Capitalism, Socialism, and Democracy | Study Guide

Joseph A. Schumpeter

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Capitalism, Socialism, and Democracy | Part 2, Chapter 11 : Can Capitalism Survive? (The Civilization of Capitalism) | Summary



Schumpeter turns from economics to sociology and the "socio-psychological superstructure" of capitalism. He discusses prehistoric ways of thinking before introducing the growth across time of rational thought and behavior. He defines this increase of rationalism as an expansion of the role of logical action in improving circumstances. Rationalism tends to overthrow the collective ways of thinking that prevailed before it, with the exception of religion.

Schumpeter ascribes the rise of rationalism to "economic necessity." Capitalism and rationalism grow together; moreover, capitalism conditions rationality in two ways. First, it "exalts the monetary unit ... into a unit of account." That is, capitalism turns money into a tool of cost-benefit analysis. Second, it produces "the mental attitude of modern science" by breaking up feudal society and creating space for the rise of an intellectual class. That intellectual class then produces inventions and innovations for capitalism.

Schumpeter argues that modern society is the society of capitalism, and its products constitute a capitalist culture. The prevalence of capitalism in modern society extends from technology to art and to democratic forms of politics. Schumpeter notes that this culture is pacifist and "unheroic." He sums up by saying that whatever one thinks of capitalist society ultimately does not matter because "things economic and social move by their own momentum."


Schumpeter has remarked a couple of times already that he believes capitalism will tend to undermine itself. Here he begins to lay out exactly how. His is a sociological argument, which follows from the preceding defense of capitalism's economic performance and the weakness of economic arguments for capitalism's failure. One of the major ways Schumpeter agrees with Marx is in understanding capitalism as a fundamentally transformative social and economic system.

Capitalism had destroyed the culture and society of feudalism, and in doing so it created the culture of capitalism. This point foreshadows the following argument about what capitalism will do to its own culture and society. Schumpeter's final notes remind the reader that, like Marx's views, his is an evolutionary, rather than revolutionary, view of the future.

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