Joseph Schumpeter’s Capitalism, Socialism and Democracy

Our own Morgan Meis in The Smart Set:

N538727847_607 You've got to admire a man who regularly wore a cape. This goes doubly if that man is an economist. But Joseph Schumpeter was no ordinary economist. Ending up at Harvard in the early 1930s, Schumpeter was an exile from the tumult of Central Europe, an orphan of the Austro-Hungarian Empire. He lost his mother, wife, and infant son all within a few months of each other. It was not difficult for Schumpeter to see the world as tragic, arbitrary, capricious.

Like Marx, Schumpeter didn't think that capitalism would last. But unlike Marx, the inevitable demise of capitalism made him sad. Schumpeter didn't think that capitalism would create a revolutionary class that would rise up to destroy it. He instead thought that capitalism was so inherently insane that the elites of society would simply get tired of the damn thing.

Schumpeter — and here is where the cape comes back in — admired the insanity. He saw capitalism as an immense innovation machine driving a process he named with the now-famous phrase “creative destruction.”