This is the most famous chapter in the book of Joseph Schumpeter’s Capitalism, socialism, and Democracy. Can Capitalism Survive Is the book that introduces the theory of creative destruction of Joseph A. Schumpeter’s. The theory states that, in capitalist economies, the current established firms that provide unforeseen avenues of the growth of economy (Schumpeter 122) erode the innovations. The capitalist societies are the perennial gales of destruction that will wipe the fortunes away. The writer in details has discussed the economic landscape of capitalism; Schumpeter further argued that the technological innovation is the cause of the business cycle that is called creative destruction. People practicing capitalist economies the obsolete technology has been eliminated in the market place and there are new avenues for economic growth that utilize innovation.
Innovation and technology development can change how the industries operate. The new technologies from web to print media for instance in the music industry their development from recording, cassettes, CDs and now the iPods. In a free world market model where there is disruption created by the economic indicators and change in technology is not the measure on the growth of the economy but it point on the business cycle. At this, the intervention of the government is not necessary I that there is self correcting in the market (Rogge 78). The business who do not employ the recent technology or employ creative work force will always not survive in the industry. Contrary to this dominant companies that revolutionized their retails with computerized inventory management are always successful in adapting in any business environment, and they can as well suppress the innovation.
The recent event in the world has revolved the ideas of Schumpeter’s on capitalist society, the force behind it and those who totally oppose capitalism. The nature of capitalism and the need to calm down its deliberation are more evident now. Schumpeter point out that professed economist has championed all the things that have been said about capitalism. The idea discuss in the book is more familiar to warn and guide us considering that it worked out during the height of new deals (Schumpeter’s 158). The idea work when the financial crisis as well as the government intervention reached unprecedented height in the history. According to Schumpeter’s capitalism cannot survive in the current world. Capitalism success will undermines the social institutions that protect it and will bring a condition where it will not survive. This is the idea that has distinguished Schumpeter’s theory of capitalist from other theories making the popular. The writer argues that as capitalism evolves the logic of its operation that has caused the economic and social to disappear, and hence a gap for the emergence of socialism. The accuracy of the theory was not the concern of the writer, but his argument was to examine some of the important ideas that try to explain how capitalism works.
Schumpeter was not the first person to predict the end of capitalism but the one who claim that the successes of capitalism will be the cause of its fall and decline. The key point in this book is the famous idea of creative distribution where the future of capitalism depends on the fundamentals impulse that keeps the capitalist engine in motion. According to the writer capitalism can revolutionize everything in its way especially the social institution that is cast out from economic prospect by the creative destructive. The genius men who see beyond the mere routine will always drive this change (Harry 120).
This Capitalism can only survive if the entrepreneur’s initiatives would lead to new productive process to revolutionary and new directions. Schumpeter further argues that the technological development will finally smother the function of entrepreneurial, and the procedure of continual alter will halt, spelling the end of capitalism (Schumpeter 133). In this book also Schumpeter’s discussed the social foundations of capitalism. The private property and voluntary exchange will define the characteristics of society which practice capitalism that must be removed in order for economic organization to be realized in the society (Schumpeter 140)
The economic rewards reap from the entrepreneur’s innovation. The economic organization has expands the production like of the modern firm that will capture and grow the economic opportunities. When the size of the industry increases it, bureaucracy will increase too (Miller 149). The function of control and ownership is separated. The capitalist does not see if the social institutions are not necessary in both voluntary contract and the private ownership. The capitalist are isolated from economic reality and their sympathy start to wane as well as the foundation of capitalist. These will render the capitalist a system that is open to attacks from the hostile parties (154).
Schumpeter argues that the capitalism focus is on innovation and change that make it difficult if not impossible for people if this system is important in guarding the living standards of the people. In daily life, there are expectations and trouble that one meet in any social system, the disappointment and frictions whether big or small it hurt, thwart and even annoyed. Every one of us is less or more in regard to the habit of attributing them to the reality and the attached emotion to the social order which cannot be constitutional produced by the capitalism. It is important to overcome the hostile impulse by reacting to them. The worldly development, which is always taken for granted, and brought together by insecurity of the people which is intensely resented as the best way of practicing social unrest (Schumpeter 159).
Capitalism will always provide unknown standard of living which cannot be obtained through other forms of social institutions that undermine its own support, by performing is a task well, and the origin of success is disregarded by its beneficiaries (Shutt 69). This brings to us the breaking contribution of Schumpeter’s in understanding capitalism and his work on sociology of the intellectual. The lack of social protection of capitalism and people feeling aggressive by the system make it a platform for the assault of the capitalist system. At last, there are groups whose interest is to work by organizing resentment, nursing it, lead it and to voice it (Schumpeter 160). The driving force of anti-capitalism is the intellectual class.
The learned population problem is that they see the economic process from the definition point of view in that they do not have direct experiences in the economic affairs. At the end, they wield decisive power in that they influence the public opinion, and it is this biasness that form strong anti- capitalist. This intellectual class is a real threat to this system of capitalist. This is the basis of Schumpeter’s’ famous remarks about intellectuals. Judges who have the sentence of death in their mind no matter what the defense do making the only success of the defense is to alter the indictment (Schumpeter 158) did the trial of capitalism.
The Capitalist will always provide a platform for attack from the intellectual in that they innovate thing that make disseminating opinion which are both inexpensive and possible. The education given to the population provides gives the people influence which in turn destabilize the social changes and at last, capitalism will encourage the core freedom of expression that is important in public criticism of social organizations (Schumpeter 172). Schumpeter reflection on psychological and sociological characteristics of the intellectual class is incredible
The learned class can easily become difficult to be unemployable in manual occupations without necessary acquiring the skills of a professional individual. The unemployed, unsatisfied employee can easily shift to place where standards are least considered where the aptitudes and acquiring of a skill count. They enlarge the congregation of intellectuals, which is increasing each day, and enter into a vigorous discontent, which breeds resentment of the mind. This will rationalize them into social criticism and the moral disapproval of capitalism (Schumpeter 175). The intellectual opposition of capitalism is built, and the people against the order supply the provision of weapon. The capitalist system is opposed and attacked by those whose opinion is heard through the work of entrepreneurs and capitalist that drives the economic process of improvement and innovation.
Shutt, Harry. The Decline of Capitalism: Can the Self-Regulated Profits System Survive? London: Zed Books, 2004. Print
Miller, Max H. Worlds Of Capitalism: Governance And Economic Change In The Era Of Globalization. London: Routledge, 2005. Print
Rogge, Benjamin A. Can Capitalism Survive? Liberty Fund Inc, 2012. Internet Resource
Schumpeter, Joseph A. Can Capitalism Survive? Creative Destruction and the Future of the Global Economy. New York: Harper Perennial, 2009. Print.
Shutt, Harry. The decline of capitalism: can a self-regulated profits system survive? Kuala Lumpur: SIRD; 2005.