Schumpeter's work stands as one of the most brilliantly wrong-headed books of the century in its central prediction that socialism would ultimately replace capitalism because of the latter's insuperable cultural contradictions. Writing in 1943, Schumpeter argued that there was no inherent reason why central planning should work less well than free markets in the production of technological innovation, a point not as glaringly off the mark then as now. The central problem with capitalism, however, was not economic but cultural: it would produce a privileged class of people who would reject the sources of their own wealth and seek a socialist order. In this he seemed quite right for many years as intellectuals and artists in the West struggled against the very system that made their discourse possible. Things began to look rather different after the Reagan and Thatcher revolutions in the 1980s and the subsequent collapse of communism. Schumpeter's book contains what is probably the most realistic, albeit minimalist, definition of democracy as a competition among elites for the allegiance of the people.
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