Original caption: Joseph Alois Schumpeter (1883-1950), Czech-born economist and professor at Harvard University. His theories on the development of capitalism made him famous Undated photograph. --- Image by © Bettmann/CORBIS

Today is the 133 birthday of the late Austrian-born economist, Joseph A. Schumpeter. A Finance Minister of Austria and later Harvard professor, Schumpeter coined the term “creative destruction” in explaining how capitalism delivers progress:

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.

Although a messy process, creative destruction was, according to Schumpeter, often necessary for innovation. As Joseph Klesney noted in an Acton Commentary in 2001:

In celebrating technology, Schumpeter inherently (if not directly) recognized the creative expression of man. Christian social ethicists, however, acknowledge that the free economy is more than the development of goods and services. They look at economics in terms of what Ludwig von Mises called human action.

All human action has the capacity for moral significance. This is also true in the world of economics; certain economic conditions produce an abundance of goods and services, and moral people attempt to determine whether these arrangements respect the human dignity and God-given rights of those involved.

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Call of the Entrepreneur

Call of the Entrepreneur

A merchant banker. A failing dairy farmer. A refugee from Communist China. One risked his savings. One risked his farm. One risked his life.

Why do their stories matter? Because how we view entrepreneurs - as greedy or altruistic, as virtuous or vicious - shapes the destinies of individuals and nations.

Visit the official Call of the Entrepreneur website for more information.