Joseph Alois Schumpeter (Triesch, Moravia, February 8, 1883 - Salisbury, Connecticut, January 8, 1950 (age 66)) is an Austrian economist mid twentieth century, known for his theories of economic fluctuations, creative destruction and innovation .

He is the author of a History of Economic Analysis, published in 1954 and still refers. Neither Keynesian nor neoclassical, is often close to the Austrian School of Economics. It is considered economist excitement and it is called heterodox economist for his theories on the evolution of capitalism in democracy, he believes doomed to disappear for social and political reasons.

Schumpeter leaves hardly classify an economic school. Whether it was Austrian , he has never been part of the Austrian School with which he was familiar with the teachings of Eugen von Böhm- Bawerk at the University of Vienna.

The economist he admired most was undoubtedly Leon Walras , but his analysis goes beyond the neoclassical framework . He was also heavily influenced by the writings of the German sociologist Max Weber. And if he shared some conclusions with Karl Marx, his analysis was very far from Marxist economic designs. Is actually the founder of general economic evolutionism . It is therefore listed in the circle called "heterodox" economists.

He believes that the foundation and spring dynamics of the economy are innovation and technical progress. The history of capitalism is a permanent moult. Technology evolves, turns pushing swathes of economic activity to wither and disappear after being dominant. Structural change is prior to quantitative.

The purpose of this paper is to talk about the influence of Max Weber on Schumpeter’s thought,with respect to their central visions.
Consequently, the connections between Schumpeter and Max Weber in this paper are regarded as being primarily substantive in nature.

Max Weber (1864–1920) published numerous scholarly works before becoming professor of Political Economy and Sociology at Freiburg University and later at
Heidelberg and Munich. His works aroused a controversy over the relationship between
Protestantism and Capitalism. Weber’s Die Protestantische Ethik und der Geist des
Kapitalismus was published in two articles in the Archiv fu¨r Sozialwissenschaft und
Sozialpolitik (1904, 1905). At that time, Schumpeter was a student in Vienna, while the
Austrian and German camps were strained because of theMethodenstreit. Chronologically, it coincided with a period in Schumpeter’s life when he was formulating his own theoretical system. Weber attacked Marx’s view according to which the capitalist, armed with new techniques and driven by rationality, had swept away the old traditional methods, and had imposed on society his own Geist deriving from causalities immanent in the specific
Capitalist Mode of Production. For Weber, this was not a realistic picture of the process of capitalist development. Until the middle of the nineteenth century, he argued, modern industry had not displaced the putter-out, whose life was considered to be very comfortable.
Weber viewed the capitalistic form of organisation in connection with capital, entrepreneurial activity and rational control over production. However, he also argued that capitalism reproduced a traditional element: ‘the traditional manner of life, the traditional rate of profit, the traditional amount of work, the traditional manner of regulating the relationships with labour, and the essentially traditional circle of customers and the manner of attracting new ones’.
In this passage, we may detect most of the fundamental elements of Schumpeter’s ideas on the conflict between routine and innovation, characterising the circular flow: we may thus visualize an economic process which merely reproduces itself at constant rates; a given population, not changing in either numbers or age distribution ... the tastes (wants) of households are given and do not change. The ways of production and usages of commerce are optimal from the standpoint of the firm’s interest and with respect to existing horizons and possibilities, hence do not change either, unless some datum changes or some chance event intrudes upon this world.
No other than ordinary routine work has to be done in this stationary society, either by workmen or managers. Beyond this there is, in fact, no managerial function—nothing that calls for the special type of activity which we associate with the entrepreneur... Such a process would turn out, year after year, the same kinds, qualities and quantities of consumers’ and producers’ goods; every firm would employ the same kind and quantities of productive goods and services; finally, all theses goods would be brought and sold at the same prices year after year.
Schumpeter described a stationary capitalist world where any element of change was absent and stationarity was the rule of economic reality. The author stated that the mechanistic repetition of acts was based on the accumulated experience of man : This stationary situation was characterised by perfect competition, complete adjustment to the equilibrium situation, where money acted as a means of payment and no net saving (or credit) existed. Any changes in the economic stratum were undisrupted.
The entrepreneurs took the same decisions. The income was paid to consumer goods already produced. Any supply was counterbalanced by its own demand at the level of prices which covered the unit cost. Money could be absent without deforming the economic phenomena. Apparently, the economic stratum could only alter under pressure.
After presenting the traditional picture, Weber went on to introduce the ‘new’ entrepreneur who intruded into the routine’s tranquillity:
Now at some time this leisureness was suddenly destroyed, and often entirely without any essential change in the form of organization, such as the transition to a unified factory, to mechanical weaving, etc....Some young man from one of the putting-out families went out into the country,carefully chose weavers for his employ, greatly increased the rigour of his supervision of their work, and thus turned them from peasants into labourers. On the other hand, he would begin to change his marketing methods... At the same time he began to introduce the principle of low prices and large turnover.
There was repeated what everywhere and always is theresult of such a process of rationalization: those who would not follow suit had to go out of business. The idyllic state collapsed under the pressure of bitter competitive struggle, respectable fortunes were made, and not lent out at interest, but always reinvested in the business... And what is most important is... the new spirit, the spirit of modern capitalism ... Its entry on the scene was not generally peaceful.
This aspect of capitalism became Schumpeter’s centre of analysis, namely the disturbance to the circular flow.
Schumpeter, just like Weber, believed that every socioeconomic phenomenon came to an end and argued that society was forced to absorb the novelty. In this context, the innovative entrepreneurs began to make higher profits and new businesses were arising under ‘the impulse of the alluring profit’. Through this overthrow of traditional mentality capitalism became dynamic:
However, Schumpeter further developed this idea of changing entrepreneurial mentality by stating that the introduction of the ‘new’ element is accompanied by a ‘destructive’ mentality, ultimately driving the economic climate to stagnation, an idea closely related with Hilferding’s analysis of a ‘latest, monopolistic, phase of capitalism’
In this way, the capitalist lifecycle came to an end because the atmosphere had changed.
Thus, the leader’s characteristics were being undermined in favour of a bureaucratised system. Meanwhile, innovation had become routine and the bourgeoisie as a class constantly lost its self-esteem.
Apparently, Schumpeter’s vision of capitalist dynamic change had several similarities with Weber’s theoretical schema. In other words, the dynamic entrepreneur who broke into the circular flow, equipped with will, energy, and the ideas that paved the way of his success over the old firms was both Weber’s and Schumpeter’s favourite theme.
In what follows, we make an attempt to illustrate some further similarities in the works of the two theoreticians. First, both theories seem to be based on the theoretical construction of ‘thesis–antithesis’, used by the ancient Greek philosophers: for Weber the type of capitalist enterprise, followed by the Protestant ethic was set against the ‘traditionalist’ enterprise, ruled by the Catholic ethic. Schumpeter, on the other hand, regarded his theory as ‘characterized by three corresponding pairs of opposites’, i.e. the circular flow versus the developing economy, ‘statics and dynamics’ and the entrepreneur versus the mere manager.
Second, the innovator is a man of unusual will and energy, and a man with no capital : ‘What have the individuals under consideration contributed to this? Only the will and the action’. The ‘unusually strong character’ and the ‘clarity of vision and the ability to act of Weber’s innovator matched with Schumpeter’s emphasis on ‘the capacity for making decisions’ and the ‘vision to evaluate forcefully”.

Finally, both theoreticians seem to have rejected hedonism as the motivating force behind entrepreneurial action and capital accumulation. In the nineteenth century, especially after the ‘marginalist revolution’ most economists viewed the entrepreneur as motivated by endless greed . However, Weber saw the case
‘where a man exists for the sake of his business instead of the reverse, an attitude resulting from the effect of a sense of duty. For Schumpeter also: ‘[the entrepreneur’s] conduct and his motive are ‘‘rational’’ in no other sense. And in no sense is his characteristic motive of the hedonist kind ...typical entrepreneurs retire from the arena only when and because their strength is spent and they feel no longer equal to the task.
Also, there was the famous ‘dream and the will to found a private kingdom’, the ‘will to conquer’, ‘the joy of creating’ that point to ‘another psychology of non-hedonist character. This thesis was consistent with Weber’s analysis, in which he noted that after the religious motivation was exhausted other motives emerged. Weber wrote: ‘In the field of its highest development, in the United States, the pursuit of wealth ... tends to become associated with purely mundane passions, a thesis that refers to Schumpeter’s ‘dream and ... will to found a private kingdom. It is important to note that Weber referred to the entrepreneur as an ‘innovator’ and that the innovation described fitted Schumpeter’s definition, even despite the absence of any particular element of invention. Weber’s emphasis was on the ‘unusually strong character’ and the ‘highly developed ethical qualities’.
To sum up, according to Weber some extra-economic motive was necessary in order to accomplish the transition to modern capitalism and economic development, and the
Protestant ethic fulfilled this goal. Similarly, Schumpeter emphasised the psychological and ethical dynamics of the different economic acts carried out. The capitalists behaved routinely, while the innovators took the initiative to change the routine themselves, a situation which accounted for capitalist development.1
Of course, some obvious differences between Weber and Schumpeter are to be observed. In this context, whereas Weber saw in the innovator the ‘ideal type’ of the
Protestant, Schumpeter saw the creative entrepreneur.
Another important difference in the work of the two great theoreticians has to do with the dynamics of change. Analytically, on the one hand, Weber’s model of change was
‘continuous’, in the sense that the Protestant leaders introduced their followers to ascetism and their followers pursued their capitalist careers with intensity and rationalism. On the other hand, for Schumpeter the picture was ‘discontinuous’, since innovators made their appearance rather spontaneously, giving rise to waves of technical change and economic development. In other words, an innovation referred to an economy fully adapted to traditional methods, forced it to readopt itself at a higher level as a new period of
‘traditionalism’ ensued, but at a higher level of output. This gave Schumpeter’s approach a dynamic character in which capitalism progressed in discontinuous steps.