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Showing posts with the label Joseph Schumpeter

Book Review: Capitalism, Socialism, and Democracy by Joseph Schumpeter

Joseph Schumpeter’s book Capitalism, Socialism and Democracy brings forward some interesting concepts pertaining to the nature of economics and governmental forms. He believes that Socialism will eventually outstrip Capitalism as a system once the owners of production reject the capitalistic system that made them successful ( 1 ).   The early period pure competitive methods that fostered growth will become stagnated as the system fails to change.     The book seeks to reconcile in part the differences between democracy and capitalism. The best method is the rule of people to create collective governance of society. However, as capitalism grows the average citizen doesn’t have much say in day-to-day politics and becomes more of a support to the legitimacy of others ( 2 ).  To this point it is important to understand that the very core nature of society is to allow some to move forward while others to stay in followership. Difficulties can arise when those with the basic s

Book Review: The Theory of Economic Development by Joseph Schumpeter

Joseph Schumpeter is known as the “Prophet of Innovation” and published his work The Theory of Economic Development at 28 years of age ( 1 ). As an economist he didn’t receive much attention because he wasn’t in alignment with the popular Keynesian Economics of the time ( 2 ).   His greatest achievement being the meshing of sociology with economics to make a system of development. The chapters of the book are: (I) The Circular Flow of Economic Life as Conditioned by Given Circumstances; (II) The Fundamental Phenomenon of Economic Development; (III) Credit and Capital; (IV) Entrepreneurial Profit; (V) Interest on Capital; (IV) The Business Cycle. Schumpeter believed in a perfect equilibrium where there are no profits, no savings, no new products, no voluntary unemployment, or need. It is a system of economic flow where there is no need to adapt, adjust, or change because everything is running smoothly. This perfect equilibrium either never existed or