Schumpeter the Superior

Geoffrey Hawthorn

  • Joseph Schumpeter: His Life and Work by Richard Swedberg
    Polity, 293 pp, £35.00, November 1991, ISBN 0 7456 0792 6
  • Joseph Schumpeter: Scholar, Teacher and Politician by Eduard März
    Yale, 204 pp, £22.50, November 1991, ISBN 0 300 03876 3

The greatest horseman in Vienna, the greatest lover in Austria, the greatest economist in the world. This, Joseph Schumpeter used to say, is what he’d set out to be. In one of them, he added, he’d failed. But he never said which. A horse, almost certainly, had let him down. He had a slightly lopsided walk, the result, it was said, of a fall. About women, there is less doubt.

His mother’s marriage to a retired general in 1893, when he was ten, got him into the best school in Vienna and gave him a taste for expensive society. His first wife, improbably for such a high-living and affectedly heroic young man, whose outlook on the world owed not a little to Nietzsche, was the daughter of a dignitary of the Church of England. She was older than he, was said to be ‘stunning’, and was perhaps rebelling. They married in 1907, and were together for two months. His second, Anna Reisinger, was much younger. She was the daughter of the caretaker of his mother’s house in Vienna. He started to see her in 1920. But he remained ostentatiously wild, and she resented his style. In the early Twenties, the board of the bank he chaired in Vienna asked him to be more discreet. He responded by hiring an open carriage and two prostitutes and trotting up and down the Kärtnerstrasse with one on each knee. He and Anna did not marry until 1925. Within a year, however, she died, in childbirth, together with the child. Schumpeter was devastated. She had, he said later, been ‘the great wonder of my life’. His mother had died a few weeks before, and he continued to talk to the two women in his diaries for the rest of his life. He had affairs again at Harvard, where he went in 1932. But he came to agree with Elizabeth Boody, an economic historian whom he met there soon after he arrived, that he’d come to lead ‘a ridiculous life’. In 1937, they married, and she sustained him. He died in her country house in Connecticut in 1950.

As an economist, his reputation has always been more ambiguous. His most famous book, and his greatest. Capitalism, Socialism and Democracy (1942), was one – J.K. Galbraith told Richard Swedberg – that he himself disdained. It was too popular. His first, which he wrote in 1908, when he was 25, irritated the historical economists, who dominated the subject in Austria, with its defence of the new marginalism. His second, The Theory of Economic Development, which was published in 1911 and made his name, irritated the marginalists, who had taught him, with its enthusiasm for Marx. The most technical, Business Cycles, which he worked on at Harvard, was later described by Paul Samuelson, whom Schumpeter had thought the cleverest of the students there, as ‘Pythagorean moonshine’. Yet in 1940, Schumpeter succeeded to the presidency of the Econometrics Society and in 1949 became the first president of the International Economic Association. In his last book, an unfinished history of economic thought which Elizabeth put together after he died, he said that all the great economists had had a distinctive ‘vision’. It is for his own, more than any precise contribution, that he is remembered.

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