Schumpeter, the New Deal, and Democracy

Abstract

Joseph Schumpeter is known to American political scientists as the originator of an elite conception of democracy as a political “method,” a conception found in hisCapitalism, Socialism and Democracy(1942). But I show in this paper that in Schumpeter's study of the development of liberal capitalist societies, he also treated democracy as a socially transformative historical tendency, one of several that he thought were propelling such societies toward a form of “democratic” socialism. Schumpeter regarded the politics of labor and the reorientation of state policy in the New Deal era as evidence of these tendencies—especially of a tendency toward the democratic reconstruction of workplace hierarchy, which he deplored. In his later work, Schumpeter sketched the outlines of a “democratic” socialist society in which the most harmful of these tendencies, in his estimation, would be curbed.