Schumpeter’s Market

Schumpeter’s Market

Enterprise and Evolution

David Reisman

Schumpeter was an interdisciplinary political economist who made institutional transformation the centrepiece of his theory of supply and demand. This comprehensive monograph reconstructs and assesses Schumpeter’s contribution to the restless economics of entrepreneurship, disequilibrium and search. Examining the evidence from all of Schumpeter’s published work, the book fills a significant gap in the literature of economic thought. Partly because Schumpeter was so prolific, partly because he touched on so many interrelated topics, there have been few books that have sought to span the whole of this important author's influential insights.

Chapter 11: Continuity, Change and Socialism

David Reisman

Subjects: business and management, entrepreneurship, economics and finance, methodology of economics


Schumpeter said it was very likely that capitalism would self-destruct. He also said it was very likely that socialism would take its place. His evolutionary schema was therefore the dual prediction that the success of capitalism would be the failure of capitalism and that the antithesis of capitalism would in the end be its phoenix and its rising star: ‘Its very success undermines the social institutions which protect it, and “inevitably” creates conditions in which it will not be able to live and which strongly point to socialism as the heir apparent.’ (Schumpeter, 1942a:61). The blue tendency is sunset capitalism, bleeding from a thousand wounds, ‘decaying, shading off into something else, or tottering toward a violent death’ (Schumpeter, 1939:II, 908). The red tendency is sunrise socialism which knows that yesterday’s decline and fall is also today’s viable new start: ‘Things and souls are transformed in such a way as to become increasingly amenable to the socialist form of life.’ (Schumpeter, 1942a:162). The blue tendency and the red tendency are not separate developments, two things apart. Instead they are a continuing skein, as closely intertwined as today and tomorrow, as much a single whole as creative destruction: ‘The capitalist process not only destroys its own institutional framework but it also creates the conditions for another.’ (Schumpeter, 1942a:162). Because capitalism is, therefore socialism will be. Schumpeter, looking to the future, anticipated that red would win and blue would lose. It was not a forecast that inspired in him...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information