GERRIT GORTER
The present study of economics did not, of course, come out of thin air. Although thinkers in classical Greece already reflected on what we now call economics, it was largely in the eighteenth century that systematic thought on the subject began.
Two conceptual tools—the economic cycle and the idea of the invisible hand—date from that century and are still in use today, both in academic research and in education.
This site contains twenty-five portraits of important economists. Each offers a biographical sketch together with an indication of his (and, in one case, her) significance for the development of economic thought. They claim no more than to provide a first introduction to the lives and works of these pioneers.
These articles originally appeared in Dutch in the Tijdschrift voor het Economisch Onderwijs and were later published on the website of Gerrit Gorter. The English translations are by Folkert Gorter.
Index
François Quesnay
Adam Smith
Thomas Robert Malthus
Jean-Baptiste Say
David Ricardo
Antoine Augustin Cournot
John Stuart Mill
Karl Marx
Walras
Carl Menger
Alfred Marshall
Vilfredo Pareto Eugen von Böhm-Bawerk
Knut Wicksell
Max Weber
Irving Fisher
Sam de Wolff
John Maynard Keynes
Joseph Alois Schumpeter
Joan Robinson
Jan Tinbergen
John Hicks
John Kenneth Galbraith
Milton Friedman
Paul Samuelson
Joseph Alois Schumpeter
Austria 1883–1950
The year 1883 was a memorable one in the history of economic thought. It was the year Karl Marx died — and the year in which two other economists came into the world: John Maynard Keynes and Joseph Alois Schumpeter.
Joseph Schumpeter was born in Vienna, then still the capital of the vast Austro-Hungarian Dual Monarchy. It was the city where Freud lived and worked, where the writer Stefan Zweig spent his youth, and where the music of the Strauss brothers was performed. The Schumpeter family belonged to the aristocracy, and throughout his life, Joseph remained the dashing Austrian gentleman.
After studying law, he developed an interest in economics. He surprised the academic world by writing several brilliant books at a young age. At 25, he published Das Wesen und der Hauptinhalt der theoretischen Nationalökonomie (The Nature and Essence of Theoretical Economics). Four years later, Theorie der wirtschaftlichen Entwicklung (The Theory of Economic Development) appeared. Schumpeter’s name was made, and he was appointed professor of economics in Graz, Austria.
Two subjects that particularly fascinated him — and to which he devoted time every day — were Greek literature and mathematics. He was a strong advocate of using mathematics in the practice of economic theory. As he himself put it: “wenn man überhaupt Theorie betreiben will, man das so exakt wie möglich tun müsse” (“if one is going to do theory at all, one must do it as precisely as possible”). Strangely enough, mathematics was almost entirely absent from Schumpeter’s own books and articles.
After his academic career, Schumpeter wanted to put his ideas into practice. That didn’t go particularly well. In 1919, he became Austria’s Minister of Finance. However, he had little instinct for political dynamics and resigned after nine months. He went on to try his hand in the business world. He was offered the leadership of the Wiener Privat Bank — but the struggling institution went bankrupt in 1924. In the process, Schumpeter lost his entire personal fortune and spent many years burdened by debt.
He returned to academia — first in Bonn, and later, from 1932 onward, at Harvard University in the United States. It was here that he wrote his three most famous books: Business Cycles (1939), Capitalism, Socialism and Democracy(1943), and History of Economic Analysis. Schumpeter didn’t live to see the publication of this last book. It was published in 1954 by his wife, Elizabeth Boody Schumpeter.
Schumpeter addressed a wide range of topics. Well known is his theory of innovation — and, tied to it, that of the entrepreneur. His theory of economic waves was subsequently derived from his theory of innovation. But he is perhaps best known for his ideas about the end of capitalism. “Can capitalism survive?” he asks in Capitalism, Socialism and Democracy. And immediately answers: “No, I do not think it can.” Karl Marx would have given the same answer — but there was a profound difference between their respective views. According to Marx, capitalism would gradually weaken and ultimately collapse in a revolution. Schumpeter, by contrast, believed that capitalism was extraordinarily successful — but that its time was nevertheless coming to an end. He saw the driving force behind capitalism — the entrepreneur — increasingly being replaced by the bureaucratic manager. On top of that, he believed capitalism would ultimately lose the support of the intellectuals. In the end, much like Marx, Schumpeter foresaw the rise of a kind of centrally planned economy — with the difference that Schumpeter didn’t need a revolution.
Schumpeter died in 1950, a somewhat resigned man who had watched from afar as his beloved Europe went down in the Second World War. A commemorative plaque at Harvard University reads: “Although he was highly cosmopolitan, the early experiences in Vienna never truly left him. To the end, he remained the cultivated Austrian gentleman of the old school.”