Joseph Alois Schumpeter

Biography of Joseph Alois Schumpeter

Joseph Alois Schumpeter (8 February 1883 – 8 January 1950) was an Austrian American economist and political scientist. He briefly served as Finance Minister of Austria in 1919. One of the most influential economists of the 20th century, Schumpeter popularized the term "creative destruction" in economics.

Born in Třešť, Habsburg Moravia (now Czech Republic, then part of Austria-Hungary) in 1883 to Catholic ethnic German parents. His father owned a factory, but he died when Joseph was only four years old. In 1893, Joseph and his mother moved to Vienna.

Schumpeter began his career studying law at the University of Vienna under the Austrian capital theorist Eugen von Böhm-Bawerk, taking his PhD in 1906. In 1909, after some study trips, he became a professor of economics and government at the University of Czernowitz. In 1911 he joined the University of Graz, where he remained until World War I. In 1919, he served briefly as the Austrian Minister of Finance, with some success, and in 1920–1924, as president of the private Biedermann Bank. That bank, along with a great part of that regional economy, collapsed in 1924 leaving Schumpeter bankrupt.

From 1925 to 1932, he held a chair at the University of Bonn, Germany. He lectured at Harvard in 1927–1928 and 1930. In 1931, he was a visiting professor at The Tokyo College of Commerce. In 1932, he moved to the United States, in 1939 he became a US citizen. Schumpeter had a highly conservative political attitude. In the beginning of WWII, the FBI investigated him for pro-Nazi leanings, but no evidence was found that he had any sympathies for Nazism.

During his Harvard years he was not generally considered a good classroom teacher, but he acquired a school of loyal followers. His prestige among colleagues was likewise not very high because his views seemed outdated and not in tune with the then-fashionable Keynesianism. This period of his life was characterized by hard work but little recognition of his core ideas.

Although Schumpeter encouraged some young mathematical economists and was even the president of the Econometric Society (1940–41), Schumpeter was not a mathematician, but rather an economist, and tried instead to integrate sociological understanding into his economic theories. From current thought it has been argued that Schumpeter's ideas on business cycles and economic development could not be captured in the mathematics of his day – they need the language of non-linear dynamical systems to be partially formalized.

Schumpeter claimed that he had set himself three goals in life: to be the greatest economist in the world, to be the best horseman in all of Austria and the greatest lover in all of Vienna. He said he had reached two of his goals, but he never said which two, although he is reported to have said that there were too many fine horsemen in Austria for him to succeed in all his aspirations.

He died in his home in Taconic, Connecticut, at the age of 66, on the night of 7 January 1950.

He was married three times, first to Gladys Ricarde Seaver, an Englishwoman nearly 12 years his senior (married 1907, separated 1913, divorced 1925); then to Anna Reisinger, the daughter of the concierge of the apartment where he grew up, twenty years his junior; they married in 1925; she died in childbirth along with their newborn son, two months after the death of Schumpeter's mother; and finally, in 1937, he married the American Elizabeth Boody, who possessed a PhD in English and business cycles, and helped him to popularize his work.

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