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Capitalism, Socialism, and Democracy: Third Edition Paperback – November 4, 2008

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Product Details

  • Paperback: 464 pages
  • Publisher: Harper Perennial Modern Classics; unknown edition (November 4, 2008)
  • Language: English
  • ISBN-10: 0061561614
  • ISBN-13: 978-0061561610
  • Product Dimensions: 5.3 x 1 x 8 inches
  • Shipping Weight: 12 ounces (View shipping rates and policies)
  • Average Customer Review: 4.0 out of 5 stars  See all reviews (19 customer reviews)
  • Amazon Best Sellers Rank: #27,209 in Books (See Top 100 in Books)

Editorial Reviews


“The 20th century’s foremost economist.” (Steve Forbes, Forbes)

“The most influential economist of the 20th century.” (Peter Drucker, Fortune)

“The great economist Joseph Schumpeter highlighted the role of innovation in powering the rise of new industries, the creative destruction of existing ones, and the growth in prosperity of economies.” (Richard Florida, Atlantic)

“Schumpeter gave us stunning insights into how the world really works. We are now living, it is said, in the Age of Schumpeter. . . . Schumpeter was a powerful prophet, and he now offers dazzling insights into everything from the rise of Wal-Mart to prosperity’s discontents.” (Robert J. Samuelson, Newsweek)

“The greatest defense of capitalist, European civilization ever penned. . . . Schumpeter did more than anyone to persuade American leaders to preserve the capitalist system” (American Conservative)

“Schumpeter may well be the most important economist of the 21st century.” (J. Bradford DeLong, Chronicle of Higher Education)

“Schumpeter was the most farsighted of twentieth-century economists. His focus on capitalism and creative destruction made him the prophet of globalization.” (The Nation)

About the Author

Joseph A. Schumpeter (1883-1950) served as Austria's first finance minister, made and lost a fortune as an investment banker, and taught economics for many years at Harvard. Capitalism, Socialism and Democracy is his best-known work.

Customer Reviews

Excellent book to read and study!
He was naturally highly critical of the neoclassical economic doctrine which purported to explain capitalist production through `perfect competition' paradigms.
Stergios D. Marangos
Some good points but a bit boring.
Chloe Oliver

Most Helpful Customer Reviews

11 of 12 people found the following review helpful By Brian C. on February 4, 2011
Format: Paperback
Capitalism, Socialism, and Democracy is divided up into five main sections. The first section on Marx and the last section on the history of the socialist parties in Europe can be safely skipped by most readers. The three central sections on capitalism, socialism, and democracy are definitely the heart of the book and of the three central sections the section on capitalism is by far the most interesting.

In the section on capitalism Schumpeter really tries to do two things. First, he attempts to provide a defense for capitalism based on its dynamic nature. Schumpeter is critical of the defenses of capitalism which base themselves on the notion that under perfect competition "the profit interest of the producer tends to maximize production" (pg77). In two footnotes Schumpeter explains the problems he has with this standard defense of capitalism.

In the first he writes, "The principle, as far as it can be proved at all, applies to a state of static equilibrium. Capitalist reality is first and last a process of change. In appraising performance of competitive enterprise, the question whether it would or would not tend to maximize production in a perfectly equilibrated stationary condition of the economic process is hence almost, though not quite, irrelevant" (pg77). The standard defense relies on the notion that under perfect competition (a state in which prices are parameters and not variables) production will take place up until the point that marginal cost just equals price. It is further argued that this is precisely "as much as it is in general `socially desirable' to produce" (pg78). But as Schumpeter points out in his footnote this only takes place when the economy is in a state of static equilibrium.
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22 of 27 people found the following review helpful By Jake Le Master on November 12, 2010
Format: Paperback
This is a theme which gives Schumpeter the opportunity to appear at his best. He approaches questions of institutions and economic tendencies from the standpoint of a lively and wide interest in human nature.

The book starts with a critical examination of Marxian doctrine -- Marx the Prophet succeeded in "weaving together those extra-rational cravings which receding religion had left running about like masterless dogs, and the rationalistic and materialistic tendencies of the time" (p. 6). Marx the Sociologist "linked the fate of the class phenomenon with the fate of capitalism " (p. 19). Marx the Economist was a follower of Ricardo (p. 22), but not merely a follower. His one truly great achievement was "to see and to teach systematically how economic theory may be turned into historical analysis, and how the historical narrative may be turned into histoire raisonnie", instead of assigning the facts of economic history "to a separate compartment" (p. 44).

There follows Part II, "Can Capitalism Survive?" Schumpeter has his own individual view of the working of capitalism. The Marxian theory of exploitation, depending on the effect of a perpetual reserve of labor in keeping wages down to the subsistence level, is disproved by experience (pp. 34-7). He himself belongs to the school of thought which treats profit as an excrescence of the economic system, so that in the stationary state neither profit nor interest would exist.

Profit in his view is derived from "innovations", and he uses the term "entrepreneur" for one who initiates an innovation.
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9 of 11 people found the following review helpful By Stergios D. Marangos on July 23, 2009
Format: Paperback Verified Purchase
* This is a long review, if you would not like to read it all you may skip to the last paragraph *

** Additionally, the large strength of this book is its defense and description of modern capitalist development and progress. Part II of the book, that is. The rest is actually not very good. So, buy this book because 1. Capitalism's best description/defense in both a socioeconomic and political context 2. Schumpeter is one of the most important economists to know of if you want to take the subject matter seriously. **

Schumpeter opens part II of Capitalism, Socialism, and Democracy, after a lengthy bit pertaining to Karl Marx `the Prophet, the Sociologist, the Economist, the Teacher' wherein he graces us with his knowledge of Marx's major strengths and flaws (sometimes correct and incorrect himself, and sometimes degenerating into complete fiction), with an ominous sentence - `Can Capitalism survive? No, I do not think it can' (p. 61). Later, in part III of the book, he opens with another - `Can Socialism work? Of course it can.' (p. 167). To unravel these two seemingly complementary statements, we must first investigate the capitalist mode of production as according to Schumpeter, how it came to fruition, and investigate what processes, either endogenous or exogenous, he believes will be the cause of its purported demise and replacement by a `socialist' mode of production.

Schumpeter believed that the most essential feature of the capitalist mode of production was to be found in the constant revolutionizing of the productive forces; a `perennial gale of creative destruction', as he said, that comes about through the introduction of new technologies and, with them, the obsolescence of the old.
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