Joseph Schumpeter

Joseph Alois Schumpeter was an Austrian-born political economist. He served briefly as Finance Minister of German-Austria in 1919. In 1932, he emigrated to the United States to become a professor at Harvard University, where he remained until the end of his career, and in 1939 obtained American citizenship.

Schumpeter was one of the most influential economists of the early 20th century and popularized the term "creative destruction," which was coined by Werner Sombart.

Schumpeter was born in Triesch, Habsburg Moravia (now Třešť in the Czech Republic, then part of Austria-Hungary) in 1883 to German-speaking Catholic parents. Both of his grandmothers were Czech. Schumpeter did not acknowledge his Czech ancestry; he considered himself an ethnic German. His father owned a factory but died when Joseph was only four years old. In 1893, Joseph and his mother moved to Vienna. Schumpeter was a loyal supporter of Franz Joseph I of Austria.

After attending school at the Theresianum, Schumpeter began his career studying law at the University of Vienna under the Austrian capital theorist Eugen von Böhm-Bawerk, taking his Ph.D. in 1906. In 1909, after some study trips, he became a professor of economics and government at the University of Czernowitz in modern-day Ukraine. In 1911, he joined the University of Graz, where he remained until World War I.

In 1918, Schumpeter was a member of the Socialization Commission established by the Council of the People's Deputies in Germany. In March 1919, he was invited to take office as Minister of Finance in the Republic of German-Austria. He proposed a capital levy as a way to tackle the war debt and opposed the socialization of the Alpine Mountain plant. In 1921, he became president of the private Biedermann Bank. He was also a board member at the Kaufmann Bank. Problems at those banks left Schumpeter in debt. His resignation was a condition of the takeover of the Biedermann Bank in September 1924.

From 1925 to 1932, Schumpeter 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, Schumpeter moved to the United States and soon began what would become extensive efforts to help central European economist colleagues displaced by Nazism. Schumpeter also became known for his opposition to Marxism and socialism, which he thought would lead to dictatorship, and even criticized President Franklin Roosevelt's New Deal. In 1939, Schumpeter became a US citizen. At the beginning of World War II, the FBI investigated him and his wife, Elizabeth Boody (a prominent scholar of Japanese economics), for pro-Nazi leanings but found no evidence of Nazi sympathies.

At Harvard, Schumpeter was considered a memorable character, erudite, and even showy in the classroom. He became known for his heavy teaching load and his personal and painstaking interest in his students. He served as the faculty advisor of the Graduate Economics Club and organized private seminars and discussion groups. Some colleagues thought his views outdated by Keynesianism, which was fashionable; others resented his criticisms, particularly of their failure to offer an assistant professorship to Paul Samuelson, but recanted when they thought him likely to accept a position at Yale University. 

This period of his life was characterized by hard work and comparatively little recognition of his massive 2-volume book Business Cycles. However, Schumpeter persevered and, in 1942, published what became the most popular of all his works, Capitalism, Socialism and Democracy, reprinted many times and in many languages in the following decades, as well as cited thousands of times.