Product Description

Pan Am, Gimbel's, Pullman, Douglas Aircraft, Digital Equipment Corporation, British Leyland - all once as strong as dinosaurs, all now just as extinct. Destruction of businesses, fortunes, products, and careers is the price of progress toward a better material life. No one understood this bedrock economic principle better than Joseph A. Schumpeter. "Creative destruction," he said, is the driving force of capitalism. Described by John Kenneth Galbraith as "the most sophisticated conservative" of the 20th Century, Schumpeter made his mark as the prophet of incessant change. His vision was stark: Nearly all businesses fail, victims of innovation by their competitors. Businesspeople ignore this lesson at their peril - to survive, they must be entrepreneurial and think strategically. Yet in Schumpeter's view, the general prosperity produced by the "capitalist engine" far outweighs the wreckage it leaves behind. During a tumultuous life spanning two world wars, the Great Depression, and the early Cold War, Schumpeter reinvented himself many times. From boy wonder in turn-of-the-century Vienna to captivating Harvard professor, he was stalked by tragedy and haunted by the spectre of his rival, John Maynard Keynes. By 1983 - the centennial of the birth of both men - Forbes christened Schumpeter, not Keynes, the best navigator through the turbulent seas of globalization. Time has proved that assessment accurate. "Prophet of Innovation" is also the private story of a man rescued repeatedly by women who loved him and put his well-being above their own. Without them, he would likely have perished, so fierce were the conflicts between his reason and his emotions. Drawing on all of Schumpeter's writings, including many intimate diaries and letters never before used, this biography paints the full portrait of a magnetic figure who aspired to become the world's greatest economist, lover, and horseman - and admitted to failure only with the horses.

Product Details

• Amazon Sales Rank: #148297 in Books
• Published on: 2007-05-31
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 736 pages

Economist, 28 April 2007
[A] splendid, full-dress biography covering [Schumpeter's] ideas,
life and times [...] by Thomas McCraw, one of America's most respected
business historians.

Economist, 28 April 2007
[McCraw] has found the perfect subject in Schumpeter. He succeeds
in getting inside the economist's head, explaining not just what he thought
but why he thought it. Beyond this, he also succeeds in painting a portrait
of his times.

London Review of Books, 19 July 2007
McCraw's triumph is to tell less exacting readers quite as much as we need to know about Schumpeter in a lucid and well-paced narrative, while also supplying, for more rigorous scholars, no fewer that two hundred pages of endnotes. McCraw successfully passes off the life of a professor of economics as a story that fully complements its undoubted intellectual significance with a tantalising human interest.

Customer Reviews

The Basic Paradox of Capitalism

As I recently read Thomas K. McCraw's brilliant biography of Joseph Schumpeter (1883-1950), I was intrigued by the evolution of his career after he earned a Ph.D. at the University of Vienna (1906). At age 24, he served as a secretary of state for finance in the new Austrian republic (1919-1920), and later became chairman and president of a Vienna-based Biederman Bank (1920-1924) that collapsed. As a result of that and several substantial investments in companies which also failed, Schumpeter suffered major financial setbacks (both professional and personal) but eventually repaid his debts, then taught at the University of Bonn (1925-1932) before accepting an offer to join the Harvard faculty as a professor of economics where he continued to teach until his death in 1950. McCraw also examines Schumpeter's personal life that, understandably, reflected the successes and failures in his career. For example, Schumpeter fell deeply in love with Anna Josifina Reisinger and married her in 1925. The next year, his beloved mother died and within a month, his wife died in childbirth, as did their son. McCraw suggests that Schumpeter never fully recovered from these personal losses.

Of greatest interest to me is the context or frame-of-reference the biographical material provides for one of Schumpeter's most influential business concepts, "creative destruction," which he introduced in his most popular book, Capitalism, Socialism, and Democracy," first published in 1942. Scholars have divided opinions as to the influences on Schumpeter's development of this concept. They probably include Karl Marx, Friedrich Nietzsche, and Werner Sombart.

According to Schumpeter, there is a "process of industrial mutation-if I may use that biological term-that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in." He goes on to explain, "The first thing to go is the traditional conception of the modus operandi of competition. Economists are at long last emerging from the stage in which price competition was all they saw. As soon as quality competition and sales effort are admitted into the sacred precincts of theory, the price variable is ousted from its dominant position. However, it is still competition within a rigid pattern of invariant conditions, methods of production and forms of industrial organization in particular, that practically monopolizes attention. But in capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance) - competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives." (from "The Process of Creative Destruction," 1942) There are countless examples of applications of this concept, notably Jack Welch's determination to "blow up" GE after he succeeded Reginald Jones as CEO.

In his own review of Prophet of Innovation in the Wall Street Journal, Dan Seligman includes Schumpeter's widely quoted this question-and-answer sequence: "Can capitalism survive? No, I do not think it can." Seligman then suggests that that answer "is hedged in later passages [in Capitalism, Socialism, and Democracy]. Even so, it will seem wildly counterintuitive to readers who have read Schumpeter on capitalism's huge successes." I agree. In fact, I presume to suggest that, from Schumpeter's perspective, no form of capitalism can survive and that continuous replacement of one form of capitalism by another confirms the enduring reality of creative destruction. Without it, there can be no innovation. In essence, that is the basic paradox of capitalism.

Comprehensive biography of economist Joseph Schumpeter
Joseph Schumpeter was brilliant, magnetic, cultured, urbane, witty and engaging. He was superbly educated and he taught at the best universities. He was an accomplished scholar and prolific writer, a snappy dresser and bon vivant, elegant, charismatic and handsome. Colleagues revered him, students loved him and women adored him. His ambition: to become the best economist, horseman and lover in the world. He confessed that, sadly, he failed to meet his goal with horses. Schumpeter was one of the world's leading economists while he lived, and has become an iconic figure since his death. John Maynard Keynes is widely considered the doyen of economists. However, Schumpeter's ideas have more impact in our postmillennial era, which some economists have termed the "century of Schumpeter." Scholar Thomas K. McCraw paints a vivid portrait of this remarkable man, his economic theories and his far-reaching influence. getAbstract suggests that being familiar with Schumpeter is pivotal to understanding today's entrepreneurial economy. McCraw's book is a good place to get to know him.

A Masterpiece!
Definitely the best book I've read in 2008. Extremely well written and documented. After reading a page you look forward for the next one. Even the footnotes are very interesting.