The Economist review;
Most economists live pretty dull lives, dividing their time between technical intellectual problems and tedious academic politics. Even Keynes inhabited a comfortable Bloomsbury cocoon. Schumpeter was anything but dull.
He was a self-made man who put on the airs of an aristocrat: he spent an hour getting dressed every morning, frequently appearing in jodhpurs. He was also a notorious womaniser. He liked to regale his colleagues with stories of “orgies” and “advanced sexual techniques” (Mr McCraw is sadly incurious about this side of his life).
By his mid-50s he had lived in nine cities and five countries. He was Austria's finance minister for a time, and witnessed the collapse of the Habsburg Empire from close quarters. He taught in Germany when it was succumbing to the Nazi temptation. He was one of the first of the great European émigrés to the United States. Daniel Bell, a liberal sociologist, described him as that rarest of creatures: an economist with a tragic sense of life...
Schumpeter's two greatest insights were that innovation is the driving force not only of capitalism but also of economic progress in general, and that entrepreneurs are the agents of innovation. Entrepreneurs are possessed by “the dream and the will to found a private kingdom”. But they are confronted with all sorts of obstacles. Innovation is hard to produce and harder to sustain: all successful businessmen stand on ground that is “crumbling beneath their feet”. And of course it produces losers as well as winners.
The NewYork Sun;
Schumpeter remained a mess of contradictions, however, and his personal triumphs were quickly matched by stunning reversals. Soon after receiving tenure, his harsh classroom discipline inspired a crushing, and largely unprecedented, student boycott of his lectures. He lost his fortune in the Viennese stock market crash of 1924, and spent the next decade laboring to repay the ensuing debt. And in a forever devastating setback, he lost his beloved second wife and son in childbirth just two years later. Following his financial and familial ruin, Schumpeter structured his remaining life around two competing sentiments: a retrospective pessimism that gradually permeated his worldview and a relentless desire to produce academic works worthy of his youthful ambitions. The Schumpeter who arrived at Harvard in 1927, where he would serve as a central influence for a generation of graduate students, was at once intensely passionate and socially removed. His subsequent works, from the seminal popular work "Capitalism, Socialism and Democracy" (1942) to his encyclopedic and still unparalleled "History of Economic Analysis" (1954), remain suspended between cool objectivity and moments of fiery, often cynical, judgment...
Perhaps John Kenneth Galbraith had this paradox in mind when he called Schumpeter "the most sophisticated conservative of this century." Schumpeter harnessed the two central concepts of modern conservatism — embracement of the dynamic change enabled by the free market economy, and suspicion of its cultural effects — in a social analysis that did not disguise or pervert its ironical nature. That he did so while transcending a range of disciplines with a mix of massive erudition and academic daring makes his achievement all the more striking, and inimitable, today.
At this point I probably should acknowledge that I have a foot planted firmly in the other camp -- the wing of the economists. The flip side of all that literary expression by Schumpeter is that you can get out of him almost anything that you wish. In Knowledge and the Wealth of Nations: A Story of Economic Discovery, I argue that a clearer view of economic growth can be obtained today through the use of formal methods. Creative destruction is often now matter-of-factly described as "churn" or "turbulence," its extent and costs and benefits measured through the Census Bureau's Longitudinal Employer-Household Dynamics Program. The study of markets and hierarchies has been largely overhauled by the likes of Michael Jensen, Oliver Williamson and their many students. Our view of the economics of knowledge has been transformed by Paul Romer. So I am somewhat embarrassed to be going on, uninvited, about the great merit of business history in general, and of a definitive biography of Schumpeter in particular.