本篇英国essay代写-Capitalism, Socialism and Democracy讲了没有经济学家和思想家奉献自己的生命去追求分析，探索和体现人类社会进化本质的最佳方法。约瑟夫•熊彼特是伟大的经济学家之一，熊彼特出生于十九世纪末，亲身经历了两次世界大战，那是人类文明最动荡的时期。本篇essay代写由51due代写平台整理，供大家参考阅读。
Since the evening of the Age of Enlightenment, there has been no lack of economists and thinkers who dedicate their lives to pursuing the best ways to analyze, explore, and exemplify the essence of the evolution of human society. Joseph A. Schumpeter is one of these great economists. Born in the late 19th century, Schumpeter witnessed two world wars, went through the most turbulent period of time in human civilization, and left the world with rich legacies of economic theories that can stand the test of time. Schumpeter articulately expresses his world-view in his undoubtedly most original and representative works – Theory of Economic Development and Capitalism, Socialism and Democracy. The first-hand experience of the unbalanced and volatile economic development period of “postmodernism” together with his historical insight of the radical industrial expansion in Europe over the major course of his life are the two primary factors shaping his view of economic and sociopolitical development, and the influence of popular Marxist teachings on the crisis-prone nature of capitalism is also indispensable. Capitalist economic growth had created unprecedented levels of economic achievement, in spite of capitalist economy has been going through booms and crises, prosperity and depression. Schumpeter explores the sociopolitical meaning of capitalist economic development in exchange, production, and consumption, and dedicates his last work to demonstrating the complex relationships among capitalism, socialism and democracy. This essay will discuss the most distinct ideas of Capitalism, Socialism and Democracy, analyze the advantages and disadvantages of these ideas, and evaluate the relevancy of these ideas in the economic world nowadays.
In Capitalism, Socialism and Democracy, Schumpeter mainly discusses three major issues, namely “Can capitalism survive?” “Can socialism work?” and “socialism and democracy.” Capitalism is certainly the focus among these ideas. The argumentation in this book is clear to follow and as his last work, it blends the ideas and theories he had had before, the concept of Creative Destruction from the Theory of Economic Development is one of the prime examples. Schumpeter dedicates the first section to Marxian doctrine and holds a critical review on his theories. After this, Schumpeter begins to demonstrate his ideas on three principal issues in an easy-to-follow logic and then concludes with a brief historical sketch of representative socialist from late 19th century.
Among Schumpeter’s various contributions to economic theories and political ideas, the most enduring legacy lies in the chapter from Capitalism, Socialism, and Democracy entitled “The Process of Creative Destruction”
“…the same process of industrial mutation — if I may use that biological term — that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.” (Schumpeter 83)
Even though Schumpeter only writes a six-page chapter to illustrate his thought on “The Process of Creative Destruction,” this does not affect the importance of this concept in the understanding of capitalism as “the perennial gale of creative destruction,” and this idea has then developed into the pillar of the way to analyze how modern economies evolve (Cox and Alm par.3). The theory of creative destruction appears to be a paradoxical term, which has been an indispensable concept of standard economic theory since the publication of Capitalism, Socialism, and Democracy. This particular chapter gives a constructive view of capitalism that will eventually become a form of corporatism and sound its own knell. Being a dynamic and evolutionary process, the driving force behind such constant state of capitalism is the emergence of new methods of production, the exploitation of new markets, and improved organizational system (Schumpeter 84). Different from traditional view of capitalism which is characterized by various competitions deriving from price, production methods, and organizational structures, the competitive force pointed out by Schumpeter stresses its destructive nature. Destructive competition therefore is perceived as a more drastic means to destroy the inefficient firms on the market. Destructive competition therefore acts as a revolutionary force that change the internal structures of capitalism. Proceeding onto the road to destruction, Schumpeter writes the entrepreneurial class, which fuels the dynamic capitalist system, is becoming less influential as he suggests, “economic progress tends to become depersonalized and automatized” (133). When the rise of corporate boards and shareholders that exemplifies Schumpeter’s judgment to a great extent is in the making, the stagnation of capitalist is not far behind.
Another important concept put forward by Schumpeter in the section “Can capitalism survive” is the indispensable role played by innovative entrepreneurs and intellectuals. Schumpeter argues that entrepreneurs are the driving force that sustained long-term economic development, even though it demolish the value of old companies that possess some degree of monopoly influence. The higher entrance barriers force new entrepreneurs to be drastically different from the established companies. The competition and threat bring by new players in the market will keep monopolists disciplined and competitive, push them to invest their retained earnings in new technologies and ideas (Rogge par. 1.1.11). Such innovative quality is what Schumpeter believes to be the explanation for why capitalism is an effective economic system (Rogge par. 1.1.11). Therefore according to Schumpeter’s argumentation, apart from competition, entrepreneurship also fuels creative destruction. In order to meet the profit target and make themselves better off, entrepreneurs pursue and introduce new ideas and technologies (Cox and Alm par.11). Existing goods and services, established industries and firms are forced to compete with “newcomers” that attract customers with new features, lower prices, higher quality and better service (Cox and Alm par.11). In this regard, even though it seems like to be contradictory to the notion of creative destruction, entrepreneurs’ chase of self-interest fuels the progress that improve the status quo (Cox and Alm par.11). In addition to that the increasing richness of a mature capitalist society enables a continuous expansion in systems of higher education and in turn in the number of the intellectuals. In fact, in 1942 Schumpeter predictively foresaw the surplus of intellectuals compared to the existing employment opportunities (Rogge par. 1.1.32). As income and prestige are equal to the self-evaluations of these people, Schumpeter argues that the intellectuals will blame the capitalist system for such inequality, and such grudge will become the impetus to their already existing critical view of the system. In addition to that, the wider the income gap between their own and those of the businessmen, the more inclined they will become so as to find ego-restoring explanations of the businessman’s success (Rogge par. 1.1.32). Schumpeter describes this kind of rationalization as “the auto-therapy of the unsuccessful”. Digging from every possible angle, Schumpeter vividly depicts the capitalist system to readers and creatively conveys his thoughts on the destiny of such a democratic system.
Admittedly, Schumpeter is the one who arrives at the well-known paradox that capitalism perishes of its achievements instead of its failures. Many Marxists, however, only acknowledge the first half of the theory that socialism stems inevitably from capitalism without addressing the reasoning for that idea. Much of that is owing to an inadequate appreciation of the economic and social effects of capitalist development. Marx and Schumpeter both project the inevitable collapse of the capitalist system. What makes these two thinking systems different is that Marx foresees such disintegration results from proletariat revolution but Schumpeter denies the chance of such revolution and argues that the “actual and prospective performance” of capitalism is strong, and unlikely to be defeated. What Schumpeter has in mind on this aspect, however, is these same successes possess the power to eventually demolish the social institutions that are necessary for its sustainable survival. That is when new conditions will surface and socialism will inevitably become the dominant economic system. Schumpeter's theory is that the intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism and eventually it will be replaced by socialism in some form. Revolution is not the necessary ingredient in the whole process, but the election of social democratic parties to become part of the parliaments should suffice the transition. He argued that capitalism’s collapse from within will become a reality when majorities vote for the creation of a welfare state and place more restrictions upon entrepreneurship that has the potential to burden and eventually destroy the capitalist structure. Throughout Capitalism, Socialism and Democracy, Schumpeter emphasizes one critical thing that as an economist, he is analyzing trends, not engaging in any kind of political advocacy. That is why he can discuss both capitalist and socialist economy in a forward-looking and balanced way.
No theory is flawless and Schumpeter’s theories and ideas are no exception. The main problem with Schumpeter’s theories on this score is that he is contradicted by reality on several points. His contention about capitalism comprises primarily of two parts which should be treated separately: firstly an understanding of how capitalist economy works, and secondly the argument that the very success of capitalism will be its own undoing. His famous argument that because of a variety of institutional changes, capitalism would be certain to go under, does not pan out six decades later: the emergence of modern corporate system, the innovative intellectuals and the old notion of property do nothing but enhance the function of capitalist economy in a better and more balanced way. Even though the transition of capitalism into socialism plausibly make sense, Schumpeter failed to anticipate the failure of socialism in East Europe in early 1990s nor did he foreknew the boom of technology since 1980s largely fosters entrepreneurship and innovation in the Western world (Henrekson and Jakobsson 1). Schumpeter’s argument is the primary function of technology would only help large corporations concentrate ownership and wealth. He did not clearly state whether innovation is ignited by monopoly or by the chance of becoming a monopoly as the reward of being innovative (“Joseph Alois Schumpeter” par.6). Many modern-day economists agree with the latter contention, and against this theoretic background, they believe corporations need to have their trade secret protected from infringement by strict law and regulation (“Joseph Alois Schumpeter” par.6). Failure in projection of future reality is unavoidable to some extent but solely focusing on the flaw of theories is a surefire way to a biased understanding of Schumpeter’s contribution to the economic and sociopolitical world.
Schumpeter has a unique and accurate perception about the growth pattern of capitalist economy and his possession of such insight enables him to make penetrating assumptions on economic growth and even sociopolitical trend. This is what contributes to the intellectual strength of his ideas. He articulately illustrates that instead of being mild and gradual, capitalist economic progress takes a disjointed form. “The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process” (Schumpeter 82). To see capitalism through an evolutionary lens, Schumpeter explains that entrepreneurs’ entry to markets is as innovative a force as it is disruptive in sustaining economic development (Cox and Alm par.7). However, Schumpeter concerns that the break of organizational, regulatory, and economic paradigms will undermine the sustainability of normal economic progress and eventually take down the institutional frameworks of capitalism (Cox and Alm par.7). To project the tomorrow of capitalist economy in such a worrying tone takes unusual courage and wisdom. Schumpeter’s insistence is rewarded with Creative Destruction being known as an essential and powerful economic concept in capitalist economy. As a potent theory, Creative Destruction stresses that change is the one constant in capitalism and can explain various dynamics and kinetics of changes in capitalist economy such as the transaction between a monopolistic market and a competitive one. Schumpeter’s insightful understanding of capitalist economy has been the source of evolutionary economics. Lost jobs, bankrupt companies and vanishing industries all necessarily result from the innate character of the growth pattern of capitalist economy. Theory put forward six decades ago is still true in today’s economies among which the more effective creative destruction operates the more productive and powerful the society becomes and the better standard of living the citizens can enjoy. In addition to that, Schumpeter’s firm attacks on assorted illusions are especially worthy in regards to the discussion of capitalist economy and democracy. He holds critical opinions to the then current (and present) inclination of various economists who advocate a formalistic and static concept of competition therefore fail to understand that the essential element make up of capitalism is change. Schumpeter also points out in his book that being critical participants of democracy life of a society, politicians have their own distinct interests, and in order to depict a realistic picture of how a democracy works politicians’ interests must be taken into consideration. Appling his ideas in the democracy world today, it is not hard to find out that there exists a positive correlation between the value of democracy perceived by the population and the chances of the hierarchical and authoritarian type of democracy being challenged. Therefore, it is no exaggeration to say that the relevance of Schumpeter’s ideas for our understanding of today’s economy is inextricably link to its intellectual advantages.
The achievements of capitalism are much more dramatic today compared to the time when Capitalism, Socialism and Democracy was published for the first time in 1942, while the introduction of socialism in the Western world has vanished from the political agenda in democratic societies. However, the drastic social movement in late 20th century does not devalue the validity of Schumpeter’s prophecy of socialism’s replacement of capitalism (Henrekson and Jakobsson 2). National diversity should be taken into account to verify the idea where Schumpeter emphasizes it is unlikely for different nations to take the same course to socialism (Henrekson and Jakobsson 2). Such creative thought can help us to understand the rise of China as an important economic and geopolitical power in 21st century. As the largest socialistic nation in the world, China is increasingly playing an influential role in world economy today. Democratic socialism is not an illusion and Schumpeter takes credit for remain his objectivity in this regard. Socialist democracy is no less stable than its capitalist counterpart, because there is no lack of rational market in such an economy. The modern-day China is the prime example on this score. The thriving new market in the oriental world provides the world with strong economic powerhouse. China’s success manifests Schumpeter’s deduction about the efficiency of price mechanism in a socialist society and proves that such an economic tool can function as well as in a capitalist society. Centralization and decentralization are not absolute. Just as North America and some European countries have mixed economy, socialist nation such as China has been move towards distinct forms of decentralization of market economy. Reading through the book can certainly help us gain an in-depth understanding of the role China is playing in the world economy today.
The issues that Schumpeter discusses six decades ago still have the value to be thoroughly investigated and debated in this new context. The time when Capitalism, Socialism and Democracy was published was a particularly turbulent and dramatic period of time in regard to war-torn state of major countries and drastic social movement afterwards. Destruction breeds new norm. Today’s global economies face the economic war that brings by the unprecedented trend of globalization. Through this constant roiling of the status quo, Creative Destruction provides a powerful force for making societies wealthier by a staggering gain in productivity. Coincidently, Jack Ma’s keynote speech on the 2016 Shanghai Forum Themed Zhejiang Entrepreneurs in the World stresses the value of the six decades old classic theory. One of the themes in Jack Ma’s speech is changes that can happen to today’s societies and entrepreneurs’ indispensable role in this sea changing era. This discussion undoubtedly exemplifies Schumpeter’s insight in coining the term Creative Destruction. Ma regards the 21st century as an era of change where excellent enterprises seek opportunities to boost their value to society after they went through a process of destruction. As a successful entrepreneur himself, Ma talks about the benefit of seeing painful destruction as rare opportunities for transition and the advantage to embrace technology revolution. Schumpeter may not foresee the powerful creation of the Internet, but he did project such revolutionary force can bring new norm to organizational system, corporate world, and the world economy. For the past two decades, the Internet is the major catalyst for the raise of many giant corporations such as Facebook, Google, and Apple in the United State, and the same technology breeds various Internet giant in China as well, for example, Tencent, Baidu, and Huawei. Some critics attack that the Internet in China is a mutated version of its capitalist economy counterparts. What these critics try to devalue is the fact that creative destruction can take place in an equally effective way in a socialist economy as in a capitalist economy in the new globalization context. It is arguably true that after read Schumpeter’s classic work, such myopic and biased view will eventually collapse.
Capitalism, Socialism and Democracy is an undisputedly classic and prescient work of 20the century. It is an essential reading for those who are interested in finding out the direction towards which the world economy is heading. In this sagacious book, Schumpeter illustrates the notion of “Creative Destruction” to the world and it is through this very concept the way to perceive and project global economic trend has been changed. Regarding Capitalism, Socialism, and Democracy as a mere forecast of capitalism’s future is rather a short view. The book also discusses about the virtues of capitalism and is in defense of the entrepreneurship and innovation capitalist economy breeds. There is no denying the fact that Schumpeter is one of the first to depict the concept of entrepreneurship and distinguishes that entrepreneur innovation is in introducing new means of production and forms of organization. Public reaction to Capitalism, Socialism, and Democracy was not totally heartening, and readers hold different views against Schumpeter’s main argument that the seeds of capitalism's recession are innate and his hostility towards centralist socialism. It is through staying true to his own ideas and refusing to advocate for either side that Schumpeter contributes to the world his great and original thoughts about economics and social issues. In so doing, Schumpeter paves the way for a more balanced consideration of the most influential economic concerns and social movements of his and our time. There is no exaggeration to say that the masterpiece produced six decades ago can still be considered as a lighthouse guiding our understanding of modern-day economic development around the globe.
Works Cited
Cox, W. Michael and Richard Alm. “Creative Destruction.” The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty,
Henrekson, Magnus, and Ulf Jakobsson. “Where Schumpeter was Nearly Right – the Swedish Model and Capitalism, Socialism and Democracy.”
“Joseph Alois Schumpeter.” The Concise Encyclopedia of Economics. 2008.
Ma, Jack. 2016 Shanghai Forum Themed Zhejiang Entrepreneurs in the World, Zhejiang Federation of Industry and Commerce, 19 November 2016, Shanghai. Keynote Address.
Rogge, Benjamin A. Can Capitalism Survive? 1979.
Schumpeter, Joseph A. Capitalism, Socialism, and Democracy. 1994. Taylor & Francis e-Library, 2003.
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Since the evening of the Age of Enlightenment, there has been no lack of economists and thinkers who dedicate their lives to pursuing the best ways to analyze, explore, and exemplify the essence of the evolution of human society. Joseph A. Schumpeter is one of these great economists. Born in the late 19th century, Schumpeter witnessed two world wars, went through the most turbulent period of time in human civilization, and left the world with rich legacies of economic theories that can stand the test of time. Schumpeter articulately expresses his world-view in his undoubtedly most original and representative works – Theory of Economic Development and Capitalism, Socialism and Democracy. The first-hand experience of the unbalanced and volatile economic development period of “postmodernism” together with his historical insight of the radical industrial expansion in Europe over the major course of his life are the two primary factors shaping his view of economic and sociopolitical development, and the influence of popular Marxist teachings on the crisis-prone nature of capitalism is also indispensable. Capitalist economic growth had created unprecedented levels of economic achievement, in spite of capitalist economy has been going through booms and crises, prosperity and depression. Schumpeter explores the sociopolitical meaning of capitalist economic development in exchange, production, and consumption, and dedicates his last work to demonstrating the complex relationships among capitalism, socialism and democracy. This essay will discuss the most distinct ideas of Capitalism, Socialism and Democracy, analyze the advantages and disadvantages of these ideas, and evaluate the relevancy of these ideas in the economic world nowadays.
In Capitalism, Socialism and Democracy, Schumpeter mainly discusses three major issues, namely “Can capitalism survive?” “Can socialism work?” and “socialism and democracy.” Capitalism is certainly the focus among these ideas. The argumentation in this book is clear to follow and as his last work, it blends the ideas and theories he had had before, the concept of Creative Destruction from the Theory of Economic Development is one of the prime examples. Schumpeter dedicates the first section to Marxian doctrine and holds a critical review on his theories. After this, Schumpeter begins to demonstrate his ideas on three principal issues in an easy-to-follow logic and then concludes with a brief historical sketch of representative socialist from late 19th century.
Among Schumpeter’s various contributions to economic theories and political ideas, the most enduring legacy lies in the chapter from Capitalism, Socialism, and Democracy entitled “The Process of Creative Destruction”
“…the same process of industrial mutation — if I may use that biological term — that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.” (Schumpeter 83)
Even though Schumpeter only writes a six-page chapter to illustrate his thought on “The Process of Creative Destruction,” this does not affect the importance of this concept in the understanding of capitalism as “the perennial gale of creative destruction,” and this idea has then developed into the pillar of the way to analyze how modern economies evolve (Cox and Alm par.3). The theory of creative destruction appears to be a paradoxical term, which has been an indispensable concept of standard economic theory since the publication of Capitalism, Socialism, and Democracy. This particular chapter gives a constructive view of capitalism that will eventually become a form of corporatism and sound its own knell. Being a dynamic and evolutionary process, the driving force behind such constant state of capitalism is the emergence of new methods of production, the exploitation of new markets, and improved organizational system (Schumpeter 84). Different from traditional view of capitalism which is characterized by various competitions deriving from price, production methods, and organizational structures, the competitive force pointed out by Schumpeter stresses its destructive nature. Destructive competition therefore is perceived as a more drastic means to destroy the inefficient firms on the market. Destructive competition therefore acts as a revolutionary force that change the internal structures of capitalism. Proceeding onto the road to destruction, Schumpeter writes the entrepreneurial class, which fuels the dynamic capitalist system, is becoming less influential as he suggests, “economic progress tends to become depersonalized and automatized” (133). When the rise of corporate boards and shareholders that exemplifies Schumpeter’s judgment to a great extent is in the making, the stagnation of capitalist is not far behind.
Another important concept put forward by Schumpeter in the section “Can capitalism survive” is the indispensable role played by innovative entrepreneurs and intellectuals. Schumpeter argues that entrepreneurs are the driving force that sustained long-term economic development, even though it demolish the value of old companies that possess some degree of monopoly influence. The higher entrance barriers force new entrepreneurs to be drastically different from the established companies. The competition and threat bring by new players in the market will keep monopolists disciplined and competitive, push them to invest their retained earnings in new technologies and ideas (Rogge par. 1.1.11). Such innovative quality is what Schumpeter believes to be the explanation for why capitalism is an effective economic system (Rogge par. 1.1.11). Therefore according to Schumpeter’s argumentation, apart from competition, entrepreneurship also fuels creative destruction. In order to meet the profit target and make themselves better off, entrepreneurs pursue and introduce new ideas and technologies (Cox and Alm par.11). Existing goods and services, established industries and firms are forced to compete with “newcomers” that attract customers with new features, lower prices, higher quality and better service (Cox and Alm par.11). In this regard, even though it seems like to be contradictory to the notion of creative destruction, entrepreneurs’ chase of self-interest fuels the progress that improve the status quo (Cox and Alm par.11). In addition to that the increasing richness of a mature capitalist society enables a continuous expansion in systems of higher education and in turn in the number of the intellectuals. In fact, in 1942 Schumpeter predictively foresaw the surplus of intellectuals compared to the existing employment opportunities (Rogge par. 1.1.32). As income and prestige are equal to the self-evaluations of these people, Schumpeter argues that the intellectuals will blame the capitalist system for such inequality, and such grudge will become the impetus to their already existing critical view of the system. In addition to that, the wider the income gap between their own and those of the businessmen, the more inclined they will become so as to find ego-restoring explanations of the businessman’s success (Rogge par. 1.1.32). Schumpeter describes this kind of rationalization as “the auto-therapy of the unsuccessful”. Digging from every possible angle, Schumpeter vividly depicts the capitalist system to readers and creatively conveys his thoughts on the destiny of such a democratic system.
Admittedly, Schumpeter is the one who arrives at the well-known paradox that capitalism perishes of its achievements instead of its failures. Many Marxists, however, only acknowledge the first half of the theory that socialism stems inevitably from capitalism without addressing the reasoning for that idea. Much of that is owing to an inadequate appreciation of the economic and social effects of capitalist development. Marx and Schumpeter both project the inevitable collapse of the capitalist system. What makes these two thinking systems different is that Marx foresees such disintegration results from proletariat revolution but Schumpeter denies the chance of such revolution and argues that the “actual and prospective performance” of capitalism is strong, and unlikely to be defeated. What Schumpeter has in mind on this aspect, however, is these same successes possess the power to eventually demolish the social institutions that are necessary for its sustainable survival. That is when new conditions will surface and socialism will inevitably become the dominant economic system. Schumpeter's theory is that the intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism and eventually it will be replaced by socialism in some form. Revolution is not the necessary ingredient in the whole process, but the election of social democratic parties to become part of the parliaments should suffice the transition. He argued that capitalism’s collapse from within will become a reality when majorities vote for the creation of a welfare state and place more restrictions upon entrepreneurship that has the potential to burden and eventually destroy the capitalist structure. Throughout Capitalism, Socialism and Democracy, Schumpeter emphasizes one critical thing that as an economist, he is analyzing trends, not engaging in any kind of political advocacy. That is why he can discuss both capitalist and socialist economy in a forward-looking and balanced way.
No theory is flawless and Schumpeter’s theories and ideas are no exception. The main problem with Schumpeter’s theories on this score is that he is contradicted by reality on several points. His contention about capitalism comprises primarily of two parts which should be treated separately: firstly an understanding of how capitalist economy works, and secondly the argument that the very success of capitalism will be its own undoing. His famous argument that because of a variety of institutional changes, capitalism would be certain to go under, does not pan out six decades later: the emergence of modern corporate system, the innovative intellectuals and the old notion of property do nothing but enhance the function of capitalist economy in a better and more balanced way. Even though the transition of capitalism into socialism plausibly make sense, Schumpeter failed to anticipate the failure of socialism in East Europe in early 1990s nor did he foreknew the boom of technology since 1980s largely fosters entrepreneurship and innovation in the Western world (Henrekson and Jakobsson 1). Schumpeter’s argument is the primary function of technology would only help large corporations concentrate ownership and wealth. He did not clearly state whether innovation is ignited by monopoly or by the chance of becoming a monopoly as the reward of being innovative (“Joseph Alois Schumpeter” par.6). Many modern-day economists agree with the latter contention, and against this theoretic background, they believe corporations need to have their trade secret protected from infringement by strict law and regulation (“Joseph Alois Schumpeter” par.6). Failure in projection of future reality is unavoidable to some extent but solely focusing on the flaw of theories is a surefire way to a biased understanding of Schumpeter’s contribution to the economic and sociopolitical world.
Schumpeter has a unique and accurate perception about the growth pattern of capitalist economy and his possession of such insight enables him to make penetrating assumptions on economic growth and even sociopolitical trend. This is what contributes to the intellectual strength of his ideas. He articulately illustrates that instead of being mild and gradual, capitalist economic progress takes a disjointed form. “The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process” (Schumpeter 82). To see capitalism through an evolutionary lens, Schumpeter explains that entrepreneurs’ entry to markets is as innovative a force as it is disruptive in sustaining economic development (Cox and Alm par.7). However, Schumpeter concerns that the break of organizational, regulatory, and economic paradigms will undermine the sustainability of normal economic progress and eventually take down the institutional frameworks of capitalism (Cox and Alm par.7). To project the tomorrow of capitalist economy in such a worrying tone takes unusual courage and wisdom. Schumpeter’s insistence is rewarded with Creative Destruction being known as an essential and powerful economic concept in capitalist economy. As a potent theory, Creative Destruction stresses that change is the one constant in capitalism and can explain various dynamics and kinetics of changes in capitalist economy such as the transaction between a monopolistic market and a competitive one. Schumpeter’s insightful understanding of capitalist economy has been the source of evolutionary economics. Lost jobs, bankrupt companies and vanishing industries all necessarily result from the innate character of the growth pattern of capitalist economy. Theory put forward six decades ago is still true in today’s economies among which the more effective creative destruction operates the more productive and powerful the society becomes and the better standard of living the citizens can enjoy. In addition to that, Schumpeter’s firm attacks on assorted illusions are especially worthy in regards to the discussion of capitalist economy and democracy. He holds critical opinions to the then current (and present) inclination of various economists who advocate a formalistic and static concept of competition therefore fail to understand that the essential element make up of capitalism is change. Schumpeter also points out in his book that being critical participants of democracy life of a society, politicians have their own distinct interests, and in order to depict a realistic picture of how a democracy works politicians’ interests must be taken into consideration. Appling his ideas in the democracy world today, it is not hard to find out that there exists a positive correlation between the value of democracy perceived by the population and the chances of the hierarchical and authoritarian type of democracy being challenged. Therefore, it is no exaggeration to say that the relevance of Schumpeter’s ideas for our understanding of today’s economy is inextricably link to its intellectual advantages.
The achievements of capitalism are much more dramatic today compared to the time when Capitalism, Socialism and Democracy was published for the first time in 1942, while the introduction of socialism in the Western world has vanished from the political agenda in democratic societies. However, the drastic social movement in late 20th century does not devalue the validity of Schumpeter’s prophecy of socialism’s replacement of capitalism (Henrekson and Jakobsson 2). National diversity should be taken into account to verify the idea where Schumpeter emphasizes it is unlikely for different nations to take the same course to socialism (Henrekson and Jakobsson 2). Such creative thought can help us to understand the rise of China as an important economic and geopolitical power in 21st century. As the largest socialistic nation in the world, China is increasingly playing an influential role in world economy today. Democratic socialism is not an illusion and Schumpeter takes credit for remain his objectivity in this regard. Socialist democracy is no less stable than its capitalist counterpart, because there is no lack of rational market in such an economy. The modern-day China is the prime example on this score. The thriving new market in the oriental world provides the world with strong economic powerhouse. China’s success manifests Schumpeter’s deduction about the efficiency of price mechanism in a socialist society and proves that such an economic tool can function as well as in a capitalist society. Centralization and decentralization are not absolute. Just as North America and some European countries have mixed economy, socialist nation such as China has been move towards distinct forms of decentralization of market economy. Reading through the book can certainly help us gain an in-depth understanding of the role China is playing in the world economy today.
The issues that Schumpeter discusses six decades ago still have the value to be thoroughly investigated and debated in this new context. The time when Capitalism, Socialism and Democracy was published was a particularly turbulent and dramatic period of time in regard to war-torn state of major countries and drastic social movement afterwards. Destruction breeds new norm. Today’s global economies face the economic war that brings by the unprecedented trend of globalization. Through this constant roiling of the status quo, Creative Destruction provides a powerful force for making societies wealthier by a staggering gain in productivity. Coincidently, Jack Ma’s keynote speech on the 2016 Shanghai Forum Themed Zhejiang Entrepreneurs in the World stresses the value of the six decades old classic theory. One of the themes in Jack Ma’s speech is changes that can happen to today’s societies and entrepreneurs’ indispensable role in this sea changing era. This discussion undoubtedly exemplifies Schumpeter’s insight in coining the term Creative Destruction. Ma regards the 21st century as an era of change where excellent enterprises seek opportunities to boost their value to society after they went through a process of destruction. As a successful entrepreneur himself, Ma talks about the benefit of seeing painful destruction as rare opportunities for transition and the advantage to embrace technology revolution. Schumpeter may not foresee the powerful creation of the Internet, but he did project such revolutionary force can bring new norm to organizational system, corporate world, and the world economy. For the past two decades, the Internet is the major catalyst for the raise of many giant corporations such as Facebook, Google, and Apple in the United State, and the same technology breeds various Internet giant in China as well, for example, Tencent, Baidu, and Huawei. Some critics attack that the Internet in China is a mutated version of its capitalist economy counterparts. What these critics try to devalue is the fact that creative destruction can take place in an equally effective way in a socialist economy as in a capitalist economy in the new globalization context. It is arguably true that after read Schumpeter’s classic work, such myopic and biased view will eventually collapse.
Capitalism, Socialism and Democracy is an undisputedly classic and prescient work of 20the century. It is an essential reading for those who are interested in finding out the direction towards which the world economy is heading. In this sagacious book, Schumpeter illustrates the notion of “Creative Destruction” to the world and it is through this very concept the way to perceive and project global economic trend has been changed. Regarding Capitalism, Socialism, and Democracy as a mere forecast of capitalism’s future is rather a short view. The book also discusses about the virtues of capitalism and is in defense of the entrepreneurship and innovation capitalist economy breeds. There is no denying the fact that Schumpeter is one of the first to depict the concept of entrepreneurship and distinguishes that entrepreneur innovation is in introducing new means of production and forms of organization. Public reaction to Capitalism, Socialism, and Democracy was not totally heartening, and readers hold different views against Schumpeter’s main argument that the seeds of capitalism's recession are innate and his hostility towards centralist socialism. It is through staying true to his own ideas and refusing to advocate for either side that Schumpeter contributes to the world his great and original thoughts about economics and social issues. In so doing, Schumpeter paves the way for a more balanced consideration of the most influential economic concerns and social movements of his and our time. There is no exaggeration to say that the masterpiece produced six decades ago can still be considered as a lighthouse guiding our understanding of modern-day economic development around the globe.
Works Cited
Cox, W. Michael and Richard Alm. “Creative Destruction.” The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty,
Henrekson, Magnus, and Ulf Jakobsson. “Where Schumpeter was Nearly Right – the Swedish Model and Capitalism, Socialism and Democracy.”
“Joseph Alois Schumpeter.” The Concise Encyclopedia of Economics. 2008.
Ma, Jack. 2016 Shanghai Forum Themed Zhejiang Entrepreneurs in the World, Zhejiang Federation of Industry and Commerce, 19 November 2016, Shanghai. Keynote Address.
Rogge, Benjamin A. Can Capitalism Survive? 1979.
Schumpeter, Joseph A. Capitalism, Socialism, and Democracy. 1994. Taylor & Francis e-Library, 2003.
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