Can Capitalism Be Restored?

Sunday September 5th, 2010   •   Posted by Robert Higgs at 11:38pm PDT   •  

I pose this question seriously, not as a physiologist, but as an economic historian. I am provoked to raise the question by an advertisement that Amazon sent me recently, calling my attention a book titled Can Capitalism Survive? Creative Destruction and the Future of the Global Economy. Seeing this sales pitch, my immediate reaction was my usual sadly amused reply to such a question: Can capitalism survive? What an odd question! Assuming that capitalism ever existed at all, it has been dead for at least a century.

At first glance, I did not recognize that the book being advertised is one for which, in a sense, I am responsible. It turns out that the �new� book is only an old (portion of a) book, now adorned by a new subtitle and two new introductory paragraphs by the Newsweek columnist Robert J. Samuelson. If I reveal that the book�s author is Joseph A. Schumpeter, many readers will recognize it immediately as Part II of that famous economist�s best-known work Capitalism, Socialism and Democracy, first published in 1942, with subsequent editions in 1947 and 1950.

The new book�s front cover has a blurb from Fortune that declares Schumpeter to have been �the most influential economist of the twentieth century . . . a major prophet.� The back cover has an embarrassingly superficial blurb by publisher Steve Forbes that, among other things, describes Schumpeter as �the twentieth century�s foremost economist.�

I do not consider Schumpeter entitled to be called the most influential economist of the past century?that distinction unfortunately belongs to John Maynard Keynes, and Milton Friedman surely deserves the second place. As for Schumpeter�s rank as a prophet or as the intellectually foremost economist, I would place him below Ludwig von Mises and F. A. Hayek.

Nevertheless, Schumpeter was unquestionably one of the most important economists of his day, and his work has continued for good reason to attract readers ever since his death in 1950.

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September 2010