Can capitalism survive? No. I do not think it can, Joseph
Schumpeter writes at the beginning of Part II of CAPITALISM,
SOCIALISM, AND DEMOCRACY. We are now publishing this famous section
(about 100 pages) as a stand alone book. In these pages Schumpeter
introduced to the world the concept of "Creative
Destruction." This famous theory states that in capitalist
economies new innovations, when first introduced, erode the
position of established firms, while providing new and previously
unforeseen avenues of economic growth. For example, think of the
music industry in our lifetime: Mp3s (by extension, iPods) have
replaced CDs, which in turn replaced cassettes and records in the
1980s. Schumpeter also controversially argued that capitalist
societies hold the seeds of their own destruction in their very
foundations. Not only is it a system reliant on the inherently
destabilizing force of change ("creative destruction"),
but it is also susceptible to large monopolistic enterprises such
as Wal Mart, which come to power as a result of capitalist
innovation, but once dominant, hold the power to eliminate
competition and, by extension, innovation.
