Joseph Alois Schumpeter (1883-1950) was an Austrian-American economist and political scientist. While studying at the University of Vienna, Schumpeter was disciple of the Austrian economists von Wieser and Böhm-Bawerk. Later he became Professor at the University of Czernowitz , the University of Graz, the University of Bonn and Harvard University and during some time he held the position of Austrian Minister of Finance.
Schumpeter took special interest in analysing the economic business cycles. Related to this topic he wrote “Business Cycles”, 1939. His theory of economic development is focused in the idea of spontaneous and disruptive changes in the economic cycle coming from the supply side. Booms were a result of new combinations of production and innovation appearance, and recessions a result of diminishing profits as competition imitated and adopted these changes. Schumpeter believes that the key in capitalism lies in the entrepreneur that applies new combinations of factors of production.
Furthermore, Schumpeter also stands out for his contribution to the history of economic thought and his “History of Economic Analysis”, 1954, is considered his masterpiece in this subject.
However it is also worth pointing out Schumpeter’s view and analysis of society. In his “Capitalism, Socialism and Democracy”, 1942, Schumpeter made an analogy between the function of democracy in the public sector and the role of the market mechanism in the private one, as he regarded both as types of horizontal coordination. In the political process, voters were considered consumers and politicians and public servants were suppliers.