Joseph Schumpeter: A Revolutionary Thinker in Economics
Joseph Alois Schumpeter (1883-1950) was an Austrian-trained economist, economic historian, and prolific author who is celebrated as one of the 20th century’s greatest minds. Recognized mainly for his theories on economic cycles and the development of capitalist economies, Schumpeter was instrumental in highlighting the pivotal role of entrepreneurship in economic innovation and growth.
Key Takeaways
- Joseph Schumpeter is revered for his book Capitalism, Socialism, and Democracy, his theory of creative destruction, and his profound references to methodological individualism in economics.
- Beyond academia, Schumpeter played crucial roles as Austria’s finance minister, a bank president, and a university professor.
- He coined the term “creative destruction”, depicting the cyclical process wherein old industries and methods are continuously replaced by innovative ones.
- Schumpeter introduced the critical concept of entrepreneurship, positioning entrepreneurs as the driving force behind innovative economic change.
- While his ideas initially took a backseat to those of contemporary John Maynard Keynes, they now centralize modern positive views on economic evolution.
Early Life and Education
Born in Moravia (now the Czech Republic) in 1883, Schumpeter was nurtured within a German-speaking family. He delved into economics, learning from notable members of the Austrian school tradition like Friedrich von Wieser and Eugen von Bohm-Bawerk. His illustrious career path saw him serving as Austria’s finance minister, leading a private bank, and teaching at universities. By 1932, Schumpeter had moved to the United States to join Harvard University. A milestone came in 1947, when he became the first immigrant elected as president of the American Economic Association.
Notable Theories and Accomplishments
Schumpeter’s contributions laid cornerstones in both economic and political theory. However, he is best known for Capitalism, Socialism, and Democracy (1942), which introduced his iconic theory of creative destruction and advanced the relevance of methodological individualism.
Creative Destruction
Schumpeter’s widely acclaimed perspective on economic growth thrived in his work, most notably in his outline of the process he termed **
Related Terms: John Maynard Keynes, Austrian School of Economics, business cycles, economic growth, capitalism, methodological individualism, entrepreneurship.
References
- Munich Personal RePEc Archive. “Schumpeter, Lederer and Hilferding on Economic Development, Credit and Business Cycles”, Pages 3-4.
- Joseph Alois Schumpeter. Capitalism, Socialism, and Democracy, Page 83. Start Publishing LLC, 2012.
- Business Jargons. “Schumpeter’s Innovation Theory of Profit”.
