Schumpeter, Joseph Alois, 1939, “Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process“, New York and London, McGraw – Hill Book Company Inc.

Introduction: Schumpeter and his intellectual legacyDespite the tens of years that have elapsed since he published his theories and the hundreds of fierce critics he faced, some of whom tried their best to demolish every aspect of his conceptions [e.g. Kuznets (1940)], Joseph A. Schumpeter continues to stir controversy in the field of economics and well beyond. Hundreds of papers are annually published about his theories, and the number of citations of his works on Google Scholar exceeds 10,000 per year. At the same time, while his view on entrepreneurship is considered dominant, and there still are papers published against the Schumpeterian mainstream a never-ending stream of papers continue to tackle critically with the Schumpeterian mainstream (Herrmann, 2010).Planned to be 'the crown of his work' (Swedberg, 2008), Business Cycles occupies a special position within Schumpeter's system of theoretical thinking. At its core, this is a book about innovation and its crucial role in the capitalist system. A brief survey of Schumpeter's publication record will reveal that after an exceptionally book published in 1911 under the title of The Theory of Economic Development (translated into English in 1934), Schumpeter's contribution to economics and social sciences further materialized in two other significant books. In 1939, he published his massive work in two volumes on Business Cycles, followed three years later by a book less grounded in economic theory and oriented more towards Marxism and economic sociology, Capitalism, Socialism and Democracy2.Schumpeter's intellectual relationship with economics included two completely different dimensions. Firstly, Schumpeter was an academic virtuoso who held positions in Chernivtsi and Graz (both towns were located in Austria at that time), as well as in Bonn and at Harvard (the last 18 years of his career and life). Secondly, in parallel to his academic pursuits, Schumpeter followed a political path, and, in the aftermath of the Great War, he assumed the office of Minister of Finance in Austria. For a short period of time, he also 'had become the president of a small but respected Viennese banking house, the Biedermann Bank' (Swedberg, 2007: 67). This combination offered him a special position for understanding both the contemporary and historical economic realities brought about by the devastating war. One of his many exegetes shed intriguing light upon Schumpeter's personality when he described him as 'the prophet of innovation', whose three-fold ambitions consisted of becoming 'the greatest economist, horseman and lover in the world. Then came his punch line: things are not going well with the horses' (McCraw, 2007: 5)3. We will also leave aside his romantic record and intimate relationships and focus for the remainder of this paper only upon his intellectual identity as expressed in one of his most important economic writings.Business Cycles is suffused with historical examples, and this richness perfectly illustrates Schumpeter's perspective on the important role played by economic history in understanding the economic system. Swedberg (2008: xxii) pointed out Schumpeter's 'famous statement that if he could relive his life as an economist and only had one specialty, he would choose economic history and not economic theory'. The same author noted that during his later period at Harvard, Schumpeter was more eager to write and engage with an audience of economic historians. From this perspective, Business Cycles represented a decisive movement from economic theory towards economic history, even if the transformation is nuanced by Schumpeter's constant interest in 'the economic mechanisms'. His theory of entrepreneurship benefitted from this historicization of his economic thinking mainly because a new consistent dimension was added to its analysis. Moreover, this shift towards economic history paid off in terms of conceptual clarity, since it gave him the opportunity to shed a better light on the concepts forming his theoretical heritage, which in Business Cycles appear in a sharper semantical condition. …