Joseph Alois Schumpeter
“Bureaucracy is not an obstacle to democracy but an inevitable complement to it.”
Joseph A. Schumpeter
Joseph Alois Schumpeter was born on February 8, 1883 in Moravian Triesch, Austria-Hungary (now Czech Republic) and died on January 8, 1950 in Taconic, Connecticut, USA at the age of 66. He studied law at the University of Vienna and in 1906 he received a doctorate. During his studies he was especially influenced by Eugen von Böhm-Bawerk. In 1909 he became a professor of economics at the University of Czernowitz (now Ukraine, then Austria-Hungary). From 1912 to 1914 he worked at the University of Graz.
In the years 1919-1920 he was the Austrian Minister of Finance, and the results in this function are assessed quite well. He was then president of the private bank, but which unfortunately went bankrupt.
Between 1925-1932 he worked at the University of Bonn, while in 1927, 1928 and 1930 occasionally lectured at Harvard in the USA. Finally, in the 30’s due to the rise of fascism he went to the U.S. and finally he worked at Harvard University to the end of his life.
Perhaps the most important Schumpeter’s idea is the concept of innovation and entrepreneurship - gradually had distinguished two key sources of entrepreneurship and changes in the economy:
- According to the first theory the key source of innovation are entrepreneurs who have the creative spirit (the Mark I model)
- According to the second theory the main source of innovation are large, financially strong companies that have the resources to research and development (Mark II model)
Nowadays both theories are regarded as complementary. In the field of innovation Schumpeter’s typology of innovation is also essential. Well-known is his definition of innovation as “creative destruction.”
Among his other key ideas include:
- Reflections on economic cycles
- Reflections on the history of economic analysis
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