Schumpeter’s most famous book – Econlib

In the summer issue of Regulation (section “From the past”), I review Joseph Schumpeter’s most famous book, Capitalism, socialism and democracyfirst published in 1950:

In the book, Schumpeter argued that capitalism will naturally evolve into socialism, that socialism can work, and that it is not logically incompatible with democracy. I will oppose all three of these statements.

This famous book is well known for its defense of “creative destruction,” but it also offers confusing arguments in favor of socialism. I write:

Reservations have not been [Schumpeter] expressed overcoming the putative advantages of socialism? Why didn’t he see that? A hypothesis echoed by Harvard business historian Thomas K. McCraw in his introduction to the 2008 edition of the book is that Schumpeter’s praise of socialism was ironic. He had to cover up his conservative views lest his socialist readers contradict them. In this view, apparently shared by other scholars, satire should be read between the lines.

A confusing argument I’m talking about (the quoted part is from Schumpeter):

If income inequality…was not deemed acceptable under socialism, top bureaucrats could be “compensated not only with honors but also with staffed official residences at public expense, allowances for “official” hospitality, the use of Admiralty and other yachts, ” and the like. OK, maybe there’s some satire there!

McCraw wrote (and I’ve saved this part exclusively for my EconLog readers) that the famous Harvard economics professor

was known for his good humor, polite manners and mischievous spirit. He has often said that he aspires to be the world’s greatest economist, lover and date. Then came the downfall: things weren’t going well with the horses.

As you will see if you read my essay (scroll down after following the link) I can only conclude on Capitalism, socialism and democracy:

Perhaps, after all, this is a long and devastating satire against socialism.

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