Joseph Alois Schumpeter, popularly known as Joseph Schumpeter, was born on 8th February 1883 and died on 8th January 1950). Schumpeter died at night in his home in Taconic, Connecticut, at age 66. He was an Austrian political economist who served briefly as Finance Minister of Austria in 1919. Later, he emigrated to the United States to become a professor at Harvard University and became a US citizen in 1939. He was undoubtedly one of the most influential economists of the early 20th century and popularized the term ‘creative destruction.’
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 of the apartment where he grew up. As a divorced man, he and his bride converted to Lutheranism to marry. They married in 1925, but within a year, she died in childbirth. 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.” Elizabeth assisted him with his research and English writing until his death. Schumpeter claimed that he had set himself three goals: to be the world’s greatest economist, the best horseman in all of Austria, and the greatest lover in all of Vienna. He said he had reached two 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.
Schumpeter was born in the old Czech Republic, then part of Austria-Hungary, to German-speaking catholic parents. Both of his grandmothers were Czech, but he did not acknowledge his Czech ancestry and considered himself an ethnic German. His father, who owned a factory, died when Joseph was only four years old. Then, in 1893, his mother moved to Vienna. He studied law at the University of Vienna and received a doctoral degree from the University of Vienna’s faculty of law, specializing in economics. In 1909, 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 and remained until World War I. In 1913-1914, Schumpeter taught at Columbia University as an invited professor, which was the high point of his worldly success”. He taught economic theory. Columbia University awarded him an honorary doctorate.
In March 1919, he was invited to take office as Minister of Finance in the Republic of German-Austria. He proposed a capital levy to tackle the war debt, and in 1921, he became president of the private Biedermann Ban and board member at the Kaufmann Bank. Problems at those banks left Schumpeter in debt. 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. In 1939, he became a US citizen. At the beginning of World War II, the FBI investigated him and his wife, Elizabeth Boody (Scholar of Japanese economics), for Nazi leanings but were devoid of any evidence.
Schumpeter’s dynamic, change-oriented, and innovation-based economics writings on innovation and entrepreneurship were a continuation of ideas from the historical school, especially of Gustav von Schmoller and Werner Sombart. The Austrian sociologist Rudolf Goldscheids’s fiscal sociology concept influenced Schumpeter’s tax state analysis. His work’s central point is that capitalism can only be understood as an evolutionary process of continuous innovation and creative destruction. Schumpeter’s posthumous History of Economic Analysis provided him the recognition he deserved. Schumpeter ignored Adam Smith and criticized John Maynard Keynes and David Ricardo. He believes that the entrepreneur disturbs this equilibrium and is the prime cause of economic development,
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. . The outstanding students of Schumpeter’s include the economists Nicholas Georgescu-Roegen, Hyman Minsky, and John Kenneth Galbraith and former chairman of the Federal Reserve, Alan Greenspan. Nobel Laureate Robert Solow, his student at Harvard expanded on Schumpeter’s theory.
Dr. Biswajit Das-KIIT School of Management, Cell: 9438064555, biswajit@ksom.ac.in