Review to the book Capitalism, Socialism and democracy Essay

Review to the book Capitalism, Socialism and democracy - Essay Example The criticism of Schumpeter is reasoned and well-informed. His views in sociology are similar to Weber's. In "Marx the Economist" Schumpeter provides critique of the labor theory of value from the point of modern economic theory. His critics boils down to that the "labor theory does not account for values in exchange except on special and unrealistic assumptions; if those assumptions are made, then the propositions of the labor theory follow from the modern theory, which can thus explain all the labor theory can explain; and the modern theory can explain things the labor theory cannot explain" (Schumpeter: 24). Also Schumpeter discusses a number of other aspects of Marx's theory and composes a list of advantages and disadvantages. However, while he criticizes Marx's position that capitalism will eventually self-destroy, the reader may notice that his own views in this regard do not differ much from those of Marx's: Schumpeter believes that capitalism bears the seed of its own destruc tion. In the second part titled "Can Capitalism Survive" Schumpeter continues to argue that Marx is right in a way. He believes that Capitalism transform into socialism but the process of transformation will not occur in the way envisaged by Marx. There will be no economic crises and instead of it will be a growing crisis of legitimacy that caused by the progress of rationalization - the view that reflects the essence of Weber's teaching. He insists on that capitalist societies will become socialistic because intellectuals will persistently protect change in a socialistic direction. Simultaneously, Schumpeter underlines the great strength of capitalism which he believes lies in a very simple and powerful schema of motivators. The promises of wealth, coupled with the threats of poverty are powerful enough to attract the majority of normal people and leave those whom reject them in the minority. They are addressed to ability, energy and capacity for work; but if there were a way of measuring either that ability in general or the personal achievement that goes into any particular success, the premiums actually paid out would probably not be found proportional to either. Impressive rewards are thrown to a small minority of winners, thus " propelling much more efficaciously than a more equal distribution would, the activity of that large majority of businessmen who receive in return a very modest compensation or nothing or less than nothing, and yet do their utmost because they have the big prizes before their eyes and overrate their chances of doing equally well... both business success and business failure are ideally precise. Neither can be talked away. (Schumpeter: 73). Also Schumpeter maintains certain modern developments that have reduced the competitiveness of the capitalist economy. The neo-classical economists' analyses of the capable distribution of resources in an equilibrium state are not of much practical interest, since conditions change so rapidly that the system will never come into equilibrium. The capitalist economy will disappear because of gale of innovation. "A system - any system, economic or other - that at every given point of time fully utilizes its possibilities to the best advantage may yet in the long run be inferior to a system that does so at no given point of