Abstract
In this chapter, I discuss the works of Joseph Schumpeter. He was mainly concerned with capitalism and the conditions for its survival. He understood capitalism to be a rational organizational form that included a capitalist system (economy and business), a capitalist order (capitalist institutions and government, politics, and bureaucracies), and capitalist society (culture, mentality and habits, schemes of moral values, and middle-class expectations). Schumpeter argued that the capitalist system contributed to the prosperity of order and society. But he also thought that the capitalist system was exposed to internal contradictions that made it unstable. Threats came also from external sources. He viewed bureaucracies as being driven by political elites too eager to regulate the capitalist system, while cultural movements embodied by public intellectuals condemned capitalism for social and ethical reasons. Schumpeter linked their criticisms to a fundamental inability of capitalism to make itself emotionally attractive.
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Notes
- 1.
I deal with entrepreneurship and innovation in Chap. 8.
- 2.
See Richard Swedberg (2004, viii).
- 3.
This does not mean, however, that I will neglect his economic analysis. Under the section Capitalism as a Process later in this chapter I detail some of his most important economic thoughts.
- 4.
See also Swedberg (2004), xvi and xix.
- 5.
- 6.
The dates in square brackets indicate the year of the original publications. In-text referencing will include the original year of publication only the first time I mention one of Schumpeter’s works. These articles have been collected in a book edited by Richard Clemence (2004), one of Schumpeter’s most respected interpreters. I have decided to quote from this latter publication to honor Clemence’s efforts to provide us with a compelling and well-rounded idea of how Schumpeter viewed some of the most controversial issues of his time. The collected articles provide insights into Schumpeter’s fears and concerns with regard to the future of democratic societies that, in his view, were the product of what he described as capitalist civilization.
- 7.
One only needs to look at the emerging economies of India, China, and other Asian countries as well Africa to realize that their people are more interested in good schools, less corruption, employment, and many other things that have always been very precious to the middle class of the West, than in revolutions. Not even within the cash-stricken members of the European Union were the highly qualified and skilled unemployed youth interested in revolutionary action.
- 8.
- 9.
- 10.
Even so, Schumpeter believed that small and medium business was generally threatened by big business. He thought that under conditions of prosperity, the latter would expand at the expense of the former.
- 11.
Some theorists have rejected this criticism. David Graeber (2011), for example, has strongly argued that many tend to forget the “as if” nature of Marx’s analysis and that Marx “was well aware that there were more bootblacks, prostitutes, butlers, soldiers, pedlars, chimneysweeps, flower girls, street musicians, convicts, nannies, and cab drivers in the London of his day than there were factory workers” (2011, 354). That awareness, however, never transpires from Marx’s work, and neither does the fact that he wrote in the hypothetical mode.
- 12.
Interestingly, although during the economic downturn of 2006–2010 many private investors lost their life savings or retirement investments, and the losses of some organizations and institutions that had invested in the share market were in the range of millions of dollars, there was a general acceptance of these changes of fortune. This seems to confirm Schumpeter’s thesis that the social groups that grow around big business are unable to protect, and, more importantly, defend their wealth and property.
- 13.
Schumpeter’s perception of the role of the entrepreneur and middle class is inflexible, as he seems to be incapable of imaging an evolution in the identity of the entrepreneur and the middle class.
- 14.
Daniel Bell (1996) has described the loss of the work ethos intimated by Schumpeter as one of the two most toxic cultural contradictions of capitalism.
- 15.
The principal investigators of the study were the then editors of the Harvard Business Review (HBR), namely John J. Brennan, James J. Valtz, John B. Shallenberger, and Vincent P. Staton. The study included a lengthy questionnaire about business ethics which was completed by some 1700 HBR executive readers that attracted a response rate of 34 % of the 5000 cross section polled. From the data reported in Baumhart’s article, it appears that the questionnaire included essay-like responses.
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Betta, M. (2016). The Contradictions of Capitalism: A Schumpeterian Analysis. In: Ethicmentality - Ethics in Capitalist Economy, Business, and Society. Issues in Business Ethics, vol 45. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-7590-8_1
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