Joseph A. Schumpeter: A Pathfinder
by: John Foster
Introduction:
This pathfinder will explore the life and work of the Austrian economist, Joseph Alois Schumpeter. Schumpeter was one of the most prominent names in Austrian (and European) economics in the early decades of the 20th century, but he is best known in the Anglophone world for his sociological approach to capitalism and the state. The goal of this pathfinder will be to provide a general introduction to Schumpeter’s life and to the most important of his works, as well as to provide some basic resources to clarify the intellectual context in which they were composed.
Library of Congress Subject Headings:
Austria—History—20th century
Austrian School of Economics
Böhm-Bawerk, Eugen von, 1851-1914
Economic Development
Economic History
Economics—20th century
Economics—History
Economics—Sociological aspects
Marginal Utility
Schumpeter, Joseph (1886-1954)
Sociology—History
Wieser, Friedrich Freiherr von, 1851-1826
Biographical Note:
Joseph Schumpeter was born in the Moravian town of Triesch, which at that time was within the Habsburg Empire. He was educated at the Theresianum, the most prestigious secondary institution in late 19th and early 20th century Vienna, and the attended the University of Vienna. There, he studied under the prominent marginalist economists Eugen von Böhm-Bawerk and Friedrich Freiherr von Wieser. Although Schumpeter showed flashes of brilliance, he was also something of an enfant terrible, and thus did not immediately reap the professional rewards that such and education might have made available. When he graduated from the University of Vienna in 1909, he was only able to secure employment at the provincial University of Czernowitz. This he considered to be a sort of exile, and even though he was subsequently called to a chair at the somewhat more prestigious University of Graz, he became disillusioned with his teaching prospects in Austria. He had published some narrowly topical works on debates within German and Austrian economics, but even the fame which he garnered for his path-breaking Theory of Economic Development did not result in his achievement of a teaching post at the University of Vienna to which he aspired.
Schumpeter spent the years in between his first two university appointments practicing law in Egypt. He returned to Austria to take up the chair in Graz in 1911, remaining there until the end of World War I. At that time, he was offered a post in the Social Democratic government which was formed after the abdication of the Habsburg emperor. Although he was not a Social Democrat and had actually been vocally critical of socialism in general, he was offered the position of Minister of Finance on the basis of his expertise and because it was thought that the inclusion of a rather conservative member would ease the transition to democracy. Unfortunately, Schumpeter proved unequal to the task and was excluded from the government nine months later. He then became a director of the Biedermann Bank, a position in which he was even more spectacularly unsuccessful than in his governmental interlude. He was forced to step down shortly before the bank collapsed under the weight of a corruption scandal. While Schumpeter was cleared of any wrong-doing, the affair left him with debts which it took him nearly twenty years to retire.
Feeling disenchanted with the new regime in Austria, Schumpeter accepted a position at the University of Bonn procured for him by his friend and colleague, Arthur Spiethoff. While there, he spent two year-long periods at Harvard, resolving to accept a position there, both because he did not like the atmosphere in Europe, and because his association with the socialist government in Austria made him unpopular with the Prussian Ministry of Education. He finally emigrated to the United States in 1932 and remained there as a professor of economics at Harvard until his death in 1950.
The nature of the subject matter is such that it will of most use for undergraduates, especially those in the upper divisions. There are a couple of reasons for this. In the first place, Schumpeter’s work is of a complex and advanced nature. Both his economic and his sociological work were intended for the specialist. Thus, for this resource to be most useful, it is desirable that the student have some background in economics or sociology. In the second place, while there is much of Schumpeter’s work which has been (and continues to be) integrated into modern sociology and economics, his works themselves were composed in the first half of the twentieth century and, as such, can be difficult to understand outside of their original intellectual context. This pathfinder will be primarily composed of three sorts of sources. First among these will be works composed by Schumpeter himself. The volume and variety of Schumpeter’s works preclude and exhaustive listing, so the presentation will concentrate on highlighting and annotating the most important examples. The second important group of sources will be biographical materials. Since there are only a relatively limited number of biographies of Schumpeter, it will be possible to discuss the majority of the available material. Finally, there will be a limited discussion of secondary sources of an analytical kind. While extensive discussion of the secondary material on Schumpeter is, for reasons of volume and complexity, outside the scope of the present project, it will be possible to present a number of the more basic sources. These will be selected on the basis of their accessibility to the beginner and their relationship to the larger world of Schumpeter scholarship.
Schumpeter published seven major monographs during his lifetime, with an eighth edited and completed by his wife after his death. I have chosen to list only those which are available in English translation. While some might not be appropriate to the beginner, it seems worthwhile to make the broad scope of Schumpeter’s work available for possible future study.
Theorie der wirtschaftlichen Entwicklung: Eine Untersuchung über Unternehmergewinn, Kapital, Kredit, Zins, und den Konjunturzyklus. (Leipzig: Dunker und Humblot, 1912). Translated as The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle. tr. Redvers Opie (Cambridge: Harvard University Press, 1934). HB175 .S462.
Schumpeter’s first major work and the one that really made his reputation among European economists. A concise presentation of his main theoretical position: that the development of capitalism was the result of waves of entrepreneurial activity. Clearly written, crisply presented, and still relevant to modern economic theory.
Epochen der Dogmen- und Methodengeschichte. (Tübingen: J. C. B. Mohr, 1914). Translated as Economic Doctrine and Method. tr. Reinhold Aris (London: GeorgeAllen & Unwin; New York: Oxford University Press, 1954). HB75 .S4543.
A brief work treating the history of economic theory, it was originally meant to be the first volume in Max Weber’s proposed (but never completed) series on social economics. Contains brief treatments of a wide range of figures in economic history.
Business Cycles: A Theoretical, Historical and Statistical Analysis of the Capitalist Process. 2 vols. (New York and London: McGraw-Hill, 1939)HB3711 .S39 1939.
Schumpeter meant this to be his magnum opus, but it was rather a flop for two main reasons. In the first place, John Maynard Keynes had just come out with the General Theory, and the interest surrounding this work to some degree stole Schumpeter’s thunder (at least Schumpeter thought so). In the second place, coming just after the end of a period of economic depression, people were not very interested in hearing that periodic depression were a fundamental fact of capitalism. Nonetheless, the book is clearly written and provides an extensive presentation of Schumpeter’s mature economic theory. The second volume contains most of the statistical matter and is only of interest to specialists.
Capitalism, Socialism, and Democracy. (New York: Harper & Brothers, 1942). HX86 .S33.
Schumpeter’s first major work in English, and the one for which he is most commonly remembered in the English-speaking world.. A major work of economic sociology, Capitalism, Socialism, and Democracy still inspires controversy. Schumpeter claimed that capitalism would eventually turn into socialism because the economic units of modern industrialism would become so large that the entrepreneurial structure of early capitalism would cease to be relevant. The book is tightly argued and is as much a work of sociology as of economics. If one were to read only one work by Schumpeter, this should be it.
History of Economic Analysis. Edited with an introduction by Elizabeth Boody Schumpeter (London: Allen & Unwin, 1954). HB75 .S456.
Massive and unfinished. The book was published four years after Schumpeter’s death with the last few chapters constructed from his notes by his wife. Much the same as Economic Doctrine and Method, but five times as long. This book is actually easier to read than EconomicDoctrine, relying less on the reader’s having a lot of knowledge to begin with. It is quite useful as a reference source, as it contains relatively short treatments of a wide variety of topic in economic history.
Joseph Schumpeter published more than 120 articles and book reviews during his lifetime. In this section, I have tried to provide a sampling of the articles of a more basic nature, and those that are crucial to understanding his larger position. A large proportion of Schumpeter’s English–language articles have been reprinted in the following two works. In addition, the Swedberg volume provides translations of articles and speeches not previously available in English:
Schumpeter, Joseph., The Economics and Sociology of Capitalism. edited by Richard Swedberg. (Princeton, N.J.: Princeton University Press, 1991). (HB119. S35 S36 1991)
Schumpeter, Joseph, Essays. edited by Richard V. Clemence. (HB171. S385).
Most of the essays cited below have been reprinted in these volumes. Where that is this case, it will be noted at the end of the citation.
“Friedrich von Wieser”, Economic Journal, 37 (1927): 328-30. HC440.5 .A1 E14.
A brief piece discussing the career of one of Schumpeter’s mentors among the economists of the Austrian School. A short piece which says as much about Schumpeter’s growing distance from the views of his youth as it does about the economic views of von Wieser.
“J. M. Keynes, General Theory”, Journal of the American Statistical Association, 31 (1936): 791-5. HA1 .A6. Reprinted in Essays.
A somewhat bitter piece, which is not completely surprising given that Schumpeter thought that Keynes’ book had stolen his thunder. Schumpeter contends that the position is interesting, but does not have the general applicability that the title suggests.
“Joan Robinson, The Economics of Imperfect Competition”, Journal of Political Economy, 42 (1934): 249-57. HB1 .J7.
Review of a work of one of John Maynard Keynes’ protégés, but one with whom Schumpeter was rather sympathetic. Review lauds Robinson’s attempt to more accurately model capitalist development by moving away from the assumption of perfect competition.
“The Crisis of the Tax State”, International Economic Papers, vol. 6 (1954): 5-38. 330.82 I61. Reprinted in The Economics and Sociology of Capitalism.
Indicative of Schumpeter’s peculiar combination of economics and sociology. He contends that the way to understand the real priorities of a state is to examine its fiscal priorities.
“The Instability of Capitalism”, Economic Journal, 38 (1928):361-86. HC440.5 .A1 E14. Reprinted in Essays.
The title is something of a misnomer, since the point of the article is that the apparent instability of capitalism was a passing phase. Also important because he turned out, in that particular case, he turned out to be wrong.
“The Present World Depression: A Tentative Diagnosis”, American Economic Review (March 1931): 179-82. HB1 .E26 Reprinted in Essays.
Schumpeter’s analysis of the depression of the late ‘20s and ‘30s. His account is basically in line with his larger position about the cyclical nature of capitalism. Schumpeter took the rather unpopular position that depressions could not be prevented by adjustments in fiscal policy.
Allen, Robert Loring, Opening Doors: The Life and Work of Joseph Schumpeter, 2 vols. (New Brunswick, N.J.: Transaction Publishers, 1991). HB119.S35 A64 1991.
Probably the most accessible of the Schumpeter biographies. Allen was a student of Schumpeter’s at Harvard and focuses much of his treatment on Schumpeter’s work and life in that particular venue.
März, Eduard, Joseph Schumpeter: Scholar, Teacher, Politician. (New Haven: Yale University Press, 1991). HB119.S35 M3713 1991.
A somewhat more technical treatment that the Allen volume. März focuses a great deal of attention on Schumpeter’s early life and career. Contains extensive discussion of Schumpete’s theories, as well as attempts to clarify how the developmental trajectory of Schumpeter’s work was affected by the vicissitudes of his personal and professional life.
Stolper, Wolfgang F., Joseph Alois Schumpeter: The Public Life of a Private Man. (Princeton, N.J.: Princeton University Press, 1994). HB119.S35 S76 1994.
Another of Schumpeter’s students, Stolper’s treatment of Schumpeter’s life and work is significantly more complex than that found in the preceding works. In addition, his treatment is thematic rather than chronological which sometimes makes it a bit difficult to follow. Nonetheless, an extremely informative piece of scholarship.
Swedberg, Richard, Joseph A. Schumpeter: His Life and Work. (Cambridge, U.K.: Polity Press, 1991). HB119.S35 S938 1991.
Swedberg is the reigning king in the field of economic sociology. He has also written and edited several volumes on Schumpeter. His treatment is readable, comprehensive, and balanced. In addition, this work contains and extensive bibliography of Schumpeter’s works. This is the first book that one ought to read on the subject.
Bottomore, Tom. Between Marginalism and Marxism: The Economic Sociology of J. A. Schumpeter. (New York: St. Martin's, 1992). HB119.S35 B68 1992b.
A very brief but useful comparison between Schumpeter’s work and that of some of his Marxist contemporaries, such as Rudolf Hilferding.
DeVecchi, Nicolo. Entrepreneurs, Institutions and Economic Change: The Economic Thought of J. A. Schumpeter (1905-1925). (Brookfield, Vt.: Edward Elgar, 1995). HB501 .D3813.
A brief outline of Schumpeter’s work. Avoids getting too technical, yet manages to introduce most of the major issues.
Etherington, Norman. “Reconsidering Theories of Imperialism. History and Theory 1982 21(1): 1-36. D1 .H8173.
A good introduction to Schumpeter’s rather peculiar, non-Marxist theory of imperialism. Good comparison to works of other writers, such as Wolfgang Mommsen.
März, Eduard. “The Economic System of Joseph A. Schumpeter: Historical Roots, Theoretical Structrure and Sociopolitical Relevance.” History of European Ideas 1988 9(2): 205-214. D16.8 .H63.
A basic introduction, brief and to the point, by one of the predominant scholars in the field. Gives contextual information about the development of Schumpeter’s work.
Seidl, Christian. “Schumpeter Addressing Keynes.” History of Economic Ideas [Italy] 1996 4(3): 169-180. This journal is not available locally.
A brief comparison of the works and approaches of the two predominant economists of the early 20th century. Crucial because of the rivalry between the two men.
Semmel, Bernard.”Schumpeter’s Curious Politics. Public Interest 1992 (106): 3-16. H1 .P86.
An interesting discussion of Schumpeter’s political views, with special emphasis on how they diverged from those held by other members of the Austrian School of Economics.
Stolper, Wolfgang F. “Joseph A. Schumpeter’s Activities as Finance Minister of Austria, 1919.” History of Economic Ideas [Italy] 1995 3(1): 105-160. This journal is not locally available.
One of a very few pieces which directly discusses Schumpeter’s brief tenure as Austrian Minister of Finance in the turbulent period following World War I.
Stolper, Wolfgang F. “Schumpeter’s Ministerial Days.” History of Economic Ideas [Italy] 1995 3(1): 93-103. This journal is not locally available.
Yet another treatment of a similar topic. Stolper is a widely recognized expert on (and former student of) Joseph Schumpeter. Protracted historical treatments of this period in Schumpeter's career are few and far between. This relatively brief essay fills what is otherwise a gap in the scholarship.
This section contains both reference sources of an encyclopedic variety, as well as bibliographies of Schumpeter's works and of other sources relating to it.
Augello, Massimo M. Joseph Alois Schumpeter: A Reference Guide. (Berlin, New York: Springer Verlag, 1990). Z8797.3 .A94 1990
By far the most extensive and up-to date source available on the subject. References are broken down by subject and the listings are quite user friendly. This volume covers both works by Schumpeter himself, as well as the extensive secondary literature that has arisen around his work in various languages.
Blaug, Mark ed. Who’s Who in Economics: A Biographical Dictionary of Major Economists, 1700-1986. (Brighton: Wheatsheaf, 1986). HB76 .W47 1986b
Blaug is the doyen of economic historians writing in the English language. The entries in this book are short and to the point, and include a citation list with suggestions for further reading. Blaug’s treatment of the subject is especially clear and can easily be understood even by those who are rather less informed about economic theory.
Boettke, Peter J. The Elgar Companion to Austrian Economics. (Aldershot, Hants, England; Brookfield, Vt.: Edward Elgar, 1994). HB98 .E43 1994.
An good introduction to Schumpeter’s work and the intellectual context of Austrian economics. It is, however, somewhat technical, so people who are not familiar with classical economics as a whole might choose to look at the works cited below before consulting this book.
Kurz, Heinz D. and Neri Salvadori eds. The Elgar Companion to Classical Economics. (Cheltenham, U.K.; Northhampton, MA: Edward Elgar Publishing, 1998). HB94 .E42 1998.
This volume is a bit more general than the one cited above, and the treatments are a bit more accessible to the non-specialist. Three pages on Schumpeter’s work and it’s relationship to the larger field of economics.
Stevenson, Michael I. Joseph Alois Schumpeter: A Bibliography, 1905-1984. (Westport, Conn: Greenwood Press, 1985). Z8797.3 .S83 1985
Covers much of the same territory as the Augello volume, but not nearly as up-to-date or extensive.
Eighth International J. A. Schumpeter Society Conference
http://les1.man.ac.uk/cric/Schumpeter/cfp.htm
The proceedings of a conference sponsored by the International Schumpeter Society and the Center for Research on Innovation and Competition at the University of Manchester in June 2000. Contains a list of participants and hyperlinks to the text of papers delivered at the conference. The subject matter might be a little far afield for the beginner, but it is at least worth looking at to get some idea of the direction of Schumpeter studies today.
International Joseph A. Schumpeter Society
http://www.wiso.uni-augsburg.de/vwl/hanusch/iss/
An organization run by Dr. Horst Hanausch of the University of Augsburg, Germany. The society puts on conferences (such as the one cited above) and promotes the study of Schumpeter’s work, evolutionary economics, and the development of entrepreneurship world wide.
Journal of Evolutionary Economics. Available on the UNC Library E-journal listing.
Probably the only journal of real interest to the beginning student of Schumpeter. Each issue contains a smattering of articles that attempt to draw out implications of the Schumpeterian program, as well a few articles relating directly to historical matters surrounding the man himself. This journal is edited by Dr. Horst Hanausch, who is one of the world’s leading experts on Schumpeterian economics and evolutionary economic theory.