Capitalism and Crisis: Thinking Through Capitalist Crisis with Schumpeter and Polanyi

The chapter offers an analysis of capitalist crisis through a reading and discussion of two seminal texts on capitalism, Joseph Schumpeter’s Capitalism, Socialism and Democracy [1943] and Karl Polanyi’s The Great Transformation [1944]. These inspiring works on economic history and social theory offer profound insights into the nature of capitalist crisis. Although written in the mid-twentieth century many of the insights in these books are of relevance to the current situation as capitalism undergoes another revulsion. While the two authors were very different – Polanyi a left-wing critic of capitalism; Schumpeter a politically right-wing economist who favoured capitalism – both were influenced by Marx’s analysis of capitalism and have helped to shape the debate on the crisis of capitalism. Indeed, Schumpeter was convinced Marx was mostly right in his prediction of the end of capitalism and the triumph of socialism. The chapter begins with a brief account of the Marxist theory capitalism in order to contextualise the discussion of the two theorists.