HST 360, Research and Innovation Policy
Spring 2015

Reading guide and questions for Joseph A. Schumpeter, Capitalism, Socialism and Democracy
(1976 HarperPerennial edition; originally published in 1942)

Introduction by Tom Bottomore

  1. How does Bottomore summarize Schumpter's arguments? (ix-x)
  2. According to Bottomore, how did Schumpeter's ideas about democracy and socialism hold up in practice? Note that Bottomore was writing in 1976.

Part II: Can Capitalism Survive?


  1. What is Schumpeter's thesis, and what does he say about its desirability?

Chapter V: The Rate of Increase of Total Output

  1. Skim pages 63-65 and start on the top of page 66. Why does Schumpeter concentrate on the figure of 2% total output? [don't spend too much time with this question.]
  2. What is the "capitalist achievement" featured on page 67?
  3. What do industrial revolutions do, and how do they work? Does Schumpeter see them as effective? (67-68)
    1. More specifically, how do "revolutions periodically reshape the existing structure of industry"? Schumpeter names 5 specific ways.
  4. What is the source of the unemployment problem? (69-71)

Chapter VI: Plausible Capitalism

  1. What links does Schumpeter make between the bourgeoisie and business success? (73-74)
  2. What does Schumpeter mean when he discusses the classical economists and their "bourgeois blinkers"? (75-76)
  3. Is perfect competition the norm? (78)
  4. What are the characteristics of Oligopoly? (79)
  5. What is Schumpeter trying to accomplish with his distinction between the "man in the street" and the "classical doctrine" of economics?

Chapter VII: The Process of Creative Destruction

  1. Note the change that Schumpeter describes in "capitalist reality" on page 81.
  2. Read carefully the paragraphs on page 82 where Schumpter describes capitalism as an "evollutionary process" that can "never be stationary."
  3. Read pages 83-86 carefully. Then re-read it, making sure you understand
    1. Schumpeter's definition of "Creative Destruction";
    2. What the existence of "Creative Destruction" means for "our problem" (that is, the analysis of capitalist economies);
    3. The significance of price competition for Schumpeter's analysis; and
    4. How we might generalize from his example of the retail sector.

Chapter VII: Monopolistic Practices

You can skim this chapter, although you should make sure to take a look at the sections highlighted in the photocopy version on Moodle. In particular, make sure you pause to read closely on pages 87, 89, 96, 98-99, 101, 102, and 104-6. Make sure you understand what Schumpeter means by "Monopolist" (98-99) and his view of "perfect competition" (104 and especially 106).

Chapter IX: Closed Season

  1. What are Schumpter's five "candidates for the role of exceptional circumstances not inherent in the business processes of capitalism which have been put up by economists or historians"? (107)
  2. What is the relationship between technological progress and capitalist enterprise? (110)