Schumpeter and the Transformation of Capitalism, Liberalism and Democracy
`Schumpeter, and the Transformation of Capitalism, Liberalism and Democracy', Government and Opposition, 26, (1991), pp. 500-19
22 Pages Posted: 29 Dec 2014
Date Written: December 26, 2014
Abstract
Re-reading Schumpeter's classic Capitalism, Socialism and Democracy in the present context is a curious but, I believe, sobering experience. A liberal and a capitalist, Schumpeter nevertheless believed the future lay with socialism. Following Weber, he maintained that the increasingly cartelized and monopolistic character of capitalism had eroded the function of the entrepreneur and made its transformation into the bureaucratic type of social organization he associated with socialist states inevitable. He assumed the public acquisition of the means of production and exchange would be a mere formality. Unlike Weber, he thought the difficulties facing a centrally planned economy had been exaggerated and were remediable. Moreover, he contended that a centralized state was well adapted to the only form of democracy likely to survive in the complex mass societies of the modern world - namely, a plebiscitary contest between rival party leaders for the right to rule. Such conclusions fly in the face of much contemporary wisdom. However, further reflection reveals them to have more substance than might at first appear.
Keywords: Schumpeter, Democracy, Liberalism, Capitalism
JEL Classification: B31
Suggested Citation: Suggested Citation