Who was he: Joseph Schumpeter was an Austrian-born American economist and political scientist. In economics, he popularized the link between the accumulation and destruction of wealth within capitalism, an idea known as "creative destruction." He was a self-made man who put on the airs of an aristocrat and thus claimed that he had set himself three goals in life: To be the greatest economist in the world, the best horseman in all of Austria and the greatest lover in all of Vienna. Schumpeter stated at one time he had reached two of his goals, but he never said which two.
By his mid-50s, Schumpeter had lived in nine cities and five countries. For a while, he was Finance Minister for Austria and he personally witnessed the fall of the Habsburg Empire. He taught in Germany when that country was being enticed by the Nazi regime and was one of the first of the great European émigrés to the United States. A liberal sociologist by the name of Daniel Bell described Joseph Schumpeter as being "an economist with a tragic sense of life," a rare thing for an economist.
Joseph Schumpeter is best known in this day and age for Capitalism, Socialism and Democracy, published in 1942. His book challenged the conventional wisdom in wartime America on each and every one of its aspects: It praised huge corporations as the engines of progress, gave cautions on the rise of a "new class" of anti-capitalist federal employees and worried about risk-aversion eventually leading to the triumph of socialism.
Schumpeter's two greatest perceptions were that modernism is the driving force behind capitalism as well as economic evolution, and that entrepreneurs are the agents of innovation. He is often lumped in with Austrian, free-market economists, though strictly speaking, Schumpter departed from Austrian orthodoxy enough so that he might be considered a maverick rather than an individual of any particular school. He was certainly free-market oriented, however.
Joseph Schumpeter believed that inequality and turmoil were a small price to pay for material advancement. "The capitalist achievement does not typically consist in providing more silk stockings for queens," he once wrote, "but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort." Nevertheless, he still recognized the danger of possible mainstream repercussions.
Background: Joseph Alois Schumpeter was born in Trešt, Moravia, formerly of Austria-Hungary and now the Czech Republic, on February 8th, 1883. Schumpeter began his career studying law at the University of Vienna under the Austrian capital theorist, Eugen von Böhm-Bawerk, and received his PhD in 1906. In 1909, after a few educational trips abroad, he became a professor of economics and government at the University of Czernowitz.
He joined the University of Graz in 1911 where he remained until World War I. In 1919 and 1920, he held the position of Austrian Minister of Finance, with a bit of success, and from 1920 to 1924, he served as the president of the private Biedermann Bank. That bank, along with a major part of its regional economy, collapsed in 1924, leaving Schumpeter bankrupt.
From 1925 to 1932, Schumpeter held a chair at the University of Bonn, Germany. Joseph Schumpeter was a lecturer at Harvard from 1927 to 1928 and again in 1930. In 1932, he moved to the United States where he taught until his death in 1950.