Capitalism, Socialism, and Democracy

Capitalism, Socialism, and Democracy

Capitalism, Socialism, and Democracy

Capitalism, Socialism, and Democracy


Capitalism, Socialism and Democracyremains one of the greatest works of social theory written this century. When it first appeared the New English Weeklypredicted that 'for the next five to ten years it will cetainly remain a work with which no one who professes any degree of information on sociology or economics can afford to be unacquainted.' Fifty years on, this prediction seems a little understated.

Why has the work endured so well? Schumpeter's contention that the seeds of capitalism's decline were internal, and his equal and opposite hostility to centralist socialism have perplexed, engaged and infuriated readers since the book's publication. By refusing to become an advocate for either position Schumpeter was able both to make his own great and original contribution and to clear the way for a more balanced consideration of the most important social movements of his and our time.


This is a book to be read not for the agreement or disagreement it provokes but for the thought it invokes.

John Kenneth Galbraith

Capitalism, Socialism and Democracy is one of the great classics in twentieth century social science. What makes Schumpeter’s book so brilliant are three things in particular: its novel view of democracy; its heretic analysis of the workings of the capitalist economy; and its provocative argument that capitalism is bound to disappear—not because of its failure, but because of its success. Schumpeter’s style, it should be emphasized, also makes the book a pleasure to read: “Even if, in places, you may dislike what Schumpeter says”, as one reviewer put it, “you will like the way he says it”. In this introduction I shall say, first, a few words about the writing of Capitalism, Socialism and Democracy and its place in Schumpeter’s output as a whole (Part I). I shall provide then a reader’s guide to Schumpeter’s book, which may be of assistance to those who are approaching it for the first time. This will also enable the hurried reader to go straight to the most important parts of Capitalism, Socialism and Democracy (Part II). The third and final part of the introduction deals with the contemporary relevance of Schumpeter’s work. Schumpeter, for example, argued that socialism is about to replace capitalism—an opinion that seems totally wrong today, especially after the disintegration of state socialism in the Soviet Union and East-Central Europe (Part III).


The story of how Schumpeter came to write Capitalism, Socialism and Democracy can be sketched in a few lines. Towards the end of the 1930s, Schumpeter decided to write a small book on socialism. To cite his wife, Elizabeth Boody Schumpeter: “J.A.S. had finished his monumental Business Cycles in 1938 and sought relaxation in Capitalism, Socialism and Democracy, which he regarded as a distinctly ‘popular’ offering that he expected to finish in a few months.” Schumpeter’s book, however, took longer to complete than he had expected, and it was not published until 1942. It was very well received, both in England and in the United States, and its reputation grew as further editions were published in 1947 and 1950. Today, according to John Kenneth Galbraith, Capitalism, Socialism and Democracy is the main work by which Schumpeter is remembered.

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