"Schumpeter's work stands as one of the most brilliantly wrong-headed books of the century in its central prediction that socialism would ultimately replace capitalism because of the latter's insuperable cultural contradictions. Writing in 1943, Schumpeter argued that there was no inherent reason why central planning should work less well than free markets in the production of technological innovation, a point not as glaringly off the mark then as now. The central problem with capitalism, however, was not economic but cultural: it would produce a privileged class of people who would reject the sources of their own wealth and seek a socialist order. [...] Schumpeter's book contains what is probably the most realistic, albeit minimalist, definition of democracy as a competition among elites for the allegiance of the people."

"Schumpeter’s core argument in Capitalism, Socialism, and Democracy is reducible to three major tenets: (1) The essence of capitalism is innovation ('creative destruction') in particular sectors. Certain standard tools of economics, such as static equilibrium and macroeconomic analysis, can therefore disguise reality and mislead scholars and students. (2) The virtues of capitalism – in particular its steady but gradual pattern of growth – are long-run and hard to see; its defects, such as inequality and apparent monopoly, are short-run and conspicuously visible. (3) It is dangerous for economists to prescribe 'general' recipes, because political and social circumstances are always changing. Capitalism, Socialism, and Democracy was Schumpeter’s most popular success by far. Translated into at least sixteen languages, it still sells widely in paperback editions. Although the author often compared it unfavorably with his more scholarly books, it retains its seminal quality three generations after it appeared. Despite the book’s title, it contains little of lasting interest about either socialism or democracy. But it bursts with ideas about capitalism, and as a 'performance' – a term Schumpeter liked to apply to others’ works – it may be the best analysis of capitalism ever written."

"Capitalism, Socialism, and Democracy is packed with scintillating insight on all the topics that really matter: capitalism and its future, the absurdities of socialism, the dangers of democratic rule, the future of freedom, and the social dynamics that protect and undermine freedom. Schumpeter himself cannot be called a member of the Austrian School but he emerges from within its culture and among its leading thinkers. Schumpeter went his own way with an eclectic and unsystematic theory of economics. But he is second to none in the integration of social, political, and economic thought. He understood Marxism and capitalist theory as well as any of his contemporaries, and managed to keep enough distance from the affair of the day to observe the big trends and the dynamics pushing them. [...] It is most famous for its prediction that capitalism is unsustainable not because it is a flawed system but rather because voters and bureaucrats in an otherwise free society will fail to protect capitalism from its enemies. He is particularly ruthless in observing how people take the triumphs of capitalism for granted, and how even those who benefit most from its productivity tend to be the same people who want the capitalist process shut down in their own self-interest."

"Capitalism, Socialism, and Democracy is Schumpeter’s most enduring and influential work. It contains a sustained appreciation of Marx and one of the most searching systemic critiques of capitalism ever penned by one of its strongest defenders. [...] Schumpeter is enjoining on us the similarities of his critique to that of Marx as much as its differences. For Schumpeter (like Marx), capitalism grows the seeds of its own downfall. Butthe seeds are not grown from its failure (the increasing immiseration of the masses,decreasing returns to scale) but from its success. Capitalism has delivered remarkablegrowth in the standard of living of working people, but the capitalist ‘engine’ drivesincessant ‘gales of creative destruction’ – a metaphor uncannily like Marx’s ‘all that is solid melts into air’. Over time, the culture that long-run capitalism breeds becomes inimical to it. Nationalisation and the erosion of bourgeois spiritual and moral values that gave capitalism its impetus, cost–benefit calculation made the benchmark of all manner of human transaction, the abstraction of stock market rather than real property relations, and the routinisation of innovation: it sounds like early, ‘pre-scientific’ Marx 100 years on. [...] Schumpeter helps us to break down our black box approach to capitalism that wehave inherited from cultural Marxism. He insisted on distinguishing monopoly (bad) and big business (not necessarily bad and historically a very efficient driver of improvements in the lot of common people). He placed enormous stress on recognis-ably human agency in large-scale economic and social change: a focus on the entrepreneur as critical to the emergent process of coordination of resources, and his resolute denunciation of equilibrium economics and its impossibly all-knowing subject. He even addresses directly the current crisis in terms of the centrality of access to finance (it has for long been the major issue for the growth of cultural enterprise)."