Schumpeter warned that socialism might ultimately prevail over capitalism, for four reasons. Creative disruption is rarely popular. Capitalism itself tends towards oligopoly. Intellectuals are susceptible to socialism. So are many bureaucrats and politicians. Socialism had manifestly failed everywhere it had been tried by the 1980s, apparently proving Schumpeter wrong.
Despite the fundamental distinction between the two, misunderstandings of capitalism and socialism — and their implications for freedom — abound, and usually in favor socialism. In these circumstances, a return to the basics is warranted. The 17th-century writings of John Locke in defense of political and economic freedom and the 19th- century critique by Karl Marx of political and economic freedom represent classics of the genre.
With this issue, scholars at the Hoover Institution are launching a program designed to evaluate free-market capitalism, socialism, and hybrid systems to determine how well the various governmental and economic forms promote general well-being and prosperity. The project is particularly important and timely, given recent interest in policies that are radical from a US historical perspective, some of which are advocated by political leaders and presidential candidates.