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Prophet of Innovation

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Prophet of Innovation

Joseph Schumpeter and Creative Destruction

Harvard UP,

15 min read
10 take-aways
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What's inside?

Economist Joseph Schumpeter’s view of capitalism as an economic growth engine is relevant today, but who was he really?

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Editorial Rating

8

Qualities

  • Innovative

Recommendation

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.

Summary

The Champion of Capitalism

Economist Joseph Schumpeter was capitalism’s most stalwart and erudite advocate. His theories on capitalism have become so widespread and commonly accepted that they now are intrinsic to the way the average person views and understands the modern capitalistic system. Schumpeter brilliantly explained why capitalism is the system under which the greatest number of people can achieve economic prosperity. Schumpeter is also the patron saint of business innovation. He believed that such innovation is limitless, particularly under a capitalistic system, which also places no limits on economic progress. He saw the enterprising individual as “the pivot on which everything turns.”

Schumpeter is most famous for his concept of “creative destruction,” which he developed to illustrate how new capitalist methods, systems and products continuously displace old ones, as cars took over from horse-drawn carriages. Schumpeter saw creative destruction as the foundation of capitalism, and of all material and economic progress. He wrote, “Creative destruction is the essential fact about capitalism. Stabilized capitalism is a contradiction in terms.” He opened ...

About the Author

Award-winning author Thomas K. McCraw is a professor emeritus of business history at Harvard Business School where he served previously as a director of research, and as chair and co-chair of the business, government and international economy unit.

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