I once had a discussion where another participant brought up Joseph Schumpeter’s work Capitalism, Socialism and Democracy as showing why capitalism should fail and why socialism is the superior system. I have not read the work, though from what I understand the work is trying to say, that because of how well capitalism works and how dynamic it is, it is usually taken over by a static socialism etc.
So, what do other forum members think about this work and how it figures into modern debates on capitalism. Also, would you recommend purchasing it?
It is not that socialism is a superior system according to Schumpeter. He believes that capitalism is doomed to fail because it produces a class of individual which naturally have an affinity against it, namely that it creates more intellectuals due to a lessening need for less labor intensive professions. You see it now with the technological advancement of capitalism. The US use to have a large farming base but technological has reduced the amount of laborers needed to sustain production. Therefore more seek higher learning to achieve a profession though with capitalism there seems to be an overproduction of such individuals. A good example would be the amount of individuals who go to college. Everyone goes to college now and many have no reason for being there. When they get out they feel entitled to work a profession that rationalizes their reason for going to college. However Schumpeter believes that not all achieve or excel at their professions. These individuals cannot go back to manual labor because they think themselves above it therefore they turn to the government to formulate jobs in line with their perceived value. Government grows, socialism ensues.
This person you are talking to hasn’t read and/or understood Schumpeter.
Thanks, that is what I was thinking as well. I shall look to read the literature at some points and disabbuse my sparring partner of their notions.
I hope Shumpeter pointed out the role of gov’t in creating all these useless university grads, because otherwise his analysis would be very analog to Marx:
According to Marx, in capitalism, improvements in technology and rising levels of productivity increase the amount of material wealth (or use values) in society while simultaneously diminishing the economic value of this wealth, thereby lowering the rate of profit—a tendency that leads to the paradox, characteristic of crises in capitalism, of “poverty in the midst of plenty,” or more precisely, crises of overproduction in the midst of underconsumption.
(From http://en.wikipedia.org/wiki/Das_Kapital)
'According to Marx, in capitalism, improvements in technology and rising levels of productivity increase the amount ofmaterial wealth (or use values) in society while simultaneously diminishing the economic value of this wealth, thereby lowering the rate of profit—a tendency that leads to the paradox, characteristic of crises in capitalism, of “poverty in the midst of plenty,” or more precisely, crises of overproduction in the midst of underconsumption.’
I don’t think Schumpeter believed in the labor theory of value which would necessitate such a view.