Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts

of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org

where you can subscribe, find other episodes, comment on this podcast, and find links to

another information related to today's conversation. Our email address is mail at econtalk.org. We'd

love to hear from you. My guest today is Thomas McCraw, the Isador Strauss Professor of Business

History Emeritus at Harvard Business School. He's a Pulitzer Prize-winning author and has written

extensively on business history and capitalism. His latest book, which is our topic for discussion

today, is Profit of Innovation, Joseph Schumpeter and Creative Destruction, published this year

by Harvard University Press. Professor McCraw, welcome to econ talk. Thanks so much. Our topic is the

life and work of Joseph Schumpeter, the economist best known for the phrase creative destruction, and I

suspect for many of our listeners and for even many economists, that's about all they know about the

man. I hope we can explore his life and his work in a little more detail in this conversation. The book

is marvelous. It's beautifully written. It weaves Schumpeter's life together with his work. It's an

intellectual portrait of the man, his era, and his place in the evolution of economic theory. What drew

you to Schumpeter and got you interested in the man and got you to write the book? My first encounter

with him was an undergraduate. When in a political theory course, we read a part of capitalism, socialism,

and democracy, which is his best known book. And I was struck by the subtlety of his writing, his

apt use of metaphors, his extraordinary knowledge of seemingly everything from ancient times to the

present, the present being 1942, the book, the year that book was published. And that was well

back. Yeah, that was that. Then when I began to teach at Harvard, especially, I became at the Harvard

Business School where innovation is, as you might think, spelled with capital letters, everything is about

innovation. There's even a department of entrepreneurship, a department of production and operations

...