Opening Doors: Life and Work of Joseph Schumpeter

Volume 2, America

Robert Loring Allen

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351501514
• Edition: 1
• Topic: Business
• Subtopic: Business Biographies
• Index: Business

"The author puts this book in the best possible context by referring to the ""magisterial and paradoxical Dr. Schumpeter"". A figure in a rare class with John Maynard Keynes, Friedrich von Hayek, and Alfred Marshall, the work of Joseph Schumpeter is equalled only in monumental significance by his personal trials and tribulations. The work is divided into two volumes - the first covering his career in Europe and the second his life and achievements in America.Walt Rostow, in his Foreword, sums up Robert Loring Allen's achievement in biography and intellectual history thus: ""In dealing with Schumpeter's life, Allen exhibits a rare consciousness of the extraordinary complexity and only limited penetrability of the human personality Schumpeter's closely interwoven personal and professional life unfolds, Allen develops without dogmatism a pattern of linkages for the reader to contemplate. In a splendid final passage, he provides a memorable summation.""What makes this enormous effort so successful is the linkage of the personal and the professional, the biographical with the intellectual. Indeed, it is Schumpeter's single-minded determination to explain within a single, formal theory, the dynamics of capitalism that bridges the gap in space, time, and personality. To his books The Theory of Economic Development, and Capitalism, Socialism and Democracy, both published by Transaction, is now added the specific contexts in which these and his other works were written.The author of this biography, like the subject himself, is a masterful student of the craft of economics, and its place within the larger social science contexts that Schumpeter worked. In this work, we are introduced into the main current of European and American social science alike. The title of the book, Opening Doors, derives from Schumpeter's life long aim to appeal to inquiring minds to move through such doors in an effort to create the social science of the"

1

Embracing America and Abandoning Europe (1933–1935)

Toward the end of his first academic year at Harvard, Schumpeter pondered his future. Should he stay in the United States or return to Europe? He had already decided to visit Europe in the summer of 1933. But did he want to go back and stay in a Germany with Hitler now in power, or did he want to return to an United States with Roosevelt in charge? Taussig reminded him that, with the Nazis currently in control of university appointments, Schumpeter could probably not keep an appointment even if he got one. The demanding nature of National Socialism was becoming apparent. Its antisemitism had opened up many university posts, but if the Jews could not last in Nazi Germany, could Schumpeter? At least in the United States, the ability to speak and write as he chose, his personal freedom, and his economic position were secure. Even if the United States remained that “uncomfortable” country, Germany, for all its attraction, was forbidding.

The democracy of the United States at once attracted and repelled Schumpeter, who regarded the country as too democratic. He thought its political system was unusually sensitive to the greed of pressure and self-seeking economic groups, while its political leadership in the 1930s seemed bent on reinstalling the mercantilist policies of the seventeenth and eighteenth centuries—policies that modern nations had phased out in the nineteenth century. Still, the United States was free, with no one telling others what to do, say, or think. Cambridge was an exception to uncomfortable America. Schumpeter in these early days of his tenure delighted in Harvard, especially its young; and Cambridge, much more than Bonn or Berlin, was a beehive of intellectual activity, not only in economics but in every field. Hundreds of men, untrammeled by politics and unimpeded by worldly worries, pursued knowledge for its own sake. Despite an attraction for some of Hitler’s ideas, despite the lingering fondness for things European, Schumpeter knew that he could not survive under the Nazis. On 3 May 1933, Schumpeter, a resident only seven months, took a taxi to the Federal Building in downtown Boston where he declared his intention to become a citizen of the United States.

1

On Sunday morning, 28 May 1933, Schumpeter boarded the steamship Scythia in Boston, bound for England. His announced purpose in returning to Europe that summer, as well as the two subsequent summers, was to study the architecture of French cathedrals, a life-long interest that needed nourishment. Someone once quipped, only half jokingly, that Schumpeter’s greatest book would be on French architecture. The trip thus combined a holiday with the renewal of old friendships, since he planned to meet Mia. Schumpeter did not work in the ordinary sense of that word on these trips, but he did plan and think through problems. At every opportunity, wherever he was, he looked up the local economists for conversation and stimulation. He argued, to himself and to others, that he needed this time of looking away from the deadly seriousness of economic theory day by day in order to confront it the better back in his study.

His itinerary began with a two-week stay in England, where he visited London, Cambridge, and Oxford. In London, he usually stopped at the art galleries, the London School of Economics, and the British Museum, sitting in the latter, as he had before, where Marx had worked. In Cambridge and Oxford, the dons and professors absorbed his attention, especially at lunches and dinners with the greats, near-greats, and students—from Maynard Keynes to that bright young R. F. Kahn and the brilliant Joan Robinson whose new book was stirring up economists. On occasion, he spoke before a group of students or teachers. He loved every minute of it since England was almost a second home to him. By 11 June 1933, he was in Rouen, France; a week later in La Rochelle. He next travelled down to Biarritz for two weeks, and then to Avignon, Nimes, and other sites in France, including Grenoble and Chartres—to see the cathedrals, of course. Finally, in mid-August, he was in Paris. At night, in hotels all over France, he studied Joan Robinson’s new book, The Economics of Imperfect Competition, in preparation for writing his review.¹

Schumpeter’s tastes in art and architecture were catholic, with a preference for the Gothic. He wandered through French cathedrals for hours, making sketches of windows and spires. From nearby shops, he bought photographs; from the cathedral archives, he learned about the building’s history and construction. Although amateur, he was expert. He also bought photographs of great art and recorded his impressions of it in his diary. The Louvre was a special favorite. But. whatever city he was in, he visited the local church or cathedral and the art gallery. Not an art critic, Schumpeter was more of an enthusiastic yet knowledgeable consumer of art whose favorites included portraits of individuals and paintings of groups of people.²

In August, Schumpeter met Mia, who still lived in Juelich and worked in Bonn. After relaxing at a German spa for a couple of weeks, they returned to Bonn in September and early October. For both, it was a pleasant interlude with no strings attached since they knew by this time that they had both accepted that marriage was out of the question. In the early fall, Schumpeter stayed with Mia’s family in nearby Juelich for a few days before moving on to London, Oxford, and Cambridge again for another round of meetings with economists. In October, he left England on the SS Laconia and was soon back in Cambridge, ready for the new academic year. Nothing had happened during the summer that impelled him to consider returning to Europe permanently.

2

In the fall of 1933, Schumpeter had a heavy teaching load. Along with Taussig and J. R. Walsh, an instructor, he taught the theory of value and distribution, but his participation consisted of only a few lectures. He continued to teach economic trends and fluctuations, along with money and banking. The most interesting teaching that year was his experiment in mathematical economics, a course called Introduction to the Mathematical Treatment of Economics. But it did not go too well. Schumpeter was not a mathematician and had never taken a course in mathematics. What he knew of the subject was self-taught. He had a historical, literary, and even romantic outlook, not a mathematical turn of mind, and he could did not embrace all that stern symbolic logic, nor could he impart it to others.

Mathematics requires a special talent to understand it fully, and an even rarer talent to teach it properly—talents not possessed by Schumpeter. Its teaching allows no grand Schumpeterian flourishes, important but oft-neglected facts, startling hypotheses, interesting paradoxes, intricate verbal analyses, and profound conclusions—all standard parts of Schumpeter’s teaching repertoire. The department decided that, as soon as possible, someone with more training in mathematics (for example, Wassily Leontief or E. B. Wilson) should teach the course. Still, all was not lost, for Schumpeter had jarred the department into introducing and continuing a course in mathematical economics, even if he would not teach it, which was never his intention anyway. And not everyone thought Schumpeter had wasted his time and effort. Edward Mason, a junior faculty member in economics, attended the class and later said that he had learned something from it.³

By the fall of 1933, Schumpeter had become a permanent fixture in the Yard, where he began in earnest to try to influence the young people. He had given up, without expending much effort, on the old men and his contemporaries. In his diary, he wrote contemptuously of the three Bs—Bullock, Black, and Burbank. But he thought the young group at Harvard held promise. After all, since the years between twenty and thirty were the most important ones for a scholar, Schumpeter felt a responsibility to guide these young economists through those years.

In 1932, he had formed another informal group of those interested in theory called the Cournot Group, named after Antoine Augustin Cournot, the famous seventeenth-century French economist best known for his mathematical formulations. The group met to stimulate its members in the study of economics.

This new group overlapped the Seven Wise Men and yet another group, often referred to by Schumpeter in his diary as the Inner Circle, as well as the occasional Friday Seminar. All these groups were informal, intermittent, and direct descendants of the Chance, Love, and Logic Society of the 1920s. When active, a group typically met once a month, though sometimes more frequently. The usual Friday night meeting place might be Lochobers, the Oyster House, or some other good restaurant in Cambridge or Boston. After a few drinks and a good meal, followed by some brandy and talk, the group retired to the house, apartment, or rooms of a participant. When it was Schumpeter’s turn to host the group, it met most often in the upstairs room of the Harvard Faculty Club. Although discussions of economics ruled these evenings, all was not serious. The members initiated Schumpeter into the joys of American burlesque by attending the Old Howard, with its striptease, at Scollay Square in Boston. These gatherings were later followed by more drinks and even more talk long into the night.⁴

The purpose of these groups was not to accomplish anything tangible, even though results sometimes ensued. For example, the book The Economics of the Recovery Program was a product of the Seven Wise Men to which each Wise Man contributed a chapter. Leontief presented a paper on “Composite Commodities and the Problem of Index Numbers” at a group meeting in the fall of 1933. In 1936, after many revisions, Econometrica published the paper. Still, the real purpose was to exchange ideas and learn. Schumpeter’s motives were clear. He wanted to soak up the intelligence and insights of lively young people, as well as to experience the intellectual excitement that only a group of young minds on the move can provide. In addition, he wanted to promote the interests of these young colleagues and students. Schumpeter also needed an audience for his own musings and the admiration of a group that regarded him as mentor. The groups substituted for family life, a combination social and intellectual occasion that got him out of the library and away from the Taussig household. Outside these groups, he had only a limited social life.

Above all, Schumpeter’s groups in the 1930s at Harvard were not an effort to establish a school, that is, an informal group of scholars who share a common economic vision and who are followers of a great scholar. Schumpeter remained as much opposed to schools at Harvard as he had been at Bonn. He did not seek to dominate the young people, to teach them his brand of economics, to inculcate any particular way of thinking about economics or anything else. No homogeneity existed in his groups. Instead, he wanted to make each person strong in whatever that person did best. If Paul Sweezy wanted to be a Marxist, then Schumpeter wanted him to be the best Marxist in the United States. Seldom speaking of his own theories, Schumpeter addressed himself to the concerns of the groups’ members and otherwise threw out ideas for all to chew on.

While a new school was no part of his intention, Schumpeter did enjoy and bask in the attention of these young people. Because he was the oldest and most intellectually mature member, all the younger men looked to him for guidance, suggestions, and ideas. Seymour Harris, at the time a young instructor at Harvard, tells of having lunch with Schumpeter,

I always dreaded these lunches, though Schumpeter was always a most interesting and convivial companion … lunch with him was an exhausting experience. It would not be long before he knew more about the subject than the expositor, and soon he would begin sticking pins into the arguments, offering suggestions and debating every point with vigor. After one of these luncheons, I was of no use for the afternoon, though the net gain was large; but Schumpeter was almost certain to return to the classroom or spend arduous consultation hours with his students.⁵

He made strenuous efforts to get to know and help the graduate students, and his office at Holyoke 42 became the center of gravity for many of the more able young men. His table at Dunster House was regularly filled with economics students engaged in earnest talk of economics. As he walked through the Yard and around the Square, like a magnet he attracted the most inquisitive. He always seemed to have a spare half-hour for conversation in his office or down at Merle’s, a coffee shop on Massachusetts Avenue opposite the Widener Library rear entrance. Unlike many of the professors, Schumpeter would even talk to fools and show-offs, believing even one of them might sometime have an idea.⁶

3

Schumpeter’s special rapport with graduate students, young instructors, and assistant professors stands in stark contrast to his inability to get along well with some of his contemporaries. He was on good enough terms with the associate and full professors, but no closeness prevailed with most of them. To them, he seemed an idiosyncratic Austrian gentleman—perhaps a brilliant economist, but a little off the beaten track, and not a leader in economics. They respected him and his ideas, but did not look to him for either friendship or leadership. With a few of the mature scholars, such as Taussig and some others, he got along famously, lunching frequently with Abbot Payson Usher, the economic historian. Arthur H. Cole, another economic historian, later joined the business school and became interested in the historical counterpart of Schumpeter’s theoretical entrepreneur. Schumpeter also got along with William Leonard Crum, and the two eventually coauthored a book. Leontief, already a world-class economist, was still a junior member of the staff, as was Gottfried Haberler when he later joined Harvard. Aside from these colleagues, Schumpeter did not interact with many of the full professors in the department except on a superficial level. Outside of economics, Schumpeter had limited contacts, getting acquainted with a few history and sociology people but not establishing any lasting connections. An exception was Talcott Parsons who, before moving over to sociology, had studied economics.

Partly because of this disinterest in most of his colleagues, especially those outside economics, Schumpeter exercised little influence within the university. He had small fondness for institutions and bureaucracies such as universities. Although useful vehicles for sponsoring his work, he thought them unworthy of his time and attention for their own sake. He never attended general faculty meetings, nor did he serve on university committees or participate in university politics and governance. Believing that institutions existed to serve professors, not the other way around, he felt that those who had no scientific talents to hone or work to do should serve the institution. His scrupulous attention to departmental and full professors’ meetings he felt was justified because their work determined the economics curriculum and personnel.⁷

Schumpeter showed little interest in undergraduates, except for the most talented. He never fully understood Harvard’s emphasis on undergraduates since his view of a university’s role left little room for such education. In his conception of the ideal university, no “students” existed, only master scholars and apprentice scholars working together in a more or less medieval arrangement. As the masters and apprentices educated one another, they mutually pushed forward the frontiers of knowledge. His university also had no room for those attending to please their fathers or to satisfy family tradition. No babysitter or haven for growth between puberty and maturity, the university existed to serve the intelligent, the dedicated, and the scientific and intellectual worker.⁸

To achieve this mutual learning experience and bring him closer to students, he employed the same device he had used at Graz and Bonn: the consultation. Schumpeter continued his practice of holding regular office hours, but, unlike most professors who made little effort to make studen...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Foreword
• Preface
• 1. Embracing America and Abandoning Europe (1933-1935)
• 2. Research and Romance (1935-1936)
• 3. Teaching and Marriage (1936-1937)
• 4. The Secret Life (1937-1938)
• 5. Business Cycles: The Amplified Vision (1939)
• 6. Alienation and Isolation (1939-1942)
• 7. Capitalism’s Fate (1942)
• 8. Toil and Turmoil (1942-1945)
• 9. A New and Uncomfortable World (1945-1947)
• 10. Effort Rewarded, Contradictions, and Solace (1947-1948)
• 11. Reviewing the Troops (1942-1949)
• 12. Reunion with the Hasen (1948-1950)
• 13. Epilogue
• Appendix A Chronology of Joseph Alois Schumpeter
• Appendix B Bibliographies of Schumpeter’s Writings
• Appendix C Personal Interviews
• Appendix D The Schumpeter Papers
• Appendix E Bibliography
• Name Index
• Subject Index
• Photographs follow page