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The Prophet Of Innovation

Of all the economists, Schumpeter had the most colorful personality. From “Prophet of Innovation, Joseph Schumpeter and Creative Destruction”:

“An English critic once wrote that Schumpeter was a bravura character whose life history could have been specially scripted for a T.V. mini-series. He liked to play the part of an aristocrat, even though his origins were middle-class and his eminence self-made. Starting as an academic boy wonder, he astonished his elders with books he wrote in his twenties. In his thirties, he had a brief public career as Austria’s finance minister. He next reinvented himself as a banker and made a fortune that he promptly lost in a stock market crash. After returning to academics, he moved to the United States to become a Harvard professor. World-famous by this time, he was also penniless. He had to make paid speeches to raise the money for his transatlantic ticket.”

 “Schumpeter had many faults, but pettiness was not one of them. He never took offense when the bold Samuelson would correct some mathematical error he was making in class. Instead, as another student recalled, “He would applaud. He admired brilliance.”  Schumpeter wrote to a Harvard dean, “I am positive that Samuelson is the most gifted graduate we have had these many years.” Schumpeter had that “rarest of all qualities in a teacher,” Sweezy wrote. “He never showed the slightest inclination to judge students or colleagues by the extent to which they agreed with him. Keynesians and Marxists were equally welcome in his circle. He didn’t care what we thought as long as we did think.” On the other hand, for those who did not think, Schumpeter could be derisive—often ridiculing the intellectual flabbiness of his fellow conservatives. “When I see those who espouse my cause, I begin to wonder about the validity of my position.”

“Never did he live within his means. He never learned to cook, do his laundry, fix a faucet, drive a car, or type his own manuscripts. Yet he was very seldom idle. He followed the daily routine of an obsessive scholar and absorbed knowledge at an extraordinary rate. He wore expensive tailored clothes and confessed that “it takes me an hour to dress.” Numerous women loved Schumpeter, and he loved them back. “OK, I have a gift for women,” he wrote in his diary. He regarded valor as the better part of discretion and enjoyed saying that he aspired to become the greatest economist, horseman, and lover in the world. Then came his punch line: things were not going well with the horses. But he was never flippant about his work. He became obsessed with it, as it often happens with people of genius. Like Benjamin Franklin, he set down numerical scores for his daily and weekly accomplishments, his system ranging from zero for failure to 1.0 for what he called a good intellectual “performance.” He judged himself harshly, setting down zeroes even for many days when he worked into the night.”­

“When the youthful Schumpeter imposed a hard regimen of reading, gave difficult examinations, and made no secret of his low opinion of the popular professor Hildebrand, the students responded with open rebellion. From this time forward, Schumpeter assumed a less arrogant attitude. He dropped none of his showmanship, but—always a superb actor—he now took on the role of kindly mentor. He extended his office hours and patiently guided his charges through the thicket of economics. In the years ahead he never mentioned this episode to his fellow professors at Harvard and elsewhere. As talkative as he was about other adventures in Europe—the duel at Czernowitz, his numerous sexual exploits—he kept silent about any student rebellion.”

“In the classroom, the young Schumpeter was a demanding teacher who handed out heavy homework. When his students complained that the librarian forbade them to check out books he had assigned, he rushed over and confronted the offender. The argument escalated, and Schumpeter began to roar out insults. The librarian, his personal integrity now in question, abruptly raised the stakes and challenged Schumpeter to a duel. Though taken aback, Schumpeter accepted. For the principle of book-borrowing, he was willing to risk injury, though probably not his life, since such affairs seldom ended in dangerous wounds. At the end of the duel, the librarian left the field with a cut on his shoulder and the satisfaction of having defended his honor. Schumpeter had made his point as well—the students would now get access to the books.”

From “The Making Of Modern Economics”:

“Earning a huge salary with sizeable overdraft privileges, Schumpeter resumed his former extravagant lifestyle, including an outlandish love life. When told to be more discreet, he “rented a pair-drawn open carriage and rode up and down a main boulevard in the inner city—at midday with an attractive blond prostitute on one knee and a brunette on the other”

“While visiting London, he suddenly married a British woman twelve years his senior. He abandoned her when he returned to the continent to teach at Bonn and never officially divorced her. After a series of extramarital affairs, Schumpeter, then thirty-two, set his heart on a twelve-year-old (!) named Annie Reisinger. He made arrangements for her to receive an education and to marry him when she came of age. To avoid thinking about his past family tragedies, Schumpeter worked ruthlessly all the time—nights, days, even weekends—and graded himself in his private diary. He suffered depression and various illnesses. During the war years, Schumpeter seemed to become more eccentric, more imbalanced, and more isolated. He continued to direct monologues to his deceased wife and mother.”

“Max Weber and Joseph Schumpeter were opposites in personality. Weber was a dogmatic, restless, hard-driving Huguenot with deeply held convictions, who took nothing lightly. Schumpeter, the gifted wunderkind of Viennese economics, was light-hearted, reasonable to a fault, and a virtuoso at playing any political game. Weber spent 1918 teaching at the University of Vienna. Near the end of the term, he met Schumpeter at the Cafe Landmann, opposite the university. Felix Somary, a university student who later became a prominent Swiss banker, reported the incident. They talked about the Russian Revolution that had occurred a year earlier. Schumpeter expressed satisfaction that socialism was no longer just a theory but could be tested in the real world. Weber responded heatedly that communism in Russia was a crime and would lead to unheard-of misery and a terrible catastrophe. “That may well be,” said Schumpeter, “but it would be a good laboratory [in which] to test our theories.” “A laboratory heaped with human corpses!” Weber rejoined. “Every anatomy classroom is the same thing,” Schumpeter shot back. The discussion turned into a raging debate. Weber became more vehement and raised his voice, as Schumpeter became more sarcastic and lowered his. All around, customers stopped reading their newspapers and playing cards and listened eagerly as the two exchanged verbal insults. Finally, Weber sprang to his feet and rushed out into the Ringstrasse, crying “This is intolerable!” A friend rushed out with Weber’s hat, trying to calm him. Schumpeter remained behind, only smiled and said, “How can someone carry on like that in a coffee house!”

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