Joseph Schumpeter (1883–1950)
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Who They Were
Joseph Schumpeter (1883-1950) was an Austrian-born economist who spent the latter part of his career in the United States, at Harvard. Trained in the intellectual world of early-twentieth-century Vienna, he ranged across economic theory, the history of the discipline and the sociology of capitalism. He held public office in Austria before settling into academic life and becoming one of the most widely read economists of his generation. His best-known book, Capitalism, Socialism and Democracy (1942), reflected on the long-run prospects of capitalism and drew on a wide sweep of history and social theory. He wrote in an era before the economics Nobel existed, but his ideas about innovation and entrepreneurship became central to later growth theory. He remains a touchstone for thinking about technological change and the dynamism of market economies.
Key Contributions
Schumpeter's most enduring idea is creative destruction, popularised in Capitalism, Socialism and Democracy (1942): economic growth comes from innovation destroying incumbent industries and replacing them with new ones, a restless process he explicitly traced back to Marx. He placed the entrepreneur at the centre of this story, casting innovation, not price competition alone, as the driving force of capitalist development. He argued, provocatively, that capitalism's very success might undermine the social and institutional supports it depended on. He also wrote a monumental History of Economic Analysis, published after his death, surveying the development of economic thought. Because he worked before the Sveriges Riksbank Prize was established in 1968, he never received a Nobel, but creative destruction has become standard vocabulary in the economics of growth, innovation and industrial change.
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Austrian-American economist who popularised creative destruction, the idea that growth comes from innovation sweeping away incumbent industries. Play the games that feature Joseph Schumpeter: