Schumpeter, Joseph Alois << SHOOM pay tuhr, YOH zehf ah LOYS >> (1883-1950), was a noted economist who studied economic growth, business cycles, and the conflict between capitalism and socialism.
In The Theory of Economic Development (1911), Schumpeter argued that growth in a private enterprise economy was caused by the innovations of entrepreneurs (business organizers) who hope to make large profits. In Business Cycles (1939), Schumpeter wrote that new developments generally came irregularly and in bunches, thus creating cycles of good and bad times.
In Capitalism, Socialism, and Democracy (1942), Schumpeter introduced the concept of creative destruction. According to this idea, innovations by entrepreneurs caused outdated industries and markets to be replaced with newer and better ones. Schumpeter argued that government efforts to reduce unequal distribution of income would destroy the conditions in which entrepreneurs could flourish. He also believed that the growth of big business would eliminate entrepreneurs from decision-making positions in industry. Capitalism would then lose its ability to grow, and the resulting economic conditions would lead to socialism.
Schumpeter was born on Feb. 8, 1883, near Jihlava, in what is now the Czech Republic. He was educated at the University of Vienna. He joined the faculty of Harvard University in 1932. He became a United States citizen in 1939. Schumpeter died on Jan. 8, 1950.
