AN ASSESSMENT OF SCHUMPETER'S CAPITALIST TRANSITION: AN ESSAY
Joseph Schumpeter, in Capitalism, Socialism, and Democracy, as well as in other works, wrote of an eventual transition of capitalism into socialism through a gradual evolutionary process. Schumpeter's focus throughout his career as an economic theorist was on innovation and its role in society. Thus, when he predicted that a transition eventually would occur from capitalism to socialism, it was not so much a thought that such an evolutionary transition would occur because capitalism became more humane, but rather just the opposite.
In Capitalism, Socialism, and Democracy, Schumpeter argued that corporations eventually would come to dominate life under the capitalist system. Under monopoly capitalism, corporations would place less of an emphasis on price and would therefore compete primarily on the bases of organizational and technological innovation. Eventually, Schumpeter (189) wrote that this competition based upon organizational and technological innovation would send "gales of creative destruction" through the economic system which eventually would result in a dissolution with capitalism on the part of society and the eventual transition of capitalism into socialism.
Schumpeter was not the first to view capitalism as a step along the way in the evolution of the economic system. Karl Marx before Schumpeter viewed economics as an evolutionary system of thought and Immanuel Wallerstein after Schumpeter continues to view economics within an evolutionary context. Other theorists also, both in the past and the present, have perceived and now perceive economics through an evolutionary prism, and they too believe that capitalism eventually will be transformed into a different sort of economic system, although not all think that the capitalist transition will lead to socialism.
Socialism, however, was the principal alternative to capitalism at the time Schumpet...