Capitalism, Socialism, and Democracy | Study Guide

Joseph A. Schumpeter

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Capitalism, Socialism, and Democracy | Part 1, Chapter 4 : The Marxian Doctrine (Marx the Teacher) | Summary



Schumpeter considers "the imposing synthesis" of Marx's ideas as a whole. He notes that in Marx, economics and sociology are one. A positive consequence of this fusion is that it integrates things like war and legislation, which economists treat as "external disturbances," more closely into the "explanatory schema" of Marxist analysis. On the other hand, the virtues of a specific focus on individual events suffer. Sometimes it is important to distinguish the "laborer" from the "proletarian."

Schumpeter discusses synthesis in general before focusing on what is particular in Marxist thought: the rendering of historical events and social institutions as not "data but variables," that is, factors in economic analysis. Thus, politics and the like are not independent factors but part of Marx's overall economic analysis. Schumpeter does not think, ultimately, that the Marxist synthesis adds much to inquiries already undertaken by economists and the other academics. Moreover, he thinks following Marxist doctrine is more likely to lead analysts astray.

Specifically, Schumpeter discusses the Marxist theory of imperialism, which holds that foreign colonies are an attempt by capitalist societies to compensate for a falling rate of profit in the host country. Schumpeter discusses the apparent sufficiency of the theory, but he urges caution. He points out that while the theory seems to fit history, the age of imperialism occurred in the early and immature period of capitalism, not the late mature period, when a "falling rate of profit" would actually occur.

Schumpeter has more disdain for the class struggle theory of colonial expansion. He points out that colonies and colonial projects were not constructed on lines that indicated the role of class. He goes on to stress that colonialism does not fit the Marxian theory of capital export, lamenting the very idea that big business has an influence on foreign policy.

Schumpeter concludes his discussion by pointing out that Marx's theory is not sufficient to justify his prediction that capitalism will destroy itself. He also charges that the theory has not explained any tendency toward socialism. Socialism will not be "realized automatically." Finally, Schumpeter suggests that when considering the question of whether capitalism will be overthrown by revolution or evolution, Marx's theories point to evolution, which is "revolution in the fullness of time."


Schumpeter makes it clear that he ultimately finds Marxist theory to be a failure in multiple respects. It fails as economics, only partly succeeds as sociology, and definitely fails as a synthesis of the two (which Schumpeter thinks is a useless effort anyway). For Schumpeter, definitions are vitally important, as is the practice of considering an idea and carefully analyzing the arguments for and against it. This thoughtful consideration and analysis is a major theme in the book's later chapters, which carry more weight in his argument. It also shows Schumpeter's commitment to academic rigor (even as his language is sometimes more playful than this rigor might imply).

Schumpeter's final chapter on Marx is itself a kind of synthesis of the previous chapters. Certainly, it sums up his entire analysis: Marx's theories have significant problems, but he was a serious thinker who reached important conclusions. This conclusion points forward to the rest of Schumpeter's argument.

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