Where Schumpeter was nearly Right - the Swedish Model and Capitalism, Socialism and Democracy
AbstractIn Capitalism, Socialism and Democracy Joseph A. Schumpeter concluded that socialism would eventually displace capitalism in Western democracies. This would come about as a result of the superior performance of capitalism. We extract six "stylized" propositions that are essential elements of Schumpeter's prediction about the fate of capitalism. These propositions are confronted with the development of the Swedish economy. The three main results of the analysis are: (1) The evolution of the Swedish economy closely followed Shumpeter's predictions until about 1980: Large firms became increasingly predominant in production and innovative activity, ownership of firms became more and more concentrated, individual entrepreneurship waned in importance, the general public grew increasingly hostile towards capitalism, and by the late 1970s explicit proposals for a gradual transfer of ownership of firms from private hands were launched. (2) Design of tax and industrial policies fueled a development of the economy along the lines predicted by Schumpeter. In general, the policies discouraged private wealth accumulation. In particular, the policies favored concentration of firms and concentration of private ownership. (3) The turning point away from the path to socialism coincides with real world developments that disclosed two major flaws in Schumpeter´s analysis. First, the ever more obvious failure of socialism in Eastern Europe went against Schumpeter's assertion that socialism can work. Second, Schumpeter, who thought that modern technology would make the giant corporation increasingly predominant, did not foresee the revival of entrepreneurship that took place in the Western countries around 1980.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 370.
Length: 29 pages
Date of creation: 03 Apr 2000
Date of revision:
Publication status: Published in Journal of Evolutionary Economics, 2001, pages 331-358.
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Corporatism; entrepreneurship; industrial policy; Schumpeter; Swedish Model;
Other versions of this item:
- Ulf Jakobsson & Magnus Henrekson, 2001. "Where Schumpeter was nearly right - the Swedish model and Capitalism, Socialism and Democracy," Journal of Evolutionary Economics, Springer, vol. 11(3), pages 331-358.
- Henrekson, Magnus & Jakobsson, Ulf, 2000. "Where Schumpeter was Nearly Right - The Swedish Model and Capitalism, Socialism and Democracy," Working Paper Series 533, Research Institute of Industrial Economics.
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Government Policy
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-04-17 (All new papers)
- NEP-CDM-2000-04-17 (Collective Decision-Making)
- NEP-HIS-2000-04-17 (Business, Economic & Financial History)
- NEP-INO-2000-04-17 (Innovation)
- NEP-TID-2000-04-17 (Technology & Industrial Dynamics)
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