Joseph Schumpeter and the economic interpretation of history
Introduction It is common to say of Schumpeter that he was a lover of paradox. Indeed, that statement has been made by no less an authority on Schumpeter than Schumpeter himself. In his preface to the first edition of Capitalism, Socialism and Democracy, he informs his reader that Part II of his book will deal with the "inevitable decomposition of capitalist society." But he adds that, contrary to the views of Marx and others, his own analysis will lead the reader to the author's "paradoxical conclusion: capitalism is being killed by its achievements." 1
I do not intend, in this chapter, to evaluate the validity of that conclusion, even with the "easy" wisdom of a retrospective view of more than fifty years. I do, however, want to take this opportunity to examine Schumpeter's views on the analysis of economic change, the forces that give rise to such change, and to the power of economic changes to generate other changes in the context of advanced capitalist societies.