Schumpeter and the end of Western Capitalism

William Kingston ()

Journal of Evolutionary Economics, 2014, vol. 24, issue 3, 449-477

Abstract: Schumpeter’s forecast in his Capitalism, Socialism and Democracy ( 1942 ) that ‘a socialist form of society will inevitably emerge from an equally inevitable decomposition of capitalist society’ did great damage to his reputation. This was especially so after the fall of the Berlin wall, when the spectre of Communism seemed to have been finally exorcised. The current financial crisis, however, has vindicated him. For Schumpeter, capitalism rightly meant, not just individual property rights, but the ability to ‘create money from nothing.’ This is such an enormous and dangerous power that it obviously has to be subject to the strictest constraint, which was traditionally provided, however imperfectly, by denial of incorporation with limited liability to those who dealt in money. The decline of capitalism began when financiers were released from this discipline, and it ended with the catastrophe caused by belief that bureaucratic control could replace it. The cause of the change was the progressive capture of democratically elected politicians by interests. On this, Schumpeter’s The Crisis of the Tax State ( 1918 ) was almost as insightful as his later book. When Governments could not allow banks to fail, they signalled the definitive arrival of centralized financing, which is a fundamental characteristic of a socialist economy. Copyright Springer-Verlag Berlin Heidelberg 2014

Keywords: Capitalism; Schumpeter; Socialism; A13; B15; K20; P7; P20 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1007/s00191-013-0312-x (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joevec:v:24:y:2014:i:3:p:449-477

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/191/PS2

DOI: 10.1007/s00191-013-0312-x

Access Statistics for this article

Journal of Evolutionary Economics is currently edited by Uwe Cantner, Elias Dinopoulos, Horst Hanusch and Luigi Orsenigo

More articles in Journal of Evolutionary Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().