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Private, for-profit ownership controls a nation’s industry
- Schumpeter argues that capitalism, where private, for-profit ownership controls a nation’s industry, will be eventually replaced by socialism, an economic system based on the public, state ownership of industry.
www.supersummary.com/capitalism-socialism-and-democracy/summary/
Jan 4, 2020 · The book Capitalism, Socialism and Democracy is primarily about the sustainability or rather the inevitability of the socialism. He saw the ultimate success of capitalism as the cause of its own destruction.
May 7, 2007 · If capitalism was the most influential single economic and social force of the 20th century (and continuing today), there is no better guide to understanding its power and complexity than famed economist Joseph Schumpeter, says Harvard Business School's Thomas K. McCraw.
Schumpeter's theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals.
- Joseph Alois Schumpeter
- 1942
Capitalism, Socialism and Democracy is a work of economics and political theory by Austrian born economist Joseph A. Schumpeter, originally published in 1942. Schumpeter argues that capitalism, where private, for-profit ownership controls a nation’s industry, will be eventually replaced by socialism, an economic system based on the public ...
- In Brief
- Chapter 21
- Chapter 22: Schumpter's Procedural Theory
- Chapter 23
Schumpeter is best known for advocating a procedural definition of democracy. Though his book touches on other points, the following summary focuses on those sections of his book.
In this chapter, Schumpter sets the stage for his "proceduralist" definition of democracy by criticizing the implications of "the eighteenth-century philosophy of democracy," which is this: "The democratic method is that institutional arrangement for arriving at political decisions which realizes the common good by making the people itself decide i...
Part I:
1. In classical theory (criticized above), each citizen has a rational opinion about every issue. Each citizen votes for a representative to carry out his opinion. Thus, selecting a representative is "secondary." 2. New theory reverses these roles: "The democratic method is that institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a comeptitive struggle for the people's vote" (269). 3. Strengths: (1) Establishes a clearer c...
Part II:
1. Presidents and prime ministers alike compete for the national vote. Even where the parliament appears to select a prime minister, it often has little choice but to pick the person with a national following. 2. Even though parliaments do pass laws and administrative acts, this is done in the same sense that an army takes a strategic hill: it is to keep its own "army" advantaged to win the fight. Passing bills "is the very method by which Parliament accepts or refuses to accept the Prime Min...
Part I: Implications of Schumpeter's new theory
1. Democracy, then, is not rule by the people, but rather rule by politicians, who compete freely for the people's vote. Politics has become a career. 2. Thus, politicians deal in votes just as businessmen deal in oil (285), forcing them to focus on short-term political goals over long-term policy planning. This is especially true of prime ministers who must constantly be sure that a piece of legislation doesn't lead to loss of confidence (as opposed to the US president, who has a bit more fr...
Part II: Four conditions for success
These conditions for democracy's success apply only to "great industrial nations of the modern type" (290). 1. There must be enough high quality people (ability and moral character) willing to run for office. One way to ensure this is if politics tends to be the game of a selective social stratum (291). If the "high quality" people shun politics (as in Weimar German), you've got problems. 2. Politicians should be able to make decisions on only a limited range of issues. Not that constitutions...
Schumpeter believed that capitalism would be destroyed by its successes, that it would spawn a large intellectual class that made its living by attacking the very bourgeois system of private property and freedom so necessary for the intellectual class’s existence.
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Joseph Schumpeter (1883–1950) coined the seemingly paradoxical term “creative destruction,” and generations of economists have adopted it as a shorthand description of the free market ’s messy way of delivering progress. In Capitalism, Socialism, and Democracy (1942), the Austrian economist wrote:
