April 20, 2007
Joseph Schumpeter as Lawyer
Posted by Gordon Smith

I am reading Thomas McGraw's new book, Prophet of Innovation: Joseph Schumpeter and Creative Destruction. As suggested by the title, the book is as much about Schumpeter's ideas as his life. The first sentence of the Preface reads: "This biography, of necessity, has two protagonists: Joseph Alois Schumpeter (1883-1850 1950) and the phenomenon of capitalist innovation."

The discussion of Schumpeter's pre-academic life is not extensive, but it has a lot of interesting nuggets. For example, I didn't realize that Schumpeter practiced law ... in Cairo!

After graduating from the University of Vienna with a law degree (the study of economics was situated in the law department), Schumpeter cast about for the next step in his career. Practicing law in Vienna would require an apprenticeship, so he decided to travel, spending time in Berlin, Paris, and London. While in England, he met Alfred Marshall and Francis Edgeworth. He also met and married Gladys Ricarde Seaver, his first wife. His marriage gave the necessity of earning money more salience. That's when he moved to Cairo:

Once in Cairo, Schumpeter represented clients in cases before the International Mixed Tribunal, a court established by Britain and Egypt. His law practice brought in a very good income, which he supplemented by handling some of the finances of the Khedive's daughter, an Egyptian princess. [The Khedive was the Ottoman governor of Egypt.] The role gave him further opportunities to indulge his aristocratic predilictions. More important, his work for the princess brought him extra compensation when his investment on her behalf earned good returns. During his ten months in Cairo, he made a substantial amount of money, on which he and Gladys lived well for the next six years.

Also while in Cairo, Schumpeter wrote his habilitation (roughly, his dissertation), which was quickly approved by the University of Vienna Faculty of Law, qualifying him for a teaching position in the Austro-Hungarian Empire. Schumpeter received his first academic appointment at the University of Czernowitz, in what today would be the Ukraine but then was part of the Habsburg province of Bukovina.

A humble (and somewhat quirky) start to an amazing career.

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