The Economics of Joseph Schumpeter

When an economic theory successfully fuses into one vast system the ideas that an economy continuously reproduces itself without altering levels of production or consumption patterns, that perfect balancing of economic forces is attainable, that the prime movers in economic development are adventurous entrepreneurs whose perpetual search for profit induces such change, and that capitalism will fail simply because it is too successful, there is little doubt that it can be described as an intriguing and even startling doctrine. This was the system constructed by one of the great economists of our time, Joseph A. Schumpeter, who was professor at Harvard from 1927 until his death in 1950.

Schumpeter’s theories, however, were not an eclectic collection of conglomerate notions. He has a cohesive theory of the origin, functioning and decline of capitalism out of which is built an imposing set of hypotheses on business cycles, money, interest and prices. Much of Schumpeter’s ideas were fixed when he was still a young man. In 1908, at the age of 25, he published a work on theoretical economics that touched on virtually all of the problems of the field and even suggested the solutions at which he would in later life ar...