ABSTRACT
The development of capitalism as a historical phenomenon raises difficult issues in social theory generally, no less than in the transmission of ideas from one society to another–in this case, from Austria and Germany in the nineteenth century to the United States in the twentieth century. Schumpeter was no novice in politics, having served as Austrian finance minister during World War One. Capitalism for Schumpeter was not so much the historic outcome of the democratic system, or for that matter the economic precursor of such a system and an economic order operating in a remote, independent realm. Schumpeter had a pessimistic view of survival prospects for capitalism equal to that of Marx, but not because of the threat of totalitarian movements and regimes, rather because of the inherent destabilizing elements in democracy. Schumpeter concludes that a class gains or loses position in the same way that it emerges and passes as a class.
