Schumpeter Quotes & Sayings

For the duration of its collective life, or the time during which its identity may be assumed, each class resembles a hotel or an omnibus, always full, but always of different people. — Joseph A. Schumpeter

To the believer Marxism presents, first, a system of ultimate ends that embody the meaning of life and are absolute standards by which to judge events and actions ... — Joseph A. Schumpeter

Voters thereby prove themselves bad and indeed corrupt judges of such issues and often they even prove themselves bad judges of their own long-run interests, for it is only the short-run promise that tells politically and only short-run rationality that asserts itself effectively. — Joseph Alois Schumpeter

For one thing, to predict the advent of big business was considering the conditions of Marx's day an achievement in itself. — Joseph A. Schumpeter

Innovation is the market introduction of a technical or organisational novelty, not just its invention. — Joseph A. Schumpeter

Geniuses and prophets do not usually excel in professional learning, and their originality, if any, is often due precisely to the fact that they do not. — Joseph Alois Schumpeter

Innovations are changes which cannot be decomposed into infinitessimal steps. — Joseph A. Schumpeter

The evolution of the capitalist style of life could be easily - and perhaps most tellingly - described in terms of the genesis of the modern Lounge Suit. — Joseph A. Schumpeter

It is, after all, only common sense to realize that, but for the fact that economic life is a process of incessant internal change, the business cycle, as we know it, would not exist. — Joseph A. Schumpeter

The capitalist engine is first and last an engine of mass production which unavoidably also means production for the masses ... It is the cheap cloth, the cheap cotton and rayon fabric, boots, motorcars and so on that are the typical achievements of capitalist production, and not as a rule improvements that would mean much to the rich man. Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within reach of factory girls. — Joseph A. Schumpeter

Creative Destruction is the essential fact about capitalism. — Joseph A. Schumpeter

Pessimistic visions about almost anything always strike the public as more erudite than optimistic ones — Joseph A. Schumpeter

Bureaucracy is not an obstacle to democracy but an inevitable complement to it. — Joseph A. Schumpeter

Can capitalism survive? No. I do not think it can. — Joseph A. Schumpeter

The public mind has by now so thoroughly grown out of humor with it as to make condemnation of capitalism and all its works a foregone conclusion
almost a requirement of the etiquette of discussion. — Joseph Alois Schumpeter

The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism. — Joseph A. Schumpeter

The perennial gale of creative destruction — Joseph A. Schumpeter

There exists no more democratic institution than the market — Joseph A. Schumpeter

Entrepreneurship rests on a theory of economy and society. The theory sees change as normal and indeed as healthy. And it sees the major task in society - and especially in the economy - as doing something different rather than doing better what is already being done. That is basically what Say, two hundred years ago, meant when he coined the term entrepreneur. It was intended as a manifesto and as a declaration of dissent: the entrepreneur upsets and disorganizes. As Joseph Schumpeter formulated it, his task is creative destruction. — Peter F. Drucker

Please do not think that I am accusing socialists of insincerity or that I wish to hold them up to scorn either as bad democrats or as unprincipled schemers and opportunists. I fully believe, in spite of the childish Machiavellism in which some of their prophets indulge, that fundamentally most of them always have been as sincere in their professions as any other men. Besides, I do not believe in insincerity in social strife, for people always come to think what they want to think and what they incessantly profess. As regards democracy, socialist parties are presumably no more opportunists than are any others; they simply espouse democracy if, as, and when it serves their ideals and interests and not otherwise. Lest readers should be shocked and think so immoral a view worthy only of the most callous of political practitioners, ... — Joseph Alois Schumpeter

Every socialist wishes to revolutionize society from the economic angle and all the blessings he expects are to come through a change in economic institutions. This of course implies a theory about social causation - the theory that the economic pattern is the really operative element in the sum total of the phenomena that we call society. — Joseph Alois Schumpeter

The capitalist process shapes things and souls for socialism. — Joseph A. Schumpeter

It is however always important to remember that the ability to see things in their correct perspective may be, and often is, divorced from the ability to reason correctly and vice versa. That is why a man may be a very good theorist and yet talk absolute nonsense ... — Joseph A. Schumpeter

There was no corner of the known world where some interest was not alleged to be in danger or under actual attack. If the interests were not Roman, they were those of Rome's allies; and if Rome had no allies, then allies would be invented. When it was utterly impossible to contrive such an interest - why, then it was the national honor that had been insulted. The fight was always invested with an aura of legality. Rome was always being attacked by evil-minded neighbors, always fighting for a breathing space. The whole world was pervaded by a host of enemies, and it was manifestly Rome's duty to guard against their indubitably aggressive designs. They were enemies who only waited to fall on the Roman people. — Joseph Alois Schumpeter

The ballot is stronger than bullets. — Joseph A. Schumpeter

Wherever autocratic power vanished at an early date - as in the Netherlands and later in England - and the protective interest receded into the background, they swiftly discovered that trade must be free - free to the nethermost recesses of hell. — Joseph Alois Schumpeter

According to the management expert Peter F. Drucker, the term "entrepreneur" (from the French, meaning "one who takes into hand") was introduced two centuries ago by the French economist Jean-Baptiste Say to characterize a special economic actor-not someone who simply opens a business, but someone who "shifts economic resources out of an area of lower and into an area of higher productivity and greater yield." The twentieth-century growth economist Joseph A. Schumpeter characterized the entrepreneur as the source of the "creative destruction" necessary for major economic advances. — David Bornstein

Social structures, types and attitudes are coins that do not readily melt. Once they are formed they persist, possibly for centuries, and since different structures and types display different degrees of this ability to survive, we almost always find that actual group and national behavior more or less departs from what we should expect it to be if we tried to infer it from the dominant forms of the productive process. — Joseph Alois Schumpeter

However, whether favorable or unfavorable, value judgments about capitalist performance are of little interest. For mankind is not free to choose. This is not only because the mass of people are not in a position to compare alternatives rationally and always accept what they are being told. There is a much deeper reason for it. Things economic and social move by their own momentum and the ensuing situations compel individuals and groups to behave in certain ways whatever they may wish to do - not indeed by destroying their freedom of choice but by shaping the choosing mentalities and by narrowing the list of possibilities from which to choose. — Joseph Alois Schumpeter

Situations emerge in the process of creative destruction in which many firms may have to perish that nevertheless would be able to live on vigorously and usefully if they could weather a particular storm. — Joseph A. Schumpeter

As far as our propositions are certain, they do not say anything about reality, and as far as they do say anything about reality, they are not
certain"


Albert Einstein (as cited in Schumpeter, 1991) — Albert Einstein

This civilization is rapidly passing away, however. Let us rejoice or else lament the fact as much as everyone of us likes; but do not let us shut our eyes to it. — Joseph Alois Schumpeter

The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process — Joseph A. Schumpeter

Politicians are like bad horsemen who are so preoccupied with staying in the saddle that they can't bother about where they're going. — Joseph Alois Schumpeter

Economic progress, in capitalist society, means turmoil. — Joseph A. Schumpeter

Adam Smith's 'invisible hand' is not above sudden, disturbing, movements. Since its inception, capitalism has known slumps and recessions, bubble and froth; no one has yet dis-invented the business cycle, and probably no one will; and what Schumpeter famously called the 'gales of creative destruction' still roar mightily from time to time. To lament these things is ultimately to lament the bracing blast of freedom itself. — Margaret Thatcher

Nothing should be more obvious than that the business organism cannot function according to design when its most important "parameters of action" - wages, prices, interest - are transferred to the political sphere and there dealt with according to the requirements of the political game or, which sometimes is more serious still, according to the ideas of some planners. — Joseph Alois Schumpeter

History is a record of "effects" the vast majority of which nobody intended to produce. — Joseph Alois Schumpeter

Gentlemen, a depression is for capitalism like a good, cold douche. — Joseph A. Schumpeter

Access to the national dividend is usually to be had only on condition of some productive service previously rendered or of some product previously sold. This condition is, in this case, not yet fulfilled. It will be fulfilled only after the successful completion of the new combinations. Hence this credit will in the meantime affect the price level. — Joseph A. Schumpeter

In one important sense, Marxism is a religion. To the believer it presents, first, a system of ultimate ends that embody the meaning of life and are absolute standards by which to judge events and actions; and, secondly, a guide to those ends which implies a plan of salvation and the indication of the evil from which mankind, or a chosen section of mankind, is to be saved. — Joseph Alois Schumpeter

The typical citizen drops down to a lower level of mental performance as soon as he enters the political field. He argues and analyzes in a way which he would readily recognize as infantile within the sphere of his real interests. He becomes primitive again. — Joseph A. Schumpeter

Our poverty will be brought home to us to its full extent only after the war. — Joseph A. Schumpeter

The state has been living on a revenue which was being produced in the private sphere for private purposes and had to be deflected from these purposes by political force. The theory that construes taxes on the analogy of club dues or of the purchase of the services of, say, a doctor only proves how far removed this part of the social sciences is from scientific habits of mind. — Joseph A. Schumpeter

Nothing is so retentive as a nation's memory. — Joseph A. Schumpeter

If the business world is divided between optimists and pessimists (Schumpeter, January 31st) then perhaps what is needed are more scientists. There is an old joke that goes: to an optimist the glass is half full; to a pessimist it is half empty. To an engineer the glass is twice as big as it needs to be. — Anonymous

Capitalism stands its trial before judges who have the sentence of death in their pockets. They are going to pass it, whatever the defense they may hear; the only success victorious defense can possibly produce is a change in the indictment. — Joseph A. Schumpeter

There is another method of obtaining money ... It does not presuppose the existence of accumulated results of previous development, and hence may be considered as the only one which is available in strict logic. This method of obtaining money is the creation of purchasing power by banks. The form it takes is immaterial. — Joseph A. Schumpeter

Capitalism does not merely mean that the housewife may influence production by her choice between peas and beans; or that plant managers have some voice in deciding what and how to produce: it means a scheme of values, an attitude toward life, a civilization - the civilization of inequality and of the family fortune. — Joseph Alois Schumpeter

The first thing a man will do for his ideals is lie. — Joseph Schumpeter

Ultimately, however, as the Austrian economist Joseph Schumpeter pointed out, a powerful bureaucratic class is in the same relation to commerce as was the scorpion in Aesop to the dog on whose back he crossed the river. They will destroy commerce and establish socialism, even if it kills them, because that is their nature. — John Derbyshire

I set out to become the greatest lover in Vienna, the greatest horseman in Austria, and the greatest economist in the world. Alas, for the illusions of youth: as a horseman, I was never really first-rate. — Joseph A. Schumpeter

Entrepreneurial profit is the expression of the value of what the entrepreneur contributes to production. — Joseph A. Schumpeter

The metal of economic theory is in Marx's pages immersed in such a wealth of steaming phrases as to acquire a temperature not naturally its own. — Joseph A. Schumpeter

Why should we stunt our ambitions and impoverish our lives in order to be insulted and looked down upon in our old age? — Joseph A. Schumpeter

It is not true that democracy will always safeguard freedom of conscience better than autocracy. Witness the most famous of all trials. Pilate was, from the standpoint of the Jews, certainly the representative of autocracy. Yet he tried to protect freedom. And he yielded to a democracy. — Joseph A. Schumpeter

The most important feature of an information economy, in which information is defined as surprise, is the overthrow, not the attainment, of equilibrium. The science that we have come to know as information theory establishes the supremacy of the entrepreneur because it appreciates the powerful connection between destruction and what Schumpeter described as "creative destruction," between chaos and creativity. — George Gilder

Profit is the payment you get when you take advantage of change. — Joseph A. Schumpeter

Lack of outlets, excess capacity, complete deadlock, in the end regular recurrence of national bankruptcies and other disasters-perhaps world wars from sheer capitalist despair-may confidently be anticipated. History is as simple a that. — Joseph A. Schumpeter

Those revolutions are not strictly incessant; they occur in discrete rushes which are separated from each other by spans of comparative quiet. The process as a whole works incessantly however, in the sense that there always is either revolution or absorption of the results of revolution, both together forming what are known as business cycles. — Joseph A. Schumpeter

As a matter of practical necessity, socialist democracy may eventually turn out to be more of a sham than capitalist democracy ever was. In any case, that democracy will not mean increased personal freedom. — Joseph Alois Schumpeter

If we limit ourselves to painting as an example, both for brevity's sake and because in that field my ignorance is slightly less complete than it is in others, and if (wrongly, as I think) we agree to start an epoch with Giotto's Arena frescoes and then follow the line (nothing short of damnable though such "linear" arguments are) Giotto - Masaccio - Vinci - Michelangelo - Greco, no amount of emphasis on mystical ardors in the case of Greco can obliterate my point for anyone who has eyes that see. — Joseph Alois Schumpeter

I know that it is not enough to be remembered for books and theories. One does not make a difference unless it is a difference in people's lives. — Joseph A. Schumpeter

Capitalism Survive? - I have tried to show that a socialist form of society will inevitably emerge from an equally inevitable decomposition of capitalist society. — Joseph Alois Schumpeter

The reduced sense of responsibility and the absence of effective volition in turn explain the ordinary citizen's ignorance and lack of judgement in matters of domestic and foreign policy which are if anything more shocking in the case of educated people and of people who are successfully active in non-political walks of life than it is with uneducated people in humble stations. — Joseph Alois Schumpeter

Socialist endeavour of the Fabian type would not have amounted to anything at any other time. But it did amount to much during the three decades preceding 1914, because things and souls were ready for that kind of message and neither for a less nor for a more radical one. Formulation and organization of existing opinion were all that was needed in order to turn possibilities into articulate policy, and this "organizing formulation" the Fabians provided in a most workmanlike manner. They were reformers. The spirit of the times made socialists of them. They were genuine socialists because they aimed at helping in a fundamental reconstruction of society which in the end was to make economic care a public affair. — Joseph Alois Schumpeter

It is quite possible that future generations will look upon arguments about the inferiority of the socialist plan as we look upon Adam Smith's argument about joint stock companies which, also, were simply false. — Joseph A. Schumpeter

This may have something to do with a tendency to discount the cost or quality advantages of quasi-monopolist combination that is at present as pronounced as was the exaggeration of them in the typical prospectus or announcement of sponsors of such combinations.] — Joseph Alois Schumpeter

Success depends on intuition, on seeing what afterwards proves true but cannot be established at the moment. — Joseph A. Schumpeter

The modern mind dislikes gold because it blurts out unpleasant truths. — Joseph A. Schumpeter

We always plan too much and always think too little. We resent a call to thinking and hate unfamiliar argument that does not tally with what we already believe or would like to believe. — Joseph A. Schumpeter

Marxism is essentially a product of the bourgeois mind. — Joseph A. Schumpeter

To begin with, convinced socialists will derive satisfaction from the mere fact of living in a socialist society.4 Socialist bread may well taste sweeter to them than capitalist bread simply because it is socialist bread, and it would do so even if they found mice in it. — Joseph Alois Schumpeter

The banker, therefore, is not so much primarily a middleman in the commodity "purchasing power" as a producer of this commodity. However, since all reserve funds and savings today usually flow to him, and the total demand for free purchasing power, whether existing or to be created, concentrates on him, he has either replaced private capitalists or become their agent; he has himself become the capitalist par excellence. — Joseph A. Schumpeter

Recognition of the inevitability of comprehensive bureaucratization does not solve the problems that arise out of it. — Joseph A. Schumpeter

Schumpeter remarked how pleased he was with the Russian Revolution. Socialism was now no longer a discussion on paper, but had to prove its viability. Max Weber responded in great agitation: Communism, at this stage in Russian development, was virtually a crime, the road would lead over unparalleled human misery and end in a terrible catastrophe. "Quite likely", Schumpeter answered, "but what a fine laboratory". "A laboratory filled with mounds of corpses", Weber answered heatedly. — Karl Jaspers

Want and effective demand are not the same thing. If they were, the poorest nations would be the ones to display the most vigorous demand. — Joseph A. Schumpeter

At the heart of capitalism is creative destruction. — Joseph A. Schumpeter

Democracy is a political method, that is to say, a certain type of institutional arrangement for arriving at political - legislative and administrative - decisions and hence incapable of being an end in itself. — Joseph A. Schumpeter

All we can thus far say about the duration of the units of [the business cycle] and each of [its] two phases is that it will depend on the nature of the particular innovations that carry a cycle, ... and the financial conditions and habits prevailing in the business community in each case. — Joseph A. Schumpeter

Surely, nothing can be more plain or even more trite common sense than the proposition that innovation [ ... ] is at the center of practically all the phenomena, difficulties, and problems of economic life in capitalist society. — Joseph A. Schumpeter

The success of everything depends on intuition, the capacity of seeing things in a way which afterwards proves to be true, even though it cannot be established at the moment, and of grasping the essential fact, discarding the unessential, even though one can give no account of the principles by which this is done. — Joseph A. Schumpeter

In economic life competition is never completely lacking, but hardly ever is it perfect. — Joseph A. Schumpeter

The capitalist achievement does not typically consist in providing more silk stocking for queens but in bringing them within the reach of factory girls in return for a steadily decreasing amount of effort. — Joseph A. Schumpeter

The stock exchange is a poor substitute for the Holy Grail. — Joseph A. Schumpeter

The trouble with Russia is not that she is socialist but that she is Russia. — Joseph A. Schumpeter

Capitalism inevitably and by virtue of the very logic of its civilization creates, educates and subsidizes a vested interest in social unrest. — Joseph A. Schumpeter

As a matter of fact, capitalist economy is not and cannot be stationary. Nor is it merely expanding in a steady manner. It is incessantly being revolutionized from within by new enterprise, i.e., by the intrusion of new commodities or new methods of production or new commercial opportunities into the industrial structure as it exists at any moment. — Joseph A. Schumpeter

The religious quality of Marxism also explains a characteristic attitude of the orthodox Marxist toward opponents. To him, as to any believer in a Faith, the opponent is not merely in error but in sin. Dissent is disapproved of not only intellectually but also morally. There cannot be any excuse for it once the Message has been revealed. — Joseph A. Schumpeter

The spirit of a people, its cultural level, its social structure, the deeds its policy may prepare - all this and more is written in its fiscal history, stripped of all phrases. He who knows how to listen to its message here discerns the thunder of world history more clearly than anywhere else. — Joseph A. Schumpeter

Created by wars that required it, the machine now created the wars it required. — Joseph Alois Schumpeter

The very foundation of private property and free contracting wears away in a nation in which its most vital, most concrete, most meaningful types of private property and free contracting disappear from the moral horizon of the people. — Joseph A. Schumpeter

Nothing is so treacherous as the obvious. — Joseph A. Schumpeter

The function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on. — Joseph A. Schumpeter

The strategic stimulus to economic development in Schumpeter's analysis is innovation, defined as the commercial or industrial application of something new
a new product, process or method of production, a new market or source of supply, a new form of commercial, business or financial organization. — Joseph A. Schumpeter

Schumpeter may well have seen singles as rational. but in a survey of Americans conducted in 1957, more than half the respondents said that unmarried people were "sick", "immoral", or "neurotic," while about a third viewed them "neutrally". — Eric Klinenberg