Prophet of Innovation: Joseph Schumpeter and Creative Destruction
Listen to a short interview with Thomas McCraw\ Host: Chris Gondek \| Producer: Heron & Crane\ 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...
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Listen to a short interview with Thomas McCrawHost: Chris Gondek \| Producer: Heron & CranePan 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 twentieth 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 specter 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. Marisa Morrison - Washington Times Prophet of Innovation is an immensely entertaining read.
Preface ixPart I L'Enfant Terrible, 1883-1926: Innovation and EconomicsPrologue: Who He Was and What He Did 31 Leaving Home 102 Shaping His Character 233 Learning Economics 384 Moving Out 575 Career Takeoff 676 War and Politics 847 Gran Rifiuto 1048 Annie 1139 Heartbreak 126Part II The Adult, 1926-1939: Capitalism and SocietyPrologue: What He Had Learned 14510 New Intellectual Directions 15111 Policy and Entrepreneurship 16712 The Bonn-Harvard Shuttle 18413 Harvard 20514 Suffering and Solace 222Part III The Sage, 1939-1950: Innovation, Capitalism, and HistoryPrologue: How and Why He Embraced History 24715 Business Cycles, Business History 25116 Letters from Europe 27917 To Leave Harvard? 30218 Against the Grain 31319 The Courage of Her Convictions 32620 Alienation 33721 Capitalism, Socialism and Democracy 34722 War and Perplexity 37523 Introspection 39924 Honors and Crises 40925 Toward the Mixed Economy 42226 History of Economic Analysis 44227 A Principle of Indeterminateness 46928 L'Envoi 485Epilogue: The Legacy 495Notes 507Acknowledgments 695Illustration Credits 699Index 703
\ American ConservativeA thinker as multifaceted as Schumpeter demands much of a biographer, and in Prophet of Innovation: Joseph Schumpeter and Creative Destruction, Thomas McCraw delivers...McCraw not only excels at conveying the innovation and excitement in Schumpeter's work, he keeps readers riveted to the story of the economist's life, and some of the twists are almost novelistic...[An] outstanding biography.\ — Daniel McCarthy\ \ \ \ \ American.comProphet of Innovation: Joseph Schumpeter and Creative Destruction is a well-written and entrancing look at one of the twentieth century's most important economic and political thinkers. McCraw's book may rightly take its place as one of the two or three best biographies of an economist ever written...[It] is so splendid because it succeeds on so many different levels. If the book were simply an account of the Harvard economics department, it would stand as a lasting and significant contribution to the history of economic thought. Alternatively, it is one of the best treatments of what it was like for European intellectuals to migrate to the United States. Or are you interested in why Austria fell apart during the 1920s, and how someone with as little real world experience as Schumpeter became Minister of Finance? The book is also a love story, and an account of how a possibly dysfunctional man can nonetheless find romantic happiness after repeated failures and tragedies. Last but not least it is an intellectual history...Every year there are three or four non-fiction books that have to be read, and this is one of them.\ — Tyler Cowen\ \ \ Baltimore Sun[A] persuasive and eloquent biography.\ — Jay Hancock\ \ \ \ \ Choice[McGraw] has written an impressive and thoughtful biography of one of the most significant economists of the 20th century. Although widely regarded as a man of no small ego, Schumpeter can justifiably lay claim to effecting considerable scholarly debate in a wide range of academic backgrounds. Schumpeter’s analysis of economic development and business cycles, his notion of the process and significance of creative destruction, and his views on entrepreneurial activities continue to influence generations of economists and social scientists. McGraw’s thorough, insightful biography draws on an array of public and private papers to explain Schumpeter’s scholarly development and increasing sway, from his early years in Vienna to Bonn and later to his tenure at Harvard. This engaging scholarly work provides substance and context and is well worth a close read by both students and faculty.\ — T.E. Sullivan\ \ \ \ \ economicprincipals.comMcCraw...frames his narrative confidently and writes beautifully...Best of all, McCraw is an extremely good interpreter of Schumpeter's published work.\ — David Warsh\ \ \ \ \ ForbesAn excellent, thorough and smoothly written biography of Joseph Schumpeter, the greatest economist of the 20th century. Too bad most politicos--and economists--don't fully grasp his insights.\ — Steve Forbes\ \ \ \ \ Harvard MagazineAlthough Schumpeter died in 1950, McCraw is right to insist that his contributions to our understanding of the economies in which we live are still vital today.\ — Peter Timlin\ \ \ \ \ Irish Times[Schumpeter] deserves more recognition and McCraw's book is to be welcomed on that account.\ — Pat McArdle\ \ \ \ \ London Review of BooksMcCraw's triumph is to tell...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 than 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 tantalizing human interest.\ — Peter Clarke\ \ \ \ \ National ReviewAn extraordinary new biography. Prophet of Innovation by Thomas K. McCraw chronicles the life of one of the 20th century's most original and insightful scholars...Like his contemporary and frequent rival John Maynard Keynes, Schumpeter makes for a rich biographical subject. Keynes received the treatment he deserved from Lord Robert Skidelsky's magisterial multi-volume biography. McCraw's effort, similarly, is worthy of Schumpeter.\ — Nick Schulz\ \ \ \ \ New YorkerMcCraw doesn't get lost in the baroque details of Schumpeter's story--how many economists ever fought a duel?--or in the arcana of his theories, achieving a balance that his brilliant and restless subject rarely did in life.\ \ \ \ \ openlettersmonthly.comIt's the lively and penetrating prose of the book itself that make its appearance in paperback a cause for rejoicing. Reading it is certainly time well-invested.\ — Abraham Benrubi\ \ \ \ \ ReasonMcCraw’s book on Schumpeter is an absorbing read, with short chapters, lots of personal detail and historical scene setting, and an important anti-Galbraithian economic theme.\ — Deirdre McCloskey\ \ \ \ \ The EconomistMuch honored as an economic prophet, Joseph Schumpeter has had to wait half a century after his death for this splendid full-dress biography covering his ideas, life, and times...[This is] a fat, learned biography by Thomas McCraw, one of America's most respected business historians, the author of a Pulitzer prize-winning history of the rise of regulation. He 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. Fin de siècle Vienna, Weimar Germany, Harvard University before and after the first world war: all come to life on these pages.\ \ \ \ \ The NationBooks on the lives of the great economists might not, at first blush, set the blood coursing. Yet Robert Skidelsky's masterly three-volume biography of John Maynard Keynes proved how engrossing such a life could be. It is high praise to say that Thomas McCraw's biography of Joseph Schumpeter, Prophet of Innovation, has some of the same quality and appeal...McCraw, who has written the definitive biography of his subject, supplies many testimonials to Schumpeter's genius and influence from both his day and our own.\ — Robin Blackburn\ \ \ \ \ The SpectatorThose seeking some escape from the deluge of "Keynes the Comeback Kid" will enjoy a refresher on that other brilliant economist of his generation, Joseph Schumpeter. Thomas K. McCraw's brilliant biography of the economist who best understood the turbulence of markets and "creative destruction" is all the more relevant as a credit crisis-induced recession unfolds. This biography is the clearest and most comprehensive guide to Schumpeter's life and work and the turbulence of his time which has, like the classic business cycle, come round again.\ — Bill Jamieson\ \ \ \ \ Wall Street Journal[Schumpeter's] private life was no less fascinating than his public message. In Prophet of Innovation, Thomas McCraw--emeritus professor of history at the Harvard Business School--artfully weaves the two together.\ — Dan Seligman\ \ \ \ \ Washington TimesProphet of Innovation is an immensely entertaining read.\ — Marisa Morrison\ \ \ \ \ Weekly StandardIt's no small feat to make a jaunty read out of the life of an economist dead more than 50 years, and Thomas K. McCraw has done just that in his impressive new biography of Joseph Schumpeter.\ — Kevin R. Kosar\ \
