World Publishing Company

Abstract

months, in 1919, was Minister of Finance of Austria.From 1909 to 1920 Schumpeter held academic positions, first ¾t Cernauti and then at Graz.Both were small universities in a provincial, narrow environment which was distasteful to him and from which he fled whenever his teaching obligations permitted.Even in 1925 when he was appointed to a professorship at Bonn, he was so heavily committed to writing articles on current economic topics for various magazines, that again he could not enjoy the calmness and serenity normally associated with academic life.Only when he came to Harvard in 1932 did he devote his full time to teaching and research.He consciously abstained from any attempt to exert a direct influence on practical affairs and, in 1943, turned to writing his last posthumously published book on the History of Economic Analysis, because, as he said in a letter, "it is simply the subject among all those at hand, that is farthest removed from current affairs."In spite of the varied activities of his younger years, Schumpeter had produced three books by the time he was thirty-one.The first and third dealt with problems of economic theory and the history of economic ideas.They were solid and imaginative contributions to the science of economics, but they were not works which make history.His second book, The Theory of Economic Development, which appeared in 1912, established his reputation.This work contains his basic views on the dynamics of modern capitalism, and almost all his later scientific work-most of which was written more than two decades after the fertile outpouring of his youthful vision-constitutes an elaboration and refinement of the fundamental theories expostulated by a youthful man in his twenties.The two essays reprinted in this volume belong to this group of writings.Imperialism had been subjected to a scientific study first by John A. Hobson, Rudolf Hilferding and Rosa Luxemburg.They all considered it an aspect of mature capitalism.What was more natural than that Schumpeter should attempt to throw further light on it and determine its relationship to the dynamics of capitalism as Vlll INTRODUCTION which the peak positions are held by an aristocracy, often with strong military leanings, to one in which the center of the stage is taken by a bourgeoisie led by a group of creative entrepreneurs.But the class structures and leadership patterns in an aristocratic and a bourgeois society differ because under each of the two systems different "socially necessary functions" need to be performed.As Schumpeter points out, this difference may be stated by saying that "the feudal master class was once-and the bourgeoisie was never -the supreme pinnacle of a uniformly constructed social pyramid.The feudal nobility was once-and the bourgeoisie was never-not only the sole possessor of physical power; it was physical power incarnate. . . .The nobility conquered the material complement to its position, while the bourgeoisie created this complement for itself."These two essays form, in a very real sense, the capstone to Schumpeter's system.They were written in the interval between his fertile youth and the re-evaluation of his doctrines in his mature age.But although Schumpeter wrote (in addition to many articles) three full-sized books during his Harvard period, he never again discussed the problems of imperialism and social classes in his later work.Hence, we may regard these two essays as the final word he had to say on these subjects.His concern with the nature of capitalist dynamics demanded that he contrast it with socio-economic movements in pre-capitalist periods.Who took on leadership roles in society in the absence of the creative entrepreneurs?What were the conditions which brought forth these leaders, and why were they able to perform the "socially necessary functions" of their societies?In the essays on imperialism and on social classes the answers to these questions are provided.The process of capitalist development is not only set against a different process of feudalist social dynamics, but at the same time placed in its historical perspective.Schumpeter's emphasis of the role of elite groups appears to place him among several other writers of the first two decades of this century who also developed "elitist" theo-