Triumph of the new.(books, arts & manners)(Prophet of Innovation: Joseph Schumpeter and Creative Destruction)(Book review)

Prophet of Innovation: Joseph Schumpeter and Creative Destruction, by Thomas K. McCraw (Belknap, 736 pp., $35)

EVERY few years, public interest in innovation and entrepreneurship undergoes something of a revival. We're in one of those periods.

Business pages brim with news of entrepreneurial returns to private equity firms and innovative financial engineering at hedge funds. A new wave of Internet start-ups, such as YouTube and MySpace, reminds the public that entrepreneurs keep creating the "new new thing" that can augment or transform existing business models. A bull market for stocks is renewing interest in financial news and information. George Gilder is once again--we can be thankful--writing big-think pieces about innovation.

Several new books are targeted at readers hungry for a deeper understanding of entrepreneurship. Carl Schramm's The Entrepreneurial Imperative makes a persuasive case for the importance of entrepreneurial dynamism to the long-run health of economies. (The Kauffman Foundation, of which Schramm is president, has done a great job in bolstering awareness of entrepreneurship.) Capital Ideas Evolving, by financial historian Peter L. Bernstein, explains how a new generation of financial entrepreneurs is harnessing academic theory to transform 21st-century Wall Street. There is even a movie: The stunning new film The Call of the Entrepreneur breathes cinematic life into a highly abstract concept.

All of these works find some of their inspiration in the writings of Joseph Schumpeter, the famous Austrian economist who is the subject of an extraordinary new biography. Prophet of Innovation by Thomas K. McCraw chronicles the life of one of the 20th century's most original and insightful scholars.

Like his contemporary and frequent rival John Maynard Keynes, Schumpeter makes for a rich biographical subject. Keynes received the treatment he deserved from Lord Robert Skidelsky's magisterial multi-volume biography. McCraw's effort, similarly, is worthy of Schumpeter.

Schumpeter's story was a rich pageant of both triumph and calamity. His life mirrored the capitalist process of incessant change and reinvention he sought to explicate. He was born in 1883 and lived through the implosion of imperial Europe, the Great Depression, two world wars, and the advent of the Cold War. He lived through a time when, as one historian put it, "the medieval and modern orders collided head-on."