2006. He works as a private adviser and provides consulting for firms through his company, Greenspan Associates LLC. ...
. Future Nobel Laureate
Robert Solow Robert Merton Solow, GCIH (; born August 23, 1924) is an American economist whose work on the theory of economic growth culminated in the exogenous growth model named after him. He is currently Emeritus Institute Professor of Economics at th ...
was his student at Harvard, and he expanded on Schumpeter's theory. Today, Schumpeter has a following outside standard textbook economics, in areas such as economic policy, management studies, industrial policy, and the study of
innovation Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed enti ...
. Schumpeter was probably the first scholar to develop theories about
entrepreneurship Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...
. For instance, the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
's innovation program, and its main development plan, the Lisbon Strategy, are influenced by Schumpeter. The International Joseph A. Schumpeter Society awards the Schumpeter Prize. The Schumpeter School of Business and Economics opened in October 2008 at the
University of Wuppertal The University of Wuppertal (''Universität Wuppertal'') is a German scientific institution, located in Wuppertal, in the state of North Rhine-Westphalia, Germany. The university's official name in German is ''Bergische Universität Wuppertal ...
, Germany. According to University President Professor Lambert T. Koch, "Schumpeter will not only be the name of the Faculty of Management and Economics, but this is also a research and teaching programme related to Joseph A. Schumpeter." On September 17, 2009, ''
The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Eco ...
'' inaugurated a column on business and management named "Schumpeter". The publication has a history of naming columns after significant figures or symbols in the covered field, including naming its British affairs column after former editor
Walter Bagehot Walter Bagehot ( ; 3 February 1826 – 24 March 1877) was an English journalist, businessman, and essayist, who wrote extensively about government, economics, literature and race. He is known for co-founding the '' National Review'' in 185 ...
and its European affairs column after
Charlemagne Charlemagne ( , ) or Charles the Great ( la, Carolus Magnus; german: Karl der Große; 2 April 747 – 28 January 814), a member of the Carolingian dynasty, was King of the Franks from 768, King of the Lombards from 774, and the first E ...
. The initial Schumpeter column praised him as a "champion of innovation and entrepreneurship" whose writing showed an understanding of the benefits and dangers of business that proved to be far ahead of its time. Schumpeter's thoughts inspired the economic theory of Adam Przeworski.


Major works


Books

* * * ::Translated as: Translated by: Bruce A. McDaniel * Pdf of preface by F.A. Hayek and first eight pages. * * * * * Translated from the 1911 original German, ''Theorie der wirtschaftlichen Entwicklung''. * Translated from the 1912 original German, ''Epochen der dogmen – und Methodengeschichte''
Pdf version.
** Reprinted in hardback as: ** Reprinted in paperback as: * * Reprinted by the University of Michigan Library * ** Reprinted as: * ** Reprinted as * ** Reprinted as: * * ** Reprinted as: * * * * * * * * ** See also the English translation: * * * ** Originally printed as: * * * ** Reprinted as: ** Reprinted as: ** Reprinted as: * * Edited from a manuscript by Elizabeth Boody Schumpeter. * * ** Originally printed as: Reprinted in 2008. *


Journal articles

* * * * * * * * * * * * Continued on pp. 88–91. ** Reprinted as: * * * * * * * * * * * Translated from a speech given in German by Schumpeter, ''Wie studiert man Sozialwissenschaft''.


Memoriams

* * * * *


Reviews

* * * * * * *


See also

* List of Austrians *
Historical school of economics The historical school of economics was an approach to academic economics and to public administration that emerged in the 19th century in Germany, and held sway there until well into the 20th century. The professors involved compiled massive eco ...
* Lausanne School * List of Austrian scientists * The Gods of the Copybook Headings * Social innovation *
Creative destruction Creative destruction (German: ''schöpferische Zerstörung'') is a concept in economics which since the 1950s is the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of Karl Marx and pop ...
* Schumpeterian rent


References


Further reading

* * * * * * . * * * * * * * Ebeling, Richard. M.
"Joseph A. Schumpeter, Outsider Looking In,"
American Institute for Economic Research, January 13, 2020 * Ebeling, Richard M
"Can Capitalism Survive? 80 Years After Schumpeter's Answer,"
American Institute for Economic Research, May 1, 2022


External links

* * * * * * * * *

* {{DEFAULTSORT:Schumpeter, Joseph Innovation economists 1883 births 1950 deaths Austrian economists Austrian emigrants to the United States Austrian people of Czech descent Austrian people of Moravian-German descent Converts to Lutheranism from Roman Catholicism Chernivtsi University academic personnel Finance Ministers of Austria Government ministers of Austria Historians of economic thought Macroeconomists American development economists People from Třešť University of Bonn faculty University of Vienna alumni Fellows of the Econometric Society Presidents of the Econometric Society Presidents of the American Economic Association Austrian expatriates in Japan American people of Moravian-German descent 20th-century American economists Harvard University faculty Columbia University faculty Austrian expatriates in Germany