JOSEPH A. SCHUMPETER: A BIOGRAPHICAL PROFILE
The first thing you notice when you enter the conference room of the economics department at Harvard are the rows of photographs of previous members of the department. Your eyes wander from one stern-looking gentleman to the next, recognizing a few and trying to determine the identity of the others. You suddenly realize that one photograph is in some way different from the othersâthat of Schumpeter. After looking at it for a while, you figure out the reason: While all the other photographs are in black and white, that of Schumpeter is in color.
It is clear that Schumpeterâs personality as well as his work are considerably more colorful than those of most economists. Joseph Alois Schumpeter was born on February 8, 1883, in Triesch (TĆeĆĄĆ„) in the Austro-Hungarian Empire, which is in present-day Czechoslovakia.1 His mother, Johanna Schumpeter (born GrĂŒner), was the daughter of a physician. His father, Joseph Schumpeter, Sr., was a cloth manufacturer who also owned a factory in Triesch. The paternal grandfather, Alois Schumpeter, had founded the factory, and his son expanded and mechanized it, replacing horse power with mechanical power. By the time Joseph was born in the early 1880s, the Schumpeters were a well-established and respected family in the small town of Triesch.
The Schumpeter family was Catholic and belonged to the German minority in a town of about five thousand people, the majority of whom were Czech. It seems that the family came to the region after the Reformation. There has been speculation that âSchumpeterâ is a German version of the Italian âGiampietro,â and that the origin of the family is Italian. There exists no proof for thisâor for the colorful legend which circulated in the Schumpeter family, that an early member of the family was a robber knight who was beheaded and demoted from the nobility at Nuremburg in the 1200s. According to the same legend, the Schumpeters thereafter made their living as glassblowers and weavers. The family then became prosperous; individual members were several times offered positions within the nobility by the Austrian emperor, but never accepted.2
Schumpeterâaffectionately called âJozsiâ (pronounced âYoshiâ) by family members and friendsâwas the only child of Joseph, Sr. and Johanna. On January 14, 1887, when Schumpeter was four years old, his father died of unknown causes. The widow and her little boy continued to live in Triesch, but then moved to Graz. They probably moved so that Johanna could be near the person who was to become her second husband, the recently retired field marshalâlieutenant Sigismund von KĂ©ler. Joseph, Jr. therefore entered primary school (Volksschule) in Graz, in 1888. In 1893, when he had completed the first stage of his education, his mother and von KĂ©ler, who was thirty-three years older than she, were married and the whole family moved to Vienna. Schumpeterâs stepfather had earlier been stationed in Vienna where, by virtue of his position and family name, he had good contacts. Von KĂ©ler used these to get the young boy into the famous school Theresianum, where the aristocracy of the Austro-Hungarian Empire traditionally sent their children. The education Schumpeter attained here was roughly the equivalent of American high school and two years of college.3
Little is known about Schumpeterâs stay in Theresianum, which began in 1893. However, there exists a photo of him from 1898 (which incidentally is the earliest photo of him), and it depicts a shy and unsure boy.4 In all other photos of Schumpeter, he virtually radiates self-confidence and determination, so one might assume that he felt somewhat out of place in this prep school for the aristocracy. He was also a day student, which put him in a special category. One of the goals of Theresianum was to teach the students to look at the world from different perspectives and not to adhere to any one view; this was intended to be good training for the day when the students would be taking over the administration of the Empire with all its nationalities and ethnic groups. According to Schumpeterâs lifelong friend, Felix Somary, this attitude at Theresianum was to have a profound impact on Schumpeterâs character:
Schumpeter . . . never seemed to take anything in life seriously. He had been educated in Theresianum, where the pupils were taught to stick to the issue and not let personal feelings interfere. One should know the rules of all parties and ideologies, but not belong to any party or believe in any one opinion. And Schumpeter knew how to play all political games superbly, from the extreme left to the extreme right.5
According to the pupils, the unofficial motto of Theresianum was, âTo be a bit stupid means that you come from a good familyâ (A bisserl blöd is vornehm). On this account too, Schumpeter must pretty quickly have shown that he came from the wrong circles in society. He excelled in Greek and Latin as well as in French, English, and Italian. He was also very interested in sociology and philosophy.6 And his grades were excellent when he graduated from Theresianum in 1901.
Later in 1901, Schumpeter enrolled at the University of Vienna and began to study economics. He first focused on social history and the history of law, but this was soon followed by âa sharp turnâ toward economic theory.7 In 1906 he received his Ph.D., and at this point he was pretty well set on his course in life: He wanted to be an economist.
But before we say anything more about Schumpeterâs career as an economist, we need to pause for a moment. A personâs character is to a large extent shaped by what happens in childhood; and since Schumpeter was a very complex person, it is necessary to look more carefully at his first years. When we do this, however, we are struck by how little knowledge there is. All that is known covers little more than a page, and most of it has been presented here. What is especially lacking is some insight into Schumpeterâs character. How did he react to the death of his father? What was his relationship to his mother? And what did he think of his stepfather?
Insofar as Schumpeterâs relationship to his father is concerned, there exists no information whatsoever. We know a little bit more about what he thought of his stepfather. According to a friend, Schumpeter did not look upon von KĂ©ler as a father, but he did regard him with a certain admiration.8 Later in life he would hint that von KĂ©ler was the supreme commander of all troops in Viennaârather than just a retired officer with a generous pension. Our knowledge of Schumpeterâs motherâand this is probably the greatest lacunae of them allâis also very sketchy. Schumpeter supposedly idolized his mother, and he described her as âhandsome, talented, and ambitious for her son.â9 Schumpeter, we are told by the same source, was extremely attached to his mother: âHis devotion to her continued without diminution or disillusion not only to the end of her life but to the end of his.â After having left Austria in 1925, Schumpeter returned only once in his life to his native country, and that was for his motherâs funeral.
Given what we know about Schumpeter being admitted to Theresianum through von KĂ©lerâs connections, the description of Schumpeterâs mother as ambitious for her son makes sense. There also exist many stories which confirm that Schumpeter desperately wanted to be successful; unfortunately, it appears that his hopes were consistently dashed. He never could live up to his motherâs expectations.
Still, we need to know much more about Schumpeter as a child and as a youngster to understand his personality when he was ready to enter adulthood as a student in Vienna. There exists no autobiographical fragment on this point; Schumpeter did not like to write about his past, nor did he preserve material about himself.10 There are not even any anecdotes about his early life; the anecdotes that Schumpeter liked to tell about himself are all about his life as an adult. There is, however, one document, which, in the eyes of one of Schumpeterâs closest friends, gives some clues to his psychology. It is the outline to a novel entitled Ships in the Fog. Schumpeter probably wrote the outline in the early 1930s, and it was found among his papers after his death. The novel itself was never written.11
It is often the case that people who write fiction for the first time produce thinly veiled autobiographical stories. This seems to have been true of Schumpeter and his projected novel. The hero in Ships in the FogâHenryâis an only child. When he is four years old, his father has an accident and is killed. The widowed mother does not have much money, but she does her best to see to it that her son gets a good start in life: âShe had connections which she resolutely exploited for her darling.â And how did Henry see his mother? According to the outline, she was âan excellent woman, strong and kind.â After the death of her husband, she became âthe one great human factor in Henryâs life.â Her ancestry was British and was rather plain compared to that of Henryâs father, âwhich racially was a mixture defying analysis.â The fatherâs family came from âTriesteâ in the Austro-Hungarian Empire and had âGreek, German, Serb, and Italian elements.â
And how was Henry himselfâthe central figureâportrayed by Schumpeter? First of all, Henry had a pervasive feeling of homelessness. Even though he loved his mother, he could not really identify with her, and he did not feel English at all: âWhere was he at home? Not really in England! Often he had thought so but ancestral past had asserted itself each time.â But neither did he feel at home in his fatherâs home country: âCertainly not . . . in what had been the Austro-Hungarian Empire.â Henry was also confused about which social group to identify with: âMore important than country means classâbut he did not with subconscious allegiance belong either to society or the business class or the professions or the trade union world, all of which provided such comfortable homes for everyone he knew.â The only stable point in Henryâs life was work. He had âno family,â âno real friends,â and âno woman.â Work was âall that is left.â
There are indeed several sides to Schumpeterâs personality that cannot be found in his portrait of Henry. Schumpeter, for example, was a bit of a snob and a showmanânot to mention that he also was a brilliant scientist. Still, there are striking parallels between the character Henry and Schumpeter. Both were fatherless early in life and had strong mothers; and both often felt lost and unhappy.
In 1901, the eighteen-year-old Schumpeter registered as a student at the Faculty of Law at the University of Vienna. While there, he specialized in the study of economics. He had several famous teachers, in particular Eugen von Böhm-Bawerk and Friedrich von Wieser. After six years of studies, Schumpeter received his doctorate of law (Doctor utriusque juris; literally, âdoctor of each of the two lawsâRoman law and canon lawâ). When his university education was completed, Schumpeter applied for his Habilitation or permission to lecture in three areas: economics, statistics, and sociology.12 This was granted on suggestion by the two referees, Böhm-Bawerk and von Wieser. Schumpeter also could have taught law and political science. In addition, he had acquired some knowledge of mathematics, even if he never was to become particularly skillful in this area. Mathematics, incidentally, was frowned upon by the Austrian economistsâespecially by von Wieserâand Schumpeter had to attend lectures in mathematics on his own. While he was a student in Vienna, he became exposed to Marxist ideas, but little is known about Schumpeterâs early reaction to Marxism. We do know that in 1905â1906, Schumpeter participated in a very lively seminar together with the two famous Marxists Otto Bauer and Rudolf Hilferding. Böhm-Bawerk had published a harsh critique of Marxism a few years earlier, which had created quite a stir in Marxist circles. âIn the heated debates between Böhm-Bawerk and the Marxists,â according to one of the participants in the seminar, âSchumpeter attracted general attention through his cool, scientific detachment. The seemingly playful manner in which he took part in the discussion . . . was evidently mistaken by many for a lack of seriousness or an artificial mannerism.â13
The University of Vienna was an extremely interesting place to be at the turn of the century for someone like Schumpeter. Carl Menger had just stopped teaching when Schumpeter arrived in 1901, but his spirit was very much alive in the teachings of his two foremost disciples, Eugen von Böhm-Bawerk and Friedrich von Wieser. Schumpeter took courses from both, as well as from Eugen von Philippovich and Karl Theodor von Inama-Sternegg. The latter was a famous statistician and economic historian, for whom Schumpeter wrote a series of brilliant statistical papers. It is generally considered that it was von Wieser and Böhm-Bawerk who had the greatest influence on Schumpeter in Vienna. In his first book, Das Wesen und der Hauptinhalt der theoretischen Nationalökonomie (The Nature and Essence of Theoretical Economics, 1908), Schumpeter says that von Wieser and Walras are the two economists to whom he owes the most.14 And in his next work, Theorie der wirtschaftlichen Entwicklung (The Theory of Economic Development, 1911), it is Böhm-Bawerk whom Schumpeter explicitly mentions.15 However, there seems to have been a third professor in Vienna to whom Schumpeter also felt indebted. When Schumpeter applied for his Habilitation in 1909, he did not single out von Wieser or Böhm-Bawerk. Instead he wrote: âMy studies have . . . first of all been influenced by the Counciller von Philippovich.â16
After he received his doctorate in law on February 16, 1906, Schumpeter seems to have been unsure about what to do next. Since he had no private fortune, he needed a profession. There were a few alternatives open to him. First, he could become an academic and teach. To do this, however, he first needed his Habilitation...