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Business Cycles was Joseph Schumpeter's least successful book, measured by its professed aims and several other yardsticks. Yet the book has two vital aspects that have largely been overlooked. First, the prodigious research that went into its writing caused a significant change in Schumpeter's thinking about capitalism. It moved him to a more historical and empirical approach that shaped nearly all his subsequent work. And second, much of the book constitutes a preview of modern, rigorous business history. This article explores both of these elements-not in the spirit of rescuing a neglected classic, because the book is not a classic. Instead, Business Cycles is a noble failure that paid unexpected dividends both to the author and to scholarship.
In 1939, Schumpeter published his two-volume, 1,095-page tome, Business Cycles, after more than seven years of concentrated research. He was fifty-six years old at the time and had been a professor at Harvard since 1932. He was well known throughout the world, having published scores of articles, over seventy book reviews, and three books, including the brilliant Theory of Economic Development (1911; English translation, 1934).1
Schumpeter struggled mightily with the research and writing of Business Cycles. As he told his friend and fellow cycle theorist Wesley Clair Mitchell in 1937, "In order to carry out so detailed an investigation as would be necessary I would have to have a whole research staff working for me." To another friend, he wrote, "I am still a slave to my manuscript and for instance . . . worried last night till 2 A.M., on such questions as whether potatoes were important enough in Germany in 1790 to count in the business cycle."2
Even as he wrote the book, he pursued many other activities. As the undisputed star of the Economics Department, he entertained a stream of visiting scholars, led several faculty discussion groups, spent prodigal amounts of time counseling graduates and undergraduates, and taught a heavy load of courses. He also devoted considerable energy to a second big project-a book on money-but decided to defer (and ultimately to abandon) that effort. By the time he neared completion of Business Cycles, he was "in a state of perfect exhaustion," as he wrote in June 1937. Early in 1938, he reported...