Capitalism and Creative Destruction: an Introduction to Joseph Schumpeter
Is the very dynamism of innovation that animates capitalism also its potential ruin? This is the central question that the conservative, if heterodox, economist Joseph Schumpeter posed in his magnum opus Capitalism, Socialism, and Democracy. Schumpeter may seem an unlikely candidate to question the very viability of capitalism. Many of today’s most celebrated market-oriented economic ideas—from ideals of bold entrepreneurial leadership to the concept of “creative destruction,” which “blazes new trails” for ever more exciting technological developments—find their origins in Schumpeter. And yet, Schumpeter reluctantly concluded that the capitalist economic and social system would be, in his words, “killed by its achievements.” This was not a happy thought. Like neoclassical economists, he viewed socialism as dismal if even possible at all. “If a doctor predicts that his patient will die presently,” Schumpter writes, “this does not mean that he desires it.” Although a fierce critic of Karl Marx, Schumpeter derived the concept of creative destruction in part from Marx’s observations regarding innovation and business cycles. In Schumpeter’s view, creative destruction is responsible for the constant reinvention of technologies, industries, and the long-term economic growth celebrated by Schumpeter and so many other economists. However, Schumpeter broke from his compatriots in taking a broader social view. Creative destruction, “impressive in its relentless necessity,” wipes away not only obsolete technologies, ideas, and institutions, but also the “flying buttresses that prevented capitalism’s collapse.” What drives Schumpter to his unwelcome conclusion? Does a broader understanding of his analyses affect the way we read his now ubiquitous ideas? What does Capitalism, Socialism, and Democracy—one of the most cited and influential works of economic thought—tell us about the economic and social world of today?
In this class, we will address these questions by reading Capitalism, Socialism, and Democracy as we discuss the economic and social questions of Schumpeter’s day and our own. The course follows the book’s structure, beginning with Schumpter’s interpretation of Marx and his discussion of technology and innovation in the development of capitalism and the accumulation of wealth. We will then ask, as Schumpeter suggests: can capitalism survive? In exploring this question we arrive at the core of the book’s argument: “creative destruction.” What is it? What does it do? Who exactly is involved in the process? And who is not? Creative destruction is celebrated by Schumpter and many others as the key feature and achievement of profit-driven, market economies. And yet, Schumpeter—while rejecting Marx’s theory of revolution—sees the same process as sowing the seeds of discontent: among intellectuals, among workers, among managers, eventually leading to the disintegration of capitalism itself. In our final sessions we will read, debate, and ask ourselves Schumpeter’s next question: can socialism work? We will explore the Schumpeter’s understanding of the relationships between capitalism, socialism, and democracy. And throughout we will ask: what are the roles played by entrepreneurs, capitalists, states, and markets? Are technology and innovation synonymous? If entrepreneurship is about taking risks, who plays the entrepreneurial role in capitalism today? Does Schumpeter help us understand neoliberal capitalism, and what are the limits of his analyses? Is capitalism really being killed by its achievements? Or is there more at play?
Course ScheduleMonday, 6:30-9:30pm ET
September 12 — October 03, 2022