Schumpeter's 'Capitalism, Socialism and Democracy' - Parts 1,2 and 3

This was my first time reading a book by a textbook economist. (I never got beyond the second page of Smiths's The Wealth of Nations...) After learning that this book was first published in 1942, I was expecting it to contain a lot of outmoded Economic concepts and observations of nascent capitalism. But I must say, I was delightfully surprised. What really struck me was how the macro/micro-economic theories and concepts we learn in class have actually been in application and been debated since decades ago. A lot of the basic concepts I learnt in Econ class was mentioned or introduced in this book. Also, (maybe it's just me) I've always associated capitalism with post-WW2, and thought that the domineering political ideology was communism.

Schumpeter summarizes Marx's major arguments and points out a few logical and conceptual errors in Marxism that he believes will prevent Marxism from perpetuating. Because I never formally studied Marxism but only Leninism and Stalin's Russia, I naturally equated Russian communism (Bolshevism) with Marxism. I was duly flabbergasted when I learnt that they are not the same. Marx argues that when an economy has accumulated a sufficient amount of capital (thus becomes a capitalist economy), the bourgeoisie exploits the proletariat. Then 'Class Struggle' takes place whereby the proletariat seize political power and "expropriate the expropriators." The difference between this and Bolshevism is that Russia up till that stage was not a capitalist economy, and that Bolshevism tried to overthrow Tsarism, not capitalism (or bourgeoisie).

In his discussion of capitalism, he provides some directions for capitalist economies. He argues that the biggest challenge for capitalist economies is the friction between public and private spheres. I am yet to finish this book, but I am currently also reading 'Capitalism and Freedom' by Milton Friedman, and it is quite fascinating how the two economists differ in their perspectives. Schumpeter sees that there are ideas that we can adopt from Marxism and socialism and that capitalism "will not last." (However that doesn't mean that he is Marxist either.) Milton Friedman on the other hand, is a firm believer in liberalizing the market and minimum government intervention.

(Still in progress of reading both books)