Prophet of Innovation: Joseph Schumpeter and Creative Destruction

Prophet of Innovation: Joseph Schumpeter and Creative Destruction

Prophet of Innovation: Joseph Schumpeter and Creative Destruction

Prophet of Innovation: Joseph Schumpeter and Creative Destruction

Excerpt

This biography, by necessity, has two protagonists: Joseph Alois Schumpeter (1883–1950) and the phenomenon of capitalist innovation. Schumpeter was one of the greatest economists who ever lived, and an electrifying personality besides. The study of capitalism obsessed him. His insights, in turn, were shaped by his own tumultuous experiences amid wars, economic upheavals, and personal misfortunes.

Schumpeter's work was so powerful that today's thinking about capitalism is in large part his—specifically, his emphasis on innovation, entrepreneurship, business strategy, and "creative destruction." Specialists in the analysis of business identify him closely with the first two of these terms. He helped to popularize the third, and he coined the fourth himself. Schumpeter was to capitalism what Freud was to the mind: someone whose ideas have become so ubiquitous and ingrained that we cannot separate his foundational thoughts from our own. My intention in this book is to recover his life and work, so that we can better take the measure of the man and his influence.

Despite Schumpeter's own attraction to numbers, this will not be a book heavy on statistics. But before we meet the man, let us consider the object of his study—capitalism—in the sort of quick statistical overview he would have relished.

The cash income of the average American is now more than twenty times what it was in 1800. If you're an American, imagine trying to live on one-twentieth of what you now earn. Among other changes in your way of life, you'd probably have to grow your own food, as most of your predecessors did in 1800.

Today, in the twenty-first century, about 80 percent of the world's popula-

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