Schumpeter

from: Denis Huisman, Dictionnaire des 1000 oeuvres-clés de la Philosophie, ed.Nathan, 2010.

entry for J. A. Schumpeter, 1883-1950, Capitalism, Socialism, andDemocracy.
translation By Doxa-l.

An outstanding theoretician of Capitalism, Schumpeter thinks that, sadly, capitalism cannot survive but that socialism might well be workable. Defining capitalism not in terms of equilibria but rather in dynamic terms, he shows that the disequilibria such a system can generate (for example,a cyclic crisis) do not signify its demise but, on the contrary, an acceleration,the disequilibria being factors contributing to growth. The essential role within capitalism is held by the entrepreneur, a dynamic, audacious business man, who makes investment decisions. Thus Schumpeter does not reduce capitalism to its sole eocnomic aspects; he adds in psychological considerations.

Not himself a marxist but conscious of «the unique importance of Marx’s message», Schumpeter is convinced, as is the communist theoretician, of the eventual demise of capitalism, although there persists between the two men a fundamental difference as to the mechanism of this demise : «Capitalism, writes the author, is being killed by its very successes.» From a strictly economic point of view, capitalism can maintain itself, even if the possibilities for investment are modified. What ruins capitalism, what destroys it from the inside, is the exhaustion of the bourgeoisie. The spirit which animated capitalism initially and found expression with the entrepreneur dies down to leave values of security and pleasure-seeking. Technical progrees, which fosters rationalization, gives more power to the specialist and tends to diminish, by lowering rates of profit, the revenues of capitalists who, progressively, are renumerated in a fashion analogous to, bureaucrats. Thus bureaucracy tends to dominate, leaving innovation behind.

Schumpeter concludes that capitalism will eventually lead to a planning-model, a form of socialism. Nonetheless, he does not wish for a marxist form of socialism, but a democracy which would reward competence, a new form of democracy where will be selected, in a competitive manner and at least cost, elites.