From Creative Action to the Social Rationalization of the Economy: Joseph A
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From Creative Action to the Social Rationalization of the Economy: Joseph A. Schumpeter's Social Theory* HARRY F. DAHMS Florida State University Schumpeter'swritings on the transitionfrom capitalism to socialism, on innovative entrepreneurship,on business cycles, and on the modern corporation have attracted much attention among social scientists. Although Schumpeter'stheoretical and socio- logical writings resemble the works of Marx, Durkheim,and Weberin that theyfurther our understandingof the rise and nature of modern society, his contributionto social theory has yet to be assessed systematically.Arguing that Schumpeter'sperspective, if understood in social theoretical terms, provides a promising starting point for the sociological analysis of the changing relationship between economy and society, I concentrateon two elementsof his work that are of value to theoreticalsociology today: the distinction between creative action and rational action that is fundamental to his theory of the entrepreneur,and his thesis that the success of the capitalist system leads to its demise. Joseph Schumpeter's work is widely received as paradoxical and contradictory.' He was the conservative champion of innovative entrepreneurship whose lifework culminated in the thesis that the success of the capitalist economy leads to the downfall of the capitalist social order. For decades, readers of his works have tried unsuccessfully to reconcile the tension between his attitudes toward, and his analyses of, capitalism and socialism. Schumpeter's diverse writings are read most often by economists whose familiarity with the history of the social sciences is too narrow to encompass his work. When read from a social theoretical perspective, however, his work gains greater coherence as a compelling interpretation of the social and economic transformations of capitalism in the twentieth century. Schumpeter was one of this century's most complex economists. His view of economics was unconventional, as shown by this quote from the History of Economic Analysis: [S]cience as a whole has never attained a logically consistent architecture;it is a tropical forest, not a building erected according to blueprint . .. the frontiers of the individual sciences or of most of them are incessantly shifting and . there is no point in trying to define them either by subject or by method. This applies particularlyto economics, which is not a science in the sense in which acoustics is one, but is rather an agglomeration of ill-co-ordinated and overlapping fields of research in the same sense as "medicine" (Schumpeter 1954:10). It is impossible to categorize Schumpeter neatly in the social-scientific division of labor. Following Max Weber, Schumpeter contended that in order to attain the status of a true science, economics must embrace economic theory, economic history, economic sociology, and economic statistics, under the heading of Sozialokonomik, or socioeconomics (see * Department of Sociology, Florida State University, Tallahassee, FL 32306-2011. I would like to thank KimberlyBarton, Catherine Fobes, Lawrence Hazelrigg, and Guy Oakes for their helpful comments and editing, as well as the journal'scopy-editor, Karen I Feinberg. See, for instance, the essays in Heertje (1981) by Tom Bottomore,Robert Heilbroner,Paul Samuelson, and others. Sociological Theory 13:1 March 1995 ? American Sociological Association. 1722 N Street NW, Washington, DC 20036 2 SOCIOLOGICALTHEORY Swedberg 1991:84-89).2 Schumpeterregarded himself as a social economist in this sense, although he maintained that neoclassical economics had to provide the foundation of socioeconomics. Sociologists' rereadingof some of Schumpeter'swritings during the 1980s gave important impulses to the emergenceof the "new economic sociology."His overall perspectiveon the economy and its study is highly compatible with the key concept in new economic sociology, namely that economic action and institutionsare socioculturally"embedded" (see Granovetter1985, 1990). His writings also inspired innovations within mainstreameco- nomics itself: "evolutionaryeconomics" aims at understandinghow capitalist economies change within the overall frameworkof neoclassical economics (Hanusch 1988; Nelson and Winter 1982). Since the early 1980s, the numberof publicationson Schumpeterhas grown steadily.3Yet although his work has become increasingly useful in framing new research in the social sciences, its potential for broadening the terrain of social theory remains unexplored. To identify Schumpeter'stheoretical contributionto sociology, one must distinguish between social theory and sociological theory. Social theory and sociological theory are often used interchangeably,although they signify differenttypes of discourses and different types of projects.Most important,they display a distinctivelydifferent bearing on sociology as a social science. Historically, social theories typically have attemptedto understand, explain, or clarify large-scale social changes, such as the rise of the capitalisteconomy and the establishmentof parliamentarydemocracy in western Europe and North America. By contrast,sociological theories comprise more recent undertakingsto set up a frameworkfor the systematic organizationof the results of empiricalresearch into a coherent and all-en- compassing understandingof modern society. Steven Seidman (1991:131-32) has pointed out that social theorists "relate stories of origin and development,tales of crisis, decline, or progress,"which are "closely connected to contemporarysocial conflicts and public debates."They "aimnot only to clarify an event or a social configurationbut also to shape its outcome."In contrast,sociological theorists attempt "to uncover a logic of society . [and] to discover the one true vocabularythat mirrorsthe social universe";they "aimto abstractfrom currentsocial conflicts to reflect on the conditions of society everywhere,to articulatethe language of social action, conflict, and change in general"and "seek to find a universallanguage, a conceptual casuistrythat can assess the truth of all social languages."Social theorists endeavor to understandthe logic of social and/orpolitical historicaltransformations; sociological theorists strive to set up a suprahistoricalframe of referencefor theoreticaland empiricalresearch that achieves the degree of linguistic and methodological compatibility needed for application to all societies and cultures. To be sure, the two are not mutuallyexclusive. In terms of Seidman'sdistinction between these two types of theory-which I employ 2 The four approaches fulfill complementaryanalytical and empirical tasks. Economic theory provides the generaland unifyingframework in which the contributionsof the otherapproaches are translatedinto one language and incorporatedinto a formal model. Economic history provides the data about the context, the concrete developments, and the changes through which the modem capitalist economy emerged. Economic statistics provides past and currentdata of economic performance-the environmentaland structuralconditions of supply and demand of naturalresources, labor, products,equipment, and so on. Economic sociology, finally, examines the social, political, and cultural conditions of economic action and institutions.In addition to the works that I will mention in this essay, Schumpeter'seconomic-sociological writings include Schumpeter([1918-19] 1991, [1927] 1991, [1949] 1975). (Also see Acham 1984; Davis 1960; Eisermann 1965; von Beckerath 1951). 3 The "SchumpeterRenaissance" (Bombach 1981; Harwood 1979) came to a head in 1983, 100 years after Schumpeter'sbirth, when he was selected for inclusion in the centennialcelebrations of the death of Karl Marx and the birth of John Maynard Keynes (Bos, Bergson, and Meyer 1984; Bos and Stolper 1984; Helburn and Bramhall 1986; Seidl 1984). Although all three shared a principal concern with the future of capitalism, the recognition that Schumpeterreceived at this time could not be anticipatedbecause of the comparativelyscant literaturethen publishedon his work. Accordingto Augello (1990), as many works on Schumpeterwere published in the 1980s as during the entire period from the late 1900s to the late 1970s. JOSEPHSCHUMPETER'S SOCIAL THEORY 3 for illustrationpurposes-Schumpeter certainlyqualifies as a social theorist:he did "relate stories of origin and development,tales of crisis, decline, or progress"that were closely connected to social conflicts and public debates of his time, especially concerning the transitionfrom capitalism to socialism. He attemptedto clarify the "social configuration" of modem capitalism,although apparently he was too closely constrainedepistemologically by the positivistic and determinist aspects of his work to conceive of, or concede, the possibility that social actors (or theorists)could "shape"outcomes of historicaltransforma- tions (see Winterberger1983). Given that Schumpeterconsidered himself an economist, he did not aspire to develop a sociological theory as delineated by Seidman. Yet do elements of his work contributeto sociological theory? In his recent work on the "creativityof action," Hans Joas (1992) outlined a sociologically viable theory of creative action. Although one chapteraddresses "economicand social action,"Joas does not mention Schumpeter.Yet Schumpeter'stheory of the innovative entrepreneurrests on the distinction between creative and rational economic action. This distinction is basic to all of Schumpeter'shistorical and theoretical writings,