Question

How does Schumpeter’s vision of the capitalist process overlap with and differ from Marx’s? Why did Schumpeter believe that capitalism could not survive? How does his vision here compare to those of Veblen and Keynes?

Answer 1

Joseph Schumpeter is an Austrian economist. In his famous writing “Capitalism, Socialism and Democracy.” And arguing that the creative destruction the not only destroy capitalism but also demise the system. The creative destruction means that the industrial revolution that restructures the economic system and destroys the old system and creating a new one. In the Marxian system this as the process of accumulation of wealth under capitalism. Marx can not use the term creative destruction. Marx and his followers write the destruction of a mass of productive forces. According to Schumpeter, capitalism is an economic change, and it cannot be stationary. The capitalist engine can destroy because of the new consumer goods, markets and new industrial organization. In his vision of capitalism, innovation creates some monopoly power, but it does not sustain.

When we compare the Schumpeterian vision with the Keynesian revolution, he failed to explain the innovation in his theory. Keynes nothing say about the innovative entrepreneur class. Both Veblen and Schumpeter are lived in the same period and both of their work is quite similar. He mainly focused on teleological thinking.