Joseph Schumpeter

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Schumpeter, Joseph


Born Feb. 8, 1883, in Triesch (now Třešt’), Moravia; died Jan. 8,1950, inTaconic, Conn. Economist and sociologist.

Educated at the University of Vienna, Schumpeter served as finance minister of Austria in 1919 and 1920. He was a professor at the University of Bonn from 1925 to 1932 and at Harvard University from 1932 until his death. He regarded the history of the discipline of political economy as the development of an analytical framework and of research methods for studying economic phenomena.

Schumpeter is known primarily for his concept of economic dynamics, which assigned a central place to the entrepreneurial function. He advanced the theory of efficient competition, which depicts the market mechanism in the era of big business as the fruitful interaction of the forces of monopoly and competition. These forces are fueled by innovations and impart a particular dynamism to economic development.

Schumpeter worked out the dynamic concept of the business cycle, in which recurrent business cycles are seen as a law of economic growth. According to this concept, the driving force behind prosperity is mass investment, embodying certain innovations, in fixed capital. In Schumpeter’s view, crises are not inevitable but occur when the natural cessation of an economic boom is met by panic. The theory of cycles assigns a major role to credit, which brings additional economic resources into play and thereby helps to implement innovations. Schumpeter attempted to refute the Marxist theory of socialist revolution by arguing that capitalist free enterprise would inevitaby be transformed, gradually, into an economic system whose development would be regulated and directed by the state.


The Theory of Economic Development. New York, 1961.
Business Cycles, vols. 1–2. New York—London, 1939.
Capitalism, Socialism, and Democracy, 3rd ed. New York, 1950.
Ten Great Economists. New York [1951].
History of Economic Analysis. London [1967].


Al’ter, L. B. Burzhuaznaia politicheskaia ekonomiia SShA. Moscow, 1961.
Seligman, B. Osnovnye techeniia sovremennoi ekonomicheskoi mysli. Moscow, 1968. Chapter 8. (Translated from English.)
Clemence, R. V., and F. S. Doody. The Schumpeterian System. Cambridge, Mass., 1950.
Schumpeter: Social Scientist. Edited by E. Harris. Cambridge, Mass., 1951.
Schneider, E., and G. Spiethoff, eds. Aufsätze zur ökonomischenTheorie. Tübingen, 1952.


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His topics include Adam Smith at the dawn of modern economics, new questions and analytical advances by Thomas Malthus and David Ricardo, John Maynard Keynes and the rise of macroeconomics, Karl Marx's grand theory of political economy, and Joseph Schumpeter and the drivers of markets and economies.
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Opening Doors: The Life and Work of Joseph Schumpeter.
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Joseph Schumpeter, "The Process of Creative Destruction," in Capitalism, Socialism, and Democracy (New York: Routledge, 2003), 81-86.
Creative destruction," said by the Austrian economist Joseph Schumpeter to be the defining characteristic of capitalism, has not destroyed the demand for coal or the need for Coal Age to cover it.
Joseph Schumpeter was among the earliest to note the importance of financial architecture to economic growth, though Americans are more likely to hear his phrase "creative destruction" misinterpreted to defend job losses.
There is a term which more or less began with Karl Marx and his Communist Manifesto and went on to be popularized by Joseph Schumpeter, an Austrian-American economist of some renown, I haven't thought much about Joseph since frequenting the Loeb building at Carleton University in the late 1960s when his book, Capitalism, Socialism and Democracy, had a certain cachet among aspiring political science students who careened between classes, demonstrations and Alice B.
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As far back as 1934, the influential economist Joseph Schumpeter identified innovation as a driver of economic growth.
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1) While these "stylized facts" would come as no surprise to the classical economists, to Joseph Schumpeter or to Ludwig von Mises, mainstream economists have been surprisingly late with respect to linking such firm- and industry-level dynamics with economy-level growth.