It goes into some of their economic theories, which are quite well known, but it was interesting to learn how their theories were influenced by their own personal experiences.
McCraw, a distinguished professor emeritus of business history at Harvard and author of the Pulitzer Prize-winning Prophets of Regulation (1984), ably draws out the contrast between the two men. Keynes knew nothing but stability during his life, enjoying a lifelong attachment to Cambridge University, where he inherited a faith in smooth and automatic economic progress. This faith, and the stability of which it was born, help explain Keynes’s intellectual response to the Depression. Schumpeter, however, knew anything but stability–the Austro-Hungarian Empire of his youth disappeared in World War I, and Austria was later annexed by Hitler’s Germany.
You can almost imagine that Shumpeter actually lived Creative Destruction.
But what I found most interesting were their disparate views of the entrepreneur.
Schumpeter was schooled in the tradition of Austrian economics, which emphasizes the crucial role of the entrepreneur who innovates and takes what may seem to be irrational risk–a perspective regarded by the Keynesians as quaintly Romantic.
Or how about this….
Galbraith had written in 1967 that the entrepreneur was a “diminishing figure”: “Apart from access to capital, his principal qualifications were imagination, capacity for decision[making] and courage in risking money, including, not infrequently, his own. None of these qualifications is especially important for organizing intelligence or effective in competing with it.” In the entrepreneur’s place was supposed to be the “technostructure,” which would stabilize demand and eliminate uncertainty from the market.
Boy, how times have changed.