Capitalism, Socialism and Democracy

Joseph A. Schumpeter (1883-1950) was an Austrian born economist and author of Capitalism, Socialism and Democracy (1942). Schumpeter served for a short time in 1919 as the finance minister for Austria. In 1932, he emigrated to the United States and became a professor at Harvard University. Schumpeter authored several other works including Methodological Individualism (1908), The Sociology of Imperialisms (1919), Social Classes in an Ethnically Homogeneous Environment (1927), Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process (1939), and Ten Great Economists: From Marx to Keynes (1951).

Schumpeter’s main thesis in Capitalism, Socialism and Democracy, that socialism will replace capitalism due to the growing bureaucratization of industry and the death of the entrepreneurial function, has not been borne out by history. Nevertheless, this work continues to be relevant in economics. This is due to its analysis of monopolies, which are influenced by the process of “creative destruction,” and its criticisms of the concept and model of perfect competition.