Why socialism failed: Toward a theory of system breakdown ? Causes of disintegration of East European state socialism

Abstract

In 1942 Schumpeter wrote Capitalism, Socialism and Democracy. 1 The book was written in the shadows of the Great Depression and was inspired by the hopes of an allied victory. Of central importance to the book then was to construct the vision, and write of the needs, of the post-fascist post-war reconstruction era. In the work, in the light of the developments of the second half of the twentieth century, Schumpeter asked two poignant questions and gave two debatable answers: "Can capitalism survive? No ''2 and "Can socialism work? Of course it can" Capitalism, Socialism and Democracy, in our mind, is a companion volume of Mannheim's Man and Society in the Age of Reconstruction 3 and Karl Polanyi's The Great TransformationJ Schumpeter, Mannheim, and Polanyi shared one common belief and one common interest: each one of them believed that with the Great Depression and the Second World War laissez-faire capitalism had came to its end, and all three were interested in working on blue-prints for post-war reconstruction of Western societies, s Reconstruction - all three agreed - has to be innovative and has to have a new base of departure: it can neither be capitalism as we used to know it nor can it be totalitarianism of rightwing or left-wing versions. Each in his own way foreshadowed something that eventually became the social-democratic welfare state of the 1950s-1970s and that proved to be by all objective measures the most successful epoch of capitalism.