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Capitalism Stands Its Trial Before Judges Who Have The Sentence Of Death In Their Pockets. They Are Going To Pass It, Whatever The Defense They May Hear; The Only Success Victorious Defense Can Possibly Produce Is A Change In The Indictment.

-Joseph A. Schumpeter

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Capitalism Stands Its Trial

Joseph A. Schumpeter

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Capitalism Stands Its Trial Before Judges Who Have The Sentence Of Death In Their Pockets. They Are Going To Pass It, Whatever The Defense They May Hear; The Only Success Victorious Defense Can Possibly Produce Is A Change In The Indictment.

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To Realize The Relative Validity Of One's Convictions And Yet Stand For Them Unflinchingly Is What Distinguishes A Civilized Man From A Barbarian.

We Always Plan Too Much And Always Think Too Little. We Resent A Call To Thinking And Hate Unfamiliar Argument That Does Not Tally With What We Already Believe Or Would Like To Believe.

Capitalism Stands Its Trial Before Judges Who Have The Sentence Of Death In Their Pockets. They Are Going To Pass It, Whatever The Defense They May Hear; The Only Success Victorious Defense Can Possibly Produce Is A Change In The Indictment.

To The Believer Marxism Presents, First, A System Of Ultimate Ends That Embody The Meaning Of Life And Are Absolute Standards By Which To Judge Events And Actions.

The Function Of Entrepreneurs Is To Reform Or Revolutionize The Pattern Of Production By Exploiting An Invention Or, More Generally, An Untried Technological Possibility For Producing A New Commodity Or Producing An Old One In A New Way, By Opening Up A New Source Of Supply Of Materials Or A New Outlet For Products, By Reorganizing An Industry And So On.

At The Heart Of Capitalism Is Creative Destruction.

It Is, After All, Only Common Sense To Realize That, But For The Fact That Economic Life Is A Process Of Incessant Internal Change, The Business Cycle, As We Know It, Would Not Exist.

The Trouble With Russia Is Not That She Is Socialist But That She Is Russia.

Success Depends On Intuition, On Seeing What Afterwards Proves True But Cannot Be Established At The Moment.

Innovation Is The Market Introduction Of A Technical Or Organisational Novelty, Not Just Its Invention.

The Capitalist Achievement Does Not Typically Consist In Providing More Silk Stocking For Queens But In Bringing Them Within The Reach Of Factory Girls In Return For A Steadily Decreasing Amount Of Effort.

Capitalism Inevitably And By Virtue Of The Very Logic Of Its Civilization Creates, Educates And Subsidizes A Vested Interest In Social Unrest.

Economic Progress, In Capitalist Society, Means Turmoil.

The Spirit Of A People, Its Cultural Level, Its Social Structure, The Deeds Its Policy May Prepare—all This And More Is Written In Its Fiscal History, Stripped Of All Phrases. He Who Knows How To Listen To Its Message Here Discerns The Thunder Of World History More Clearly Than Anywhere Else.

The Ballot Is Stronger Than Bullets.

Those Revolutions Are Not Strictly Incessant; They Occur In Discrete Rushes Which Are Separated From Each Other By Spans Of Comparative Quiet. The Process As A Whole Works Incessantly However, In The Sense That There Always Is Either Revolution Or Absorption Of The Results Of Revolution, Both Together Forming What Are Known As Business Cycles.

The Success Of Everything Depends On Intuition, The Capacity Of Seeing Things In A Way Which Afterwards Proves To Be True, Even Though It Cannot Be Established At The Moment, And Of Grasping The Essential Fact, Discarding The Unessential, Even Though One Can Give No Account Of The Principles By Which This Is Done.

This Civilization Is Rapidly Passing Away, However. Let Us Rejoice Or Else Lament The Fact As Much As Everyone Of Us Likes; But Do Not Let Us Shut Our Eyes To It.

Nothing Is So Treacherous As The Obvious.

The Capitalist Engine Is First And Last An Engine Of Mass Production Which Unavoidably Also Means Production For The Masses. . . . It Is The Cheap Cloth, The Cheap Cotton And Rayon Fabric, Boots, Motorcars And So On That Are The Typical Achievements Of Capitalist Production, And Not As A Rule Improvements That Would Mean Much To The Rich Man. Queen Elizabeth Owned Silk Stockings. The Capitalist Achievement Does Not Typically Consist In Providing More Silk Stockings For Queens But In Bringing Them Within Reach Of Factory Girls.

Democracy Is A Political Method, That Is To Say, A Certain Type Of Institutional Arrangement For Arriving At Political — Legislative And Administrative — Decisions And Hence Incapable Of Being An End In Itself.

Why Should We Stunt Our Ambitions And Impoverish Our Lives In Order To Be Insulted And Looked Down Upon In Our Old Age?

The Metal Of Economic Theory Is In Marx's Pages Immersed In Such A Wealth Of Steaming Phrases As To Acquire A Temperature Not Naturally Its Own.

Nothing Is So Retentive As A Nation's Memory.

It Is However Always Important To Remember That The Ability To See Things In Their Correct Perspective May Be, And Often Is, Divorced From The Ability To Reason Correctly And Vice Versa. That Is Why A Man May Be A Very Good Theorist And Yet Talk Absolute Nonsense.

All We Can Thus Far Say About The Duration Of The Units Of [the Business Cycle] And Each Of [its] Two Phases Is That It Will Depend On The Nature Of The Particular Innovations That Carry A Cycle,... And The Financial Conditions And Habits Prevailing In The Business Community In Each Case.

Politicians Are Like Bad Horsemen Who Are So Preoccupied With Staying In The Saddle That They Can't Bother About Where They're Going.

Profit Is The Payment You Get When You Take Advantage Of Change.

The Modern Mind Dislikes Gold Because It Blurts Out Unpleasant Truths.

Our Poverty Will Be Brought Home To Us To Its Full Extent Only After The War.

The Typical Citizen Drops Down To A Lower Level Of Mental Performance As Soon As He Enters The Political Field. He Argues And Analyzes In A Way Which He Would Readily Recognize As Infantile Within The Sphere Of His Real Interests. He Becomes Primitive Again.

The Strategic Stimulus To Economic Development In Schumpeter's Analysis Is Innovation, Defined As The Commercial Or Industrial Application Of Something New---a New Product, Process Or Method Of Production, A New Market Or Source Of Supply, A New Form Of Commercial, Business Or Financial Organization.

For The Duration Of Its Collective Life, Or The Time During Which Its Identity May Be Assumed, Each Class Resembles A Hotel Or An Omnibus, Always Full, But Always Of Different People.

It Is Quite Possible That Future Generations Will Look Upon Arguments About The Inferiority Of The Socialist Plan As We Look Upon Adam Smith's Argument About Joint Stock Companies Which, Also, Were Simply False.

The Stock Exchange Is A Poor Substitute For The Holy Grail.

The Evolution Of The Capitalist Style Of Life Could Be Easily - And Perhaps Most Tellingly - Described In Terms Of The Genesis Of The Modern Lounge Suit.

As A Matter Of Fact, Capitalist Economy Is Not And Cannot Be Stationary. Nor Is It Merely Expanding In A Steady Manner. It Is Incessantly Being Revolutionized From Within By New Enterprise, I.e., By The Intrusion Of New Commodities Or New Methods Of Production Or New Commercial Opportunities Into The Industrial Structure As It Exists At Any Moment.

Capitalist Economy

The Very Foundation Of Private Property And Free Contracting Wears Away In A Nation In Which Its Most Vital, Most Concrete, Most Meaningful Types Of Private Property And Free Contracting Disappear From The Moral Horizon Of The People.

The Capitalist Process Shapes Things And Souls For Socialism.

The First Thing A Man Will Do For His Ideals Is Lie.

Things Economic And Social Move By Their Own Momentum And The Ensuing Situations Compel Individuals And Groups To Behave In Certain Ways Whatever They May Wish To Do-not Indeed By Destroying Their Freedom Of Choice But By Shaping The Choosing Mentalities And By Narrowing The List Of Possibilities From Which To Choose.

Surely, Nothing Can Be More Plain Or Even More Trite Common Sense Than The Proposition That Innovation [...] Is At The Center Of Practically All The Phenomena, Difficulties, And Problems Of Economic Life In Capitalist Society.

We Always Plan Too Much And Always Think Too Little.

There Is Another Method Of Obtaining Money... It Does Not Presuppose The Existence Of Accumulated Results Of Previous Development, And Hence May Be Considered As The Only One Which Is Available In Strict Logic. This Method Of Obtaining Money Is The Creation Of Purchasing Power By Banks. The Form It Takes Is Immaterial.

The Religious Quality Of Marxism Also Explains A Characteristic Attitude Of The Orthodox Marxist Toward Opponents. To Him, As To Any Believer In A Faith, The Opponent Is Not Merely In Error But In Sin. Dissent Is Disapproved Of Not Only Intellectually But Also Morally. There Cannot Be Any Excuse For It Once The Message Has Been Revealed.

Innovations Are Changes Which Cannot Be Decomposed Into Infinitessimal Steps.

It Is Not True That Democracy Will Always Safeguard Freedom Of Conscience Better Than Autocracy. Witness The Most Famous Of All Trials. Pilate Was, From The Standpoint Of The Jews, Certainly The Representative Of Autocracy. Yet He Tried To Protect Freedom. And He Yielded To A Democracy.

Lack Of Outlets, Excess Capacity, Complete Deadlock, In The End Regular Recurrence Of National Bankruptcies And Other Disasters-perhaps World Wars From Sheer Capitalist Despair-may Confidently Be Anticipated. History Is As Simple A That.

Pessimistic Visions About Almost Anything Always Strike The Public As More Erudite Than Optimistic Ones

Access To The National Dividend Is Usually To Be Had Only On Condition Of Some Productive Service Previously Rendered Or Of Some Product Previously Sold. This Condition Is, In This Case, Not Yet Fulfilled. It Will Be Fulfilled Only After The Successful Completion Of The New Combinations. Hence This Credit Will In The Meantime Affect The Price Level.

Geniuses And Prophets Do Not Usually Excel In Professional Learning, And Their Originality, If Any, Is Often Due Precisely To The Fact That They Do Not.

The State Has Been Living On A Revenue Which Was Being Produced In The Private Sphere For Private Purposes And Had To Be Deflected From These Purposes By Political Force. The Theory That Construes Taxes On The Analogy Of Club Dues Or Of The Purchase Of The Services Of, Say, A Doctor Only Proves How Far Removed This Part Of The Social Sciences Is From Scientific Habits Of Mind.

The Banker, Therefore, Is Not So Much Primarily A Middleman In The Commodity "purchasing Power" As A Producer Of This Commodity. However, Since All Reserve Funds And Savings Today Usually Flow To Him, And The Total Demand For Free Purchasing Power, Whether Existing Or To Be Created, Concentrates On Him, He Has Either Replaced Private Capitalists Or Become Their Agent; He Has Himself Become The Capitalist Par Excellence.

The Intellectual And Social Climate Needed To Allow Entrepreneurship To Thrive Will Not Exist In Advanced Capitalism.

The Perennial Gale Of Creative Destruction

For One Thing, To Predict The Advent Of Big Business Was Considering The Conditions Of Marx's Day An Achievement In Itself.

Entrepreneurial Profit Is The Expression Of The Value Of What The Entrepreneur Contributes To Production.

Recognition Of The Inevitability Of Comprehensive Bureaucratization Does Not Solve The Problems That Arise Out Of It.

The Essential Point To Grasp Is That In Dealing With Capitalism We Are Dealing With An Evolutionary Process

Creative Destruction

Bureaucracy Is Not An Obstacle To Democracy But An Inevitable Complement To It.

Situations Emerge In The Process Of Creative Destruction In Which Many Firms May Have To Perish That Nevertheless Would Be Able To Live On Vigorously And Usefully If They Could Weather A Particular Storm.

Gentlemen, A Depression Is For Capitalism Like A Good, Cold Douche.

Want And Effective Demand Are Not The Same Thing. If They Were, The Poorest Nations Would Be The Ones To Display The Most Vigorous Demand.

In One Important Sense, Marxism Is A Religion. To The Believer It Presents, First, A System Of Ultimate Ends That Embody The Meaning Of Life And Are Absolute Standards By Which To Judge Events And Actions; And, Secondly, A Guide To Those Ends Which Implies A Plan Of Salvation And The Indication Of The Evil From Which Mankind, Or A Chosen Section Of Mankind, Is To Be Saved.

There Exists No More Democratic Institution Than The Market

Marxism Is Essentially A Product Of The Bourgeois Mind.

In Economic Life Competition Is Never Completely Lacking, But Hardly Ever Is It Perfect.

Can Capitalism Survive? No. I Do Not Think It Can.

Creative Destruction Is The Essential Fact About Capitalism.

I Set Out To Become The Greatest Lover In Vienna, The Greatest Horseman In Austria, And The Greatest Economist In The World. Alas, For The Illusions Of Youth: As A Horseman, I Was Never Really First-rate.

I Know That It Is Not Enough To Be Remembered For Books And Theories. One Does Not Make A Difference Unless It Is A Difference In People's Lives.

Capitalism Survive?—i Have Tried To Show That A Socialist Form Of Society Will Inevitably Emerge From An Equally Inevitable Decomposition Of Capitalist Society.

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