In 1918, in a coffeehouse opposite the University of Vienna, Max Weber sat down with his friends Felix Somary and Joseph Schumpeter to discuss current affairs. What were they to make of the October Revolution, and what of the Bolsheviks? Schumpeter suggested that Marxism could now be given a proper laboratory test. Weber countered: it would be a laboratory filled with corpses, since the Bolsheviks were performing the experiment. ‘Every anatomy room is the same thing’, Schumpeter replied. The tone of the conversation escalated and the value-neutral sociologist soon walked out, leaving his strange Austrian counterpart behind.

The strangeness of Joseph Alois Schumpeter goes beyond his complex personality: publicly a charming aristocrat pretender, privately a tortured melancholic who built a solitary cult around his lost loves. His intellectual independence sets him apart among economists, who find it difficult to categorize his achievements. Given the ‘creative destruction’ with which his name is associated, some have called Schumpeter a Nietzschean; but many critical thinkers have celebrated the negation of the existing order. His former student James Tobin spoke of Schumpeter as the economist who turned Marxism upside down, which seems more fitting—provided we add that this operation can only be expected to give us Hegel once again. Like Hegel, Schumpeter saw all progress as determinate negation, a destruction that is itself creative. His response was familiar: we must stand stoically before the slaughter-bench. The temporary discomfort of recessions, or even generations of hardship, were for him the conditions of material plenty. If workers and politicians could be made to understand this—in what is perhaps a bourgeois corollary to the theory of Absolute Knowledge—they would see that capitalism is to be celebrated even during the worst moments of market failure. Schumpeter is thus becoming the economist of the hour: with every permutation of Keynesianism exhausted, he is invoked when one wants to make the case for letting the whole thing burn, since burning is what allows capitalism to rise, phoenix-like, from the ashes.

Given the general disillusionment with economic interventionism, one might expect retrospective accounts of Schumpeter’s work to declare victory over his long-time Cambridge rival John Maynard Keynes: the history of the twentieth century has shown, so the story runs, that capitalism can breathe without its oxygen-tent. But such a narrative is far too simplistic, and it is doubtful that a contrarian like Schumpeter would have acquiesced to it. Moreover, those now looking to his work are not only the free-market fundamentalists, who identify him entirely with the content of his most famous phrase. Thomas McCraw’s The Prophet of Innovation provides support from unlikely quarters, especially considering McCraw’s criticism of Schumpeter for apparently failing to appreciate ‘the greatest American president of the twentieth century’—Franklin Delano Roosevelt. What are we to make of these crossed allegiances, within the bowels of American academic economics?

As its title suggests, the present biography is a sequel of sorts to McCraw’s Pulitzer-Prize winning Prophets of Regulation (1984), which extolled the virtues of regulating capitalism at the height of the Reagan era. That work was a direct rebuke to the mathematical economics of Milton Friedman and his Chicago school, which took the failure of regulation as a premise, ‘a tacit assumption hidden behind apparently scholarly explanations presented in theoretical forms’. A historian at the Harvard Business School, McCraw plays Cassandra to the extreme turn his field has taken away from historical inquiry towards the abstractions of mathematical models. Thus, while he may not agree with his politics, McCraw certainly supports Schumpeter’s economic methodology: he continually praises Schumpeter’s late insistence on a nuanced historical interpretation of capitalism’s essence.

It is this that most distinguishes Schumpeter from neoliberal ideology, and McCraw’s fight to remember his historical cast of mind is commendable, though not original. Richard Swedberg and Robert Loring Allen’s biographies from the 1990s looked to Schumpeter for similar criticisms of the reigning methodological consensus. Aside from a largely unsubstantiated claim that Allen’s work suffered from uneven documentation—he cites Allen too often for us to believe him on that count—McCraw does not explain why Schumpeter requires another biography. Perhaps he merely needed a popularizer who could excise all his more suggestive remarks on socialism—rendering him pristine and ready for the twenty-first century. In his attacks on the mathematical obsessions of his field, moreover, McCraw ignores the highly influential, and resolutely ahistorical, critique of such models in the legacy of Carl Menger and the Austrian School, above all in the work of Friedrich von Hayek. This is an unfortunate oversight: few thinkers would have been better placed to combat the rise of doctrinaire libertarianism than Schumpeter himself.