Course Hero. "Capitalism, Socialism, and Democracy Study Guide." Course Hero. 26 Apr. 2019. Web. 7 Aug. 2020. <https://www.coursehero.com/lit/Capitalism-Socialism-and-Democracy/>.
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(Course Hero, 2019)
Course Hero. "Capitalism, Socialism, and Democracy Study Guide." April 26, 2019. Accessed August 7, 2020. https://www.coursehero.com/lit/Capitalism-Socialism-and-Democracy/.
Course Hero, "Capitalism, Socialism, and Democracy Study Guide," April 26, 2019, accessed August 7, 2020, https://www.coursehero.com/lit/Capitalism-Socialism-and-Democracy/.
Schumpeter begins by praising Marx as a "very learned man" in the field of economic theory. He notes that Marx's "master" in the field of economics is British political economist David Ricardo (1772–1822), from whom Marx borrowed not only the foundations of his argument but also "the art of theorizing." It is from Ricardo and another economist, François Quesnay (1694–1774), that Marx borrowed the labor theory of value (the idea that the value of a product is determined by the labor used to produce it). Schumpeter summarizes Marx's arguments:
In conclusion, Schumpeter ends with a negative verdict on Marx the economist. He qualifies this verdict by pointing out that Marx's critics themselves were "far from always being right." He praises Marx for seeing and teaching "how economic theory may be turned into historical analysis." Finally, he closes by noting that even though Marx's economic theory failed to implement his sociological setup, "in failing, it establishes both a goal and a method."
Schumpeter the economist is most at home with Marx the economist. He shows his own depth and breadth of knowledge in a confident dissection of Marx's economic views. Although Schumpeter treats Marx's ideas on sociology and economics separately, his Chapter 2, about sociology, should be borne in mind when considering what is written in Chapter 3. According to Marxist ideology, the economic and the sociological are meant to be one. When the economics does not add up (or rests on old and outdated data and theory), many of the sociological analyses too will fall flat.
Schumpeter is frankly unimpressed with Marx's immiseration theory and expresses that feeling forcefully. To Schumpeter, the chief virtue of capitalism was that it had clearly brought so much to so many. This is just one of a number of examples where Schumpeter disagrees with an idea because it does not conform with his observations of the world (as opposed to a model or theory).
Even so, Schumpeter regularly points out the ways he agrees with Marx. Schumpeter too will argue that capitalism dooms itself. His point in this chapter is that Marx cannot back up his own argument, a prelude to Schumpeter's unveiling of his own, rival theory.