Sunday, May 20, 2007

Pg. 69: Thomas McCraw's "Prophet of Innovation"

Today's feature at the Page 69 Test: Thomas K. McCraw's Prophet of Innovation: Joseph Schumpeter and Creative Destruction.

About the book, from the publisher:
Pan Am, Gimbel's, Pullman, Douglas Aircraft, Digital Equipment Corporation, British Leyland -- all once as strong as dinosaurs, all now just as extinct. Destruction of businesses, fortunes, products, and careers is the price of progress toward a better material life. No one understood this bedrock economic principle better than Joseph A. Schumpeter. "Creative destruction," he said, is the driving force of capitalism.

Described by John Kenneth Galbraith as "the most sophisticated conservative" of the twentieth century, Schumpeter made his mark as the prophet of incessant change. His vision was stark: Nearly all businesses fail, victims of innovation by their competitors. Businesspeople ignore this lesson at their peril -- to survive, they must be entrepreneurial and think strategically. Yet in Schumpeter's view, the general prosperity produced by the "capitalist engine" far outweighs the wreckage it leaves behind.

During a tumultuous life spanning two world wars, the Great Depression, and the early Cold War, Schumpeter reinvented himself many times. From boy wonder in turn-of-the-century Vienna to captivating Harvard professor, he was stalked by tragedy and haunted by the specter of his rival, John Maynard Keynes. By 1983 -- the centennial of the birth of both men -- Forbes christened Schumpeter, not Keynes, the best navigator through the turbulent seas of globalization. Time has proved that assessment accurate.

Prophet of Innovation is also the private story of a man rescued repeatedly by women who loved him and put his well-being above their own. Without them, he would likely have perished, so fierce were the conflicts between his reason and his emotions. Drawing on all of Schumpeter's writings, including many intimate diaries and letters never before used, this biography paints the full portrait of a magnetic figure who aspired to become the world's greatest economist, lover, and horseman -- and admitted to failure only with the horses.
Among the praise for Prophet of Innovation:

Much honored as an economic prophet, Joseph Schumpeter has had to wait half a century after his death for this splendid full-dress biography covering his ideas, life, and times.... [This is] a fat, learned biography by Thomas McCraw, one of America's most respected business historians, the author of a Pulitzer prize-winning history of the rise of regulation. He has found the perfect subject in Schumpeter. He succeeds in getting inside the economist's head, explaining not just what he thought but why he thought it. Beyond this, he also succeeds in painting a portrait of his times. Fin de siƩcle Vienna, Weimar Germany, Harvard University before and after the first world war: all come to life on these pages.
--The Economist

[Schumpeter's] private life was no less fascinating than his public message. In Prophet of Innovation, Thomas McCraw -- emeritus professor of history at the Harvard Business School -- artfully weaves the two together.
--Dan Seligman, Wall Street Journal

In this biography, Pulitzer Prize winner McCraw neatly divides his emphasis between Schumpeter's professional and personal life. He portrays his subject as a somewhat self-absorbed insatiable scholar not entirely comfortable with his contemporaries, which might explain marriages and affairs with much older and younger women, as well as his affinity with students and often-strained relations with colleagues of his own generation. McGraw lucidly addresses Schumpeter's economic theories through an examination of his letters, lectures, addresses, articles, and major works.... [An] insightful and highly readable biography.
--Lawrence R. Maxted, Library Journal (starred review)

[A] persuasive and eloquent biography.
--Jay Hancock, Baltimore Sun

This well-paced and beautifully written book explains not only Schumpeter's work but also the fast-changing phenomenon of modern capitalism. McCraw brings out Schumpeter's energy and charisma as well as the power of his ideas, quite skillfully linking the economist's colorful and adventurous personal life with the development of his views. This book is a fine tribute to a great thinker.
--Harold James, Princeton University

Read the entire review in The Economist.

Thomas K. McCraw is the Isidor Straus Professor of Business History, Emeritus at the Harvard Business School. His other books include Creating Modern Capitalism: How Entrepreneurs, Companies, and Countries Triumphed in Three Industrial Revolutions and Prophets of Regulation, which won the Pulitzer Prize in history.

The Page 69 Test: Prophet of Innovation.

--Marshal Zeringue