Can Capitalism Survive?: Creative Destruction and the Future of the Global Economy

Written just before WWII, //Can Capitalism Survive?// chronicles Schumpeter's critical analysis of the structural issues that maintain and erode the integrity of capitalism. Schumpeter interestingly predicts many events that have occurred in the process of globalization; he notes that imperialist wars (ex.: Vietnam, Iraq) will spell economic catastrophe before anything else; likewise, he anticipates our current "Green" frenzy, "The conquest of the air may well be more important than the conquest of India was--we must not confuse geographical frontiers with economic ones." This is a prophetic assertion in that capitalism has sold us environmental demise and will, in turn, now sell us "green" sustainability. While Schumpeter has long been praised for his conception of capitalism as a process of "creative destruction," we mention that this is only one of eight chapters and not the only takeaway. Since Schumpeter's analysis, we've seen the rise and fall of Keynesian economics, the development of neo-liberalism and its current failings, and how "creative non-destruction" of our financial institutions has temporarily stabilized our GDP while leaving a record number of un/underemployed workers to the detriment of our social wealth. Hence, "in breaking down the pre-capitalist framework of society, capitalism thus broke not only barriers that impeded its progress, but also flying buttresses that prevented its collapse." Lastly, Schumpeter's insights help illuminate how the structure of capitalism is defined by its dialectic--our current climate of alarming crises coupled with excessive profits and rewards for those fortunately holding capital.

Reviewed by Joe Atkins

Joseph Schumpeter's 'Can Capitalism Survive?' presents a detailed theory of his projection for the future of capitalism, while extrapolating on the reasons for and against its coming demise.

His observations about the superstructure of the capitalist economy are incredibly astute, in ways that other economists of the Austrian school would fail to perceive- it's historical significance, and, most importantly, it's ramifications on the development of society over the past two-hundred years.
Moreover, he humbly acknowledges, in ways other free-marketeers do not, a number of its negative consequences on social development- particularly in regard to family-structure, faith and basic humanistic compassion.

And yet, throughout the work there are a number of pressing contradictions in his logic- particularly in his failure to reconcile the historical development of capitalism vis-a-vis previous systems of social order.
He, like most economists, also attempts to repudiate any moral arguments in the battle between capitalism v. socialism (ones that he suggests would inherently favor socialism)-- while simultaneously defending an individualist utilitarianism throughout the entire work.
His position? The long-range, the broad-picture of economic development is what we must fixate upon, rather than the current condition when discussing the merits of unfettered capitalism. Here he introduces his theory of 'creative destruction', arguing that the growth of technology is spurred on by a perpetual cycle of destruction and creation of existing structures, which is constantly leading innovation. With this he staunchly defends the technological and material progress of the past two centuries as indebted solely to capitalism. He attributes all the positives of modernity to capitalism--embodied rationality-- while arguing that the rationality of socialism, and recognition of failures within capitalism, as short-sighted. In short, he has his cake and eats it too.

Schumpeter's 'Can Capitalism Survive?' is as much a treatise in defense of capitalism as it as a lamentation for its potential destruction. While it may be dated (completed and published in 1942), it continues to provide a number of solid arguments for those in favor of its continuation, even if his underlying ideology blinds him in recognizing some pressing logical shortcomings.