38 pages • 1 hour read
Joseph Alois SchumpeterCapitalism, Socialism and Democracy
Nonfiction | Book | Adult | Published in 1942A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Index of Terms
Anarchism
The political philosophy which rejects the moral legitimacy of state authority over individuals. Anarchists have also often advocated violent revolution to overthrow states.
Bourgeoisie
In Marxist terminology, the class of people who own the means of production and therefore constitute the capitalist class. This is also how Schumpeter uses it in the text.
Capitalism
The social and economic system in which the means of production are owned privately, and in which workers sell their labor to owners for wages. More specifically, it also refers to a system, in contrast to Feudalism, where capital is continually reinvested to create more capital.
Creative Destruction
A term coined by Schumpeter in the text. It refers to the potential for monopoly firms to be “destroyed” and rendered redundant by new innovations in products and manufacturing processes. According to Schumpeter this threat both incentivizes innovation and forces monopolies to act efficiently.
Feudalism
The social and economic system which preceded capitalism. Feudal lords own land, the principal productive force. They rent it to peasants, or “serfs” tied to that land, in exchange for a share of the crops that the serfs produce.
Labour Party
Founded in 1900, the main socialist and left-wing party in the UK. Elected in 1945, the Labour Party was able to implement a significant socialist program at the time.
Monopoly
A firm that is the only significant power in a given industry. In classical economics, monopoly firms can influence price by restricting the quantity of commodities produced.
Oligopoly
Similar to monopoly. Rather than one dominant firm in an industry, there are several.
Perfect Competition
A market where there are many buyers and sellers; no one firm can influence prices. A model used in classical economics.
Proletariat
A Marxist term. This refers to the class of people under capitalism forced to sell their labor to the owners of the means of production for wages. Similar to, but not identical with, the concept of the working class.
SDP
This is the acronym for the Social Democratic Party, the German socialist party founded in 1863. Along with the British Labour Party, the SDP is historically one of the most successful socialist parties in Europe.
Socialism
In contrast to capitalism, socialism is the social and economic system whereby the means of production are controlled by the public “in common” rather than being privately owned by individuals. According to Marxist theory and Schumpeter, the system will emerge after the fall of capitalism.
Utopian Socialism
In contrast to Marxist socialism, a socialism which suggests blueprints for an ideal socialist society without any clear historical or social explanation of how this will come about. This was the dominant form of socialism prior to Marx.
