Front Page Titles (by Subject) Schumpeter\'s Economic Theories - Literature of Liberty, Summer 1980, vol. 3, No. 2
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Schumpeter's Economic Theories - Leonard P. Liggio, Literature of Liberty, Summer 1980, vol. 3, No. 2 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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Schumpeter's Economic Theories
“Joseph Alois Schumpeter.” Journal of Economic Issues 13(March 1979):141–157.
Joseph Schumpeter (1883–1950) studied economics under the Austrian economists Wieser, Philipovich, and Bohm-Bawerk at the University of Vienna where Bohm-Bawerk took a special interest in the brilliant young economist. Among his classmates were the later leader of the Austrian economists, Ludwig von Mises, and the Austro-Marxists Otto Bauer, Rudolph Hilferding, and Email Lederer. The twin perspectives of Marxian and the Austrian school of economics were to influence Schumpeter's view of the social process throughout his career. After receiving his doctorate in 1906, Schumpeter traveled to England to continue his research and to follow up on his growing interest in mathematical economics, an interest that can be clearly seen in his first major publication, Das Wesen und der Haupinhalt der theoretischen Nationalökonomie.
It is, however, with his second publication, The Theory of Economic Development (1912), that Schumpeter first advanced what was to be his most important contribution to economic theory and what was to remain a constant theme in his work throughout the rest of his life. In this work (unlike his first work where he had “solved” to his own satisfaction the allocation problem in a static setting) Schumpeter turns his attention to the real world of dynamic change. It is here that he unveils the driving force of the market economy—the innovator-entrepreneur. It is the entrepreneur who bursts onto the static scene and, armed with unusual insight, innovation, and perseverance, disturbs the static equilibrium and throws the whole economic system into a frenzy of change, growth, and development.
Schumpeter's scholarly interests were both wide ranging and deep. His knowledge of the theoretical economic literature was astounding, yet his interests were far broader than economics narrowly defined. In his well known essay, Imperialism (1918), Schumpeter sets forth his contention that imperialism is not due to modern capitalist forces but rather to feudal atavisms that remain in the not yet totally modern socio-economic system—an obvious challenge to the theories of Lenin and Hilferding. According to Schumpeter, the purely economic forces are self-equilibrating. It is, therefore, within the political realm that one must look for the causes of market failure and social breakdown.
For years Schumpeter continued work on his theory of innovation and change, and in 1939 he published the fruits of his life-long research: Business Cycles—A Theoretical, Historical and Statistical Analysis of the Capitalist Process. The reception from the profession was disappointing, but, undeterred, he pushed on. In 1942 he published the remarkably successful Capitalism, Socialism and Democracy. This work, addressed to the educated layman, set forth Schumpeter's unique analysis of the capitalist system, a system whose very successes would cause its downfall.
Joseph Schumpeter died in 1950 while at work on yet another and perhaps his most erudite work: History of Economic Analysis. Two years later his wife Elizabeth Boody Schumpeter published the manuscript which detailed two thousand years of economic thought in well over one thousand pages of rich and stimulating prose.