Joseph Schumpeter
Joseph Alois Schumpeter (German: [ˈʃʊmpeːtɐ]; February 8, 1883 – January 8, 1950)[3] was an Austrian political economist. He served briefly as Finance Minister of Austria in 1919. In 1932, he emigrated to the United States to become a professor at Harvard University, where he remained until the end of his career, and in 1939 obtained American citizenship.
Joseph Schumpeter
February 8, 1883
January 8, 1950 (aged 66)
Austrian
University of Vienna (PhD, 1906)
Harvard University, 1932–50
University of Bonn, 1925–32
Biedermann Bank, 1921–24
Columbia University, 1913–1914
University of Graz, 1912–14
University of Czernowitz, 1909–11
Schumpeter was one of the most influential economists of the early 20th century, and popularized the term "creative destruction", coined by Werner Sombart.[4][5][6]
Early life and education[edit]
Schumpeter was born in 1883 in Triesch, Habsburg Moravia (now Třešť in the Czech Republic, then part of Austria-Hungary) to German-speaking Catholic parents. Both of his grandmothers were Czech.[7] Schumpeter did not acknowledge his Czech ancestry; he considered himself an ethnic German.[7] His father, who owned a factory, died when Joseph was only four years old.[8] In 1893, Joseph and his mother moved to Vienna.[9] Schumpeter was a loyal supporter of Franz Joseph I of Austria.[7]
Schumpeter was educated at the Theresianum, and began his career studying law at the University of Vienna under Eugen von Böhm-Bawerk, an economic theorist of the Austrian School. In 1906, he received his doctoral degree from the University of Vienna's faculty of law, with a specialisation in economics.[10] In 1909, after some study trips, he became a professor of economics and government at the University of Czernowitz in modern-day Ukraine. In 1911, he joined the University of Graz, where he remained until World War I.
In 1913–1914, Schumpeter taught at Columbia University as an invited professor. This invitation marked, according to Wolfgang Stolper, the "high point of his worldly success".[11] He taught economic theory and met Irving Fisher and Wesley Clair Mitchell.[12] Columbia awarded him an honorary doctorate.[13]
In 1918, Schumpeter was a member of the Socialisation Commission established by the Council of the People's Deputies in Germany. In March 1919, he was invited to take office as Minister of Finance in the Republic of German-Austria. He proposed a capital levy as a way to tackle the war debt and opposed the socialization of the Alpine Mountain plant.[14] 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.[15]
From 1925 until 1932, Schumpeter held a chair at the University of Bonn, Germany. He lectured at Harvard 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 fellow central European economists displaced by Nazism.[16] Schumpeter also became known for his opposition to Marxism and socialism, which he thought would lead to dictatorship, and even criticized Franklin Roosevelt's New Deal.[17] In 1939, Schumpeter became a US citizen. At the beginning of World War II, the FBI investigated him and his wife, Elizabeth Boody (a prominent scholar of Japanese economics) for Nazi sympathies, but found no evidence of such leanings.[18][19]
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.[20] Some colleagues thought his views were outdated by Keynesianism, which was fashionable; others resented his criticisms, particularly of their failure to offer an assistant professorship to Paul Samuelson, but recanted when they thought him likely to accept a position at Yale University.[21] 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, reprinted many times and in many languages in the following decades, as well as cited thousands of times.[22]
Career[edit]
Influences[edit]
The source of Schumpeter's dynamic, change-oriented, and innovation-based economics was the historical school of economics. Although his writings could be critical of that perspective, Schumpeter's work on the role of innovation and entrepreneurship can be seen as a continuation of ideas originated by the historical school, especially the work of Gustav von Schmoller and Werner Sombart.[23][24] Despite being born in Austria and having trained with many of the same economists, some argue he cannot be categorized with the Austrian School of economics without major qualifications[25] while others maintain the opposite.[26]
The Austrian sociologist Rudolf Goldscheid's concept of fiscal sociology influenced Schumpeter's analysis of the tax state.[27] A 2012 paper showed that Schumpeter's writings displayed the influence of Francis Galton's work.[28]
Personal life[edit]
Schumpeter was married three times.[57] 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 of the apartment where he grew up. As a divorced man, he and his bride converted to Lutheranism to marry.[58] 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 in 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.[59] Elizabeth assisted him with his research and English writing until his death.[60]
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. He said he had reached two of his goals, but he never said which two,[61][62] although he is reported to have said that there were too many fine horsemen in Austria for him to succeed in all his aspirations.[63][64]
Later life and death[edit]
Schumpeter died in his home in Taconic, Connecticut, at the age of 66, on the night of January 7, 1950.[65]
Legacy[edit]
For some time after his death, Schumpeter's views were most influential among various heterodox economists, especially Europeans, who were interested in industrial organization, evolutionary 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, 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".[66] Other outstanding students of Schumpeter's include the economists Nicholas Georgescu-Roegen and Hyman Minsky and John Kenneth Galbraith and former chairman of the Federal Reserve, Alan Greenspan.[67] Future Nobel Laureate Robert Solow was his student at Harvard, and he expanded on Schumpeter's theory.[68]
Today, Schumpeter has a following outside standard textbook economics, in areas such as economic policy, management studies, industrial policy, and the study of innovation. Schumpeter was probably the first scholar to develop theories about entrepreneurship. For instance, the European Union'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, 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."[69]
On September 17, 2009, The Economist inaugurated a column on business and management named "Schumpeter".[70] 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 and its European affairs column after Charlemagne. 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.[70]
Schumpeter's thoughts inspired the economic theory of Adam Przeworski.[71]