Capitalism, Socialism, and Democracy | Study Guide

Joseph A. Schumpeter

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Capitalism, Socialism, and Democracy | Part 5, Chapter 26 : A Historical Sketch of Socialist Parties (From 1875 to 1914) | Summary



Schumpeter begins his period with the creation of the German Social Democratic Party, though he sidesteps to compare a contrasting example of socialist organization in England. He notes that from an early point (the 1830s), English trade union movements had ceased to adopt a hostility to capitalism.

He then moves to consider the Fabian Society, "small group of bourgeois intellectuals" formed in London in 1883. Schumpeter notes with some disdain that the Fabian attitude was nothing more than to "clean up the bad things" and to "secure the good things." He argues at length that Fabian socialism was unlikely to amount to anything at a different point in time, but in the decades before 1914 they did indeed manage to do so. The Fabians were reformers, no more or less radical than the needs of the era. Schumpeter proposes that it was possible that the Fabians were better Marxists than Marx himself because they focused on what could be done to aid the evolution of society.

Schumpeter next considers "Sweden on the one hand and Russia on the other." He notes that "every country has its own socialism." The Swedish party adopted a slow and steady approach of peaceable integration into politics. In Russia, on the other hand, socialist parties were intensely Marxist. This intensity was surprising because Russia was very far from the ideal of capitalist development under the tsar. Nevertheless, the Marxists developed into a Social Democratic Party, which split in 1903 into two rival groups: Bolsheviks and Mensheviks. The Bolsheviks, led by Vladimir Lenin (1870–1924), succeeded partly because they were willing to break with Marx and make the revolution themselves.

In the United States, Schumpeter sketches labor history before concluding that "the man in the street" decided that socialism was "un-American." In particular, the United States totally skipped the phase of socialism that adopted "unadulterated Marxism." France, meanwhile, the "country of the peasant, the artisan, the clerk and the small rentier," avoided the "emergence of great and disciplined parties of the English type."

Finally, Schumpeter considers the parties in Germany and Austria. He wonders why English methods did not work in Germany, in which the government was earlier and more keenly involved in social reform. (Chancellor Otto von Bismarck of Germany had passed social security legislation in the 1870s.) He notes how the German Social Democratic Party developed admirably in terms of its organization, leadership, and bureaucracy and captured a great share of the labor vote. And yet they were explicitly Marxist until the 1890s, when the leadership embarked on a program of "revisionism" of Marx's message. Finally, Schumpeter considers the "officially Marxist" socialist party in Austria, which was able to become a "governmental party" without too much trouble when the opportunity arose.

Schumpeter includes a short sketch of the Second International, founded in 1889, which was the most recent response of the world parties to the Marxist call for an international organization.


Schumpeter's lengthy discussion of the pre–World War I affairs of socialist parties is full of quickly sketched detail, although it is not always clear what purpose it serves to his analysis. One major takeaway is that there is no obvious or uniform development of socialist parties. As Schumpeter notes, every country has its own socialism. This is part of the explanation for the serial failures of the international socialist associations that was made most obvious in the turn to nationalism in World War I.

Schumpeter, who is never shy of saying what he thinks about whomever he pleases, has a special disdain for the Fabians. Every sentence is laden with gentle mockery of people who come across more as slightly dotty do-gooders than as serious political actors. And yet this mockery covers an assessment of the Fabians as far more in step with the true development of socialism than many other parties have accomplished.

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