Joseph A. Schumpeter
By Richard Swedberg
Joseph Schumpeter infamously declared that "Early in life I had three ambitions: to be the greatest economist in the world, the greatest horseman in Austria, and the best lover in Vienna. Well, in one of those goals I have failed" (p.3). As the quote suggests, Schumpeter was quite boastful of all three capacities.
He was perhaps justified in at least one of them; let's focus on it, although this biography adequately covers his other two pursuits. At 28, he published his second book, (the German version of ) The Theory of Economic Development, in which he attempted to analyze the economic process through not just economics but also the other social sciences. It is in this book that he first developed the figure of the heroic, charismatic entrepreneur (evidently influenced by Weber's charismatic leader): a figure that innovates by creating new combinations, but does not invent per se (pp.34-35). Eight years later, he became the Austrian finance minister. (He was fired after seven months because he kept trying to undermine the socialist government) (p.60). Schumpeter has been considered Weber's greatest successor as economic sociologist, as well as a close compatriot of the great sociologist (Ch.5). Indeed, Schumpeter excelled at sociological approaches to economics, and was quite poor at mathematics, even though he tirelessly promoted mathematical approaches to economics.
In 1932, after being turned down repeatedly for a position at the University of Berlin, Schumpeter settled for a position at Harvard—just in time to avoid the Nazi takeover (Ch.6). There, he ignored the fact that his students called him "Schumpy" behind his back, and he attempted (unsuccessfully) to attract graduate students to his seminars in mathematical economics. (Undergraduates were beneath his notice, and he wondered aloud whether they were really necessary.) Meanwhile, he worked tirelessly on his enormous two-volume book on business cycles, which was poorly received. His follow-up, a little popular book called Capitalism, Socialism, and Democracy, was quite well received and is now considered his masterpiece, although he thought it far less serious and consequential than Business Cycles.
"Schumpeter was the only economist of any stature in the United States who took Marxism seriously," Swedberg adds, and his project was similar to Marx's: both understood economic evolution as a process generated by the economic system (p.153). Schumpeter's approach, of course, was Weberian: it understood that the economy and social structure could influence each other (p.155). Although Schumpeter respected Marx as a sociologist, however, he noted several problems with Marx's economics: the labor theory of value was "dead and buried." He took a similarly dim view of Marx's doctrine of surplus value. Marx had no theory of business cycles. Yet he appreciated Marx's achievement in "developing a purely economic theory of change" (p.155).
There is much more in this book on Schumpeter's upbringing and values, his achievements and failures, and of course his adventures as a horseman and a lover. If you're interested in this fascinating economist, I encourage you to read the biography.