Joseph Schumpeter(1883 — 1950)
Joseph Schumpeter
États-Unis, Autriche, Allemagne, Cisleithanie
7 min read
Austrian economist and political scientist, naturalized American, Joseph Schumpeter is one of the major thinkers of 20th-century economics. He is famous for his analyses of innovation, the entrepreneur, and business cycles.
Frequently asked questions
Key Facts
- Born in 1883 in Triesch (Moravia, then Austria-Hungary).
- Published in 1911 his *Theory of Economic Development*, placing the entrepreneur-innovator at the heart of capitalist dynamics.
- Briefly served as Austria's Minister of Finance in 1919.
- Published in 1942 *Capitalism, Socialism and Democracy*, where he coined the concept of **creative destruction**.
- Professor at Harvard University from 1932 until his death in 1950.
Works & Achievements
Foundational work introducing the concept of the innovator as the driving force of the economy. Schumpeter argues that it is not capital accumulation or population growth, but entrepreneurial innovation that creates economic growth.
Masterful analysis of cycles of expansion and contraction in capitalism. Schumpeter explains how innovations created by entrepreneurs generate periods of overproduction, followed by recurring market adjustments.
Major synthesis in which Schumpeter prophesies the inevitable decline of capitalism due to its very success. The work analyzes the incompatibilities between mass democracy and the functioning of the capitalist system.
Collection of his scientific articles and reflections on the history of economic thought. These essays complete his intellectual project by showing the evolution of his thinking over several decades.
Encyclopedic work in which Schumpeter traces the development of economic thought from Adam Smith to his own time. It is his major contribution to intellectual history, revealing his convictions about what constitutes a true economic science.
Anecdotes
Schumpeter had a surprising mix of passions: a great Austrian horseman, he jokingly said his three ambitions in life were to become the best economist, the best horseman in Austria, and to win the heart of a beautiful woman. He admitted failing in all three areas, which allowed him to keep his humor in the face of personal and academic defeats.
At Harvard in the 1940s, this Austrian professor had remarkable eccentricities: he arrived at class wearing sumptuous ties and impeccable suits, creating a striking contrast with the usual image of the bohemian scholar. His students wondered whether this dandyism was intellectual provocation or simply the mark of an aristocracy of the mind.
In 1919, at just 35, Schumpeter became finance minister of the young Austrian Republic, but his tenure ended in fiasco after only a few months. This brief foray into politics confirmed his calling as a theorist rather than a man of action.
He founded the Econometric Society in 1930, a major institution that professionalized the use of mathematics in economics. This choice transformed economics into a quantifiable scientific discipline, marking a decisive turning point in the history of economic thought.
Primary Sources
"The entrepreneur is the one who carries out new combinations of factors of production. His role is not to discover new economic situations, but to realize them."
"The success of capitalism is the cause of its decline... socialism, by becoming necessary, becomes possible, not as it was in the past, but because capitalism would have created the necessary material and mental conditions."
"Economic cycles are not accidental phenomena but intrinsic manifestations of the capitalist economy based on innovation."
"In equilibrium, there is neither profit nor loss. The entrepreneur makes profits precisely because he breaks this equilibrium through innovation."
Key Places
Schumpeter's birthplace in 1883. This small town in Moravia (now Czech Republic) gave him his Central European roots, shaped by Austro-Hungarian culture and the early stages of regional industrialization.
Cultural and economic capital of the Austro-Hungarian Empire where Schumpeter received his university education and held his first academic posts. Vienna was the heart of early 20th-century Central European economic thought.
University where Schumpeter taught political economy before World War I. This Styrian city was a secondary but important intellectual center of the Austro-Hungarian Empire.
Prestigious university where Schumpeter held a professorship in the 1920s-1930s. Bonn represented the peak of his European career before forced emigration due to the rise of Nazism.
Schumpeter's final and most important academic refuge from 1937. At Harvard, he wrote his most influential works and founded the economic school of thought that still dominates theory today.
City where Schumpeter lived during his American exile, directly observing American capitalism in action and the effects of the Great Depression. New York represented the modern embodiment of the capitalist economy he studied.
