Capitalism, Socialism, and Democracy | Study Guide

Joseph A. Schumpeter

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Capitalism, Socialism, and Democracy | Part 3, Chapter 19 : Can Socialism Work? (Transition) | Summary



Schumpeter considers the difficulties of the transition from capitalism to socialism. He reiterates his belief that capitalism "shapes things and souls for socialism." Potentially this shaping could happen so completely that the transition to socialism would be all but seamless, though the final step would need to be taken. In a mature state of socialization for socialism, the resistance to socialism will be weak, and cooperation will come from members of all classes. A minimal level of "socialization after the fact" would be necessary to ensure a stable and relatively smooth transition as the central authority gradually took up the reins.

In a state of immature socialization, or "premature" adoption of socialism, more must be done. Such a society might look like the "fettered" capitalism of Schumpeter's era. The transition to socialism in a society like that of the United States in 1932 involves rather more difficulties than in the "mature" case. Even after the revolutionary capture of the government, the new central authority would have to use its "red army" to quash resistance and establish revolutionary order by "firing impartially to right and left." As monetary policy to inflict inflation would help the economic transition, so the process of socialization must take place. Schumpeter concludes by expressing his dismay at those who seek to engineer the transition to socialism—a framework he does not provide—in a society that is not ready for it, for the work of transition involves a great deal of violence and social harm.

Schumpeter considers the case of what socialist parties can do before reaching the proper "transition point," using England as an example. The English are familiar with a strong state, and the English ruling class is "uniquely able and civilized." In such a circumstance a policy of socialization "before the fact" can be undertaken, for instance through a policy of industrial nationalization.

Schumpeter concludes this section by noting that it was written in 1938, before the outbreak of World War II. He does not know how the war will end or what its consequences will be, so he thinks it best to leave the writing as is.


A major problem for all socialist theorists was the question of getting "from here to there"—the transition from capitalism to socialism. Schumpeter offers two models of transition, one fairly smooth and favorable, the other rough and bloody. Schumpeter's real meaning here is that socialists should be patient, trust time and inevitability, and not try to force the transition. Ultimately, trying to secure a premature transition would be more trouble than it was worth, even if it proved successful.

Schumpeter's admirable intellectual honesty is once more in display in his note that the section was written in 1938. A great deal had occurred between then and the book's publication in 1942, not least the beginning of World War II in 1939 and the United States' entry into that conflict two years later. Schumpeter knew that events of the war could well blow his predictions out of the water. His confidence and, perhaps, intellectual integrity prohibited him from amending the chapter to try to match his predictions to events in progress.

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