The long-term perspective
Reducing Schumpeter’s contribution to economic thought to the study of factors accounting for the economic dynamism of capitalism – that is, the entrepreneur, innovation and credit – fails to do justice to the much broader scope of his research agenda which is encapsulated in his view of capitalism as a process of historical transformation. Schumpeter always acknowledged his intellectual debt to two great exponents of economic thought – Walras and Marx – and it is to the latter that he owes his conception of capitalism as an historically specific set of institutions. Like Marx, Schumpeter believes that the capitalist system carries within it the seeds of its own destruction and that it will eventually be replaced by socialism. Schumpeter is, however, primarily interested in the role played by institutional and cultural factors in this incessant movement towards destruction, and much of his work is dedicated to highlighting their significance. Thus, his analysis of the long-term perspectives of capitalism, contained mainly in Capitalism, Socialism and Democracy (CSD) provides a perfect opportunity to study the links between the dynamic theory of the process of economic evolution, on the one hand, and the analysis of social and cultural disruptions, on the other – both intrinsically linked to one another in the reality of capitalist development. At the time of the publication of CSD (1942), the possibility of a decline of capitalism and the spectre of socialism were particularly popular subjects of debate. In developing an analytical framework of his own, Schumpeter takes a fairly original stance, distinct from the position of both the liberals of the day and the proponents of regulation and interventionism.