Capitalism, Socialism, and Democracy | Study Guide

Joseph A. Schumpeter

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Capitalism, Socialism, and Democracy | Part 4, Chapter 22 : Socialism and Democracy (Another Theory of Democracy) | Summary



Schumpeter offers the full version of his own definition of democracy: a method that is the institutional arrangement for arriving at political decisions. In this method, power is acquired through a competitive struggle for the people's vote. Schumpeter promotes this definition because it accounts for states like England, which have a democratic method but are not technically democracies (England, for example, is technically a constitutional monarchy).

The definition places a premium on "the vital fact of leadership." As such the "manufactured will" can take the place of the semi-mythical popular will. Schumpeter's definition allows for the existence of preferences among the masses as well as a variety of degrees and forms of competition. It clarifies the relationship between individual freedom and democracy and places the weight of responsibility on the electorate both for selecting and for getting rid of a government. Finally, the definition allows a resolution to an "old controversy." Namely, simple majorities in votes tend to distort rather than give effect to the popular will because the enacted will rests with the majority that wins the vote, not with "the people" at large.

Schumpeter then discusses how his definition might be put into practice. He decides that what is meant by "producing a government" is choosing "the leading man" of the day. Schumpeter refers to this leading position as "prime minister." He notes that the only nation of his time in which the electorate chooses its leader directly is the United States. Then, in comparison, he describes the process by with the British parliament produces a prime minister, the leader of the victorious party in a parliamentary contest.

Schumpeter discusses other British examples, such as the 1879 election of Prime Minister William Ewart Gladstone (1809–98), to further test his definition. He notes that in a parliamentary system it is the parliament's job, not the electorate's, to produce a government. The cabinet meanwhile is appointed by the prime minister. The final part of the developing argument is that the role of the electorate is to be shaped by the democratic process, not to shape that process. A political party, likewise, is an organization based on the principle that members will cooperate to compete for and win power, no matter what the party claims to stand for.


Schumpeter's personal definition of democracy has been previewed before; here he gives a full summation. Plenty of people would find his definition reductionist and unfulfilling. Schumpeter does not mind because, as the chapter shows, the definition suits his ends anyway. He knows that it will be criticized, however, which is why he spends so much time defining, defending, and justifying its use. Schumpeter's use of British historical examples show the depth of his interest and his knowledge. His strength as an analyst stems from his grasp of multiple places and times and his use of economic and social facts within their historical context.

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