Originally published in 1927 and republished in the supplied 1954 version, Schumpeter’s review essay examines the third volume of Werner Sombart’s Der moderne Kapitalismus. Its governing distinction is between historical synthesis and economic explanation. Sombart’s achievement lies in organizing evidence, framing problems, and opening lines of inquiry; these accomplishments do not establish the analytical consistency of his arguments.
Schumpeter situates Sombart within the historical school’s movement beyond the Methodenstreit. Historical investigation requires concepts, while conceptual work develops through investigation. Their convergence occurs through research rather than an abstract settlement of methodological disputes. Sombart extends this cooperation by making historical construction central to economic inquiry:
Der ganze Wurf liegt in der Richtung des Schmollerprogramms und gab ihm einen neuen Impuls nach einer Richtung, die in ihm lag.
English translation: The whole conception lies in the direction of the Schmoller programme and gave it a new impulse in a direction that already lay within it.
Continuity with Schmoller coexists with a shift of emphasis. Sombart moves beyond detailed investigations toward a comprehensive architecture in which economic history and theory become interdependent tasks. Schumpeter judges this architecture by its capacity to make historical material intellectually productive:
Fruchtbar ist sie und das ganze ungeheuere Material der historischen Disziplinen fruchtbar macht sie zweifellos.
English translation: Fruitful it is, and it undoubtedly makes fruitful the whole immense material of the historical disciplines.
This praise does not endorse every explanation. Sombart’s economic systems, distinguished through organization, economic mentality, and technique, offer a flexible framework for comparison. Yet arranging historical experience into systems can obscure continuity and leave causal relations insufficiently specified. Schumpeter places this difficulty within a longstanding problem of historical understanding:
Zwar wird seit Jahrhunderten Geschichte nicht nur geschrieben sondern auch konstruiert.
English translation: To be sure, for centuries history has not only been written but also constructed.
The question is not whether historians construct their objects, but how effectively their constructions illuminate development. Sombart inherits Marx’s concentration on capitalism without matching his sustained analytical discipline. Where Marx pursues systematic explanation, Sombart experiments with perspectives whose implications remain incompletely developed. The freedom that makes the work suggestive also limits its explanatory force.
Schumpeter tests this distinction against the account of high capitalism. Identifying capitalism’s specific character is a major task, but Sombart’s definitions do not fully accomplish it. The year 1913 provides a practical endpoint for the evidence, not a decisive transition to late capitalism. Regulation, restrictions on competition, and organizational changes emerged gradually, exposing the difficulty of dividing continuous development into discrete systems.
The volume proceeds from entrepreneurs, the state, and technology through capital, labor, and markets to economic processes and business organization. Schumpeter suggests that cyclical movement might have supplied a stronger organizing principle. Sombart helped redirect attention from isolated crises toward recurrent fluctuations and understood depression in relation to preceding expansion. Nevertheless, his cycle theory fails to integrate his insights into entrepreneurship and credit creation, while giving insufficient attention to longer waves.
The treatment of entrepreneurs likewise combines sociological insight with analytical incompleteness. Sombart distinguishes types and motivations vividly but does not adequately explain entrepreneurial function or investigate social ascent and decline. His account of demand emphasizes producers’ influence over consumption; Schumpeter asks whether leadership in consumption must originate with producers. Business concentration also requires explanation rather than an assumption of rationality: banking interests and defensive combinations may preserve inefficient enterprises. Distinguishing actors’ purposes from systemic outcomes requires more precise analysis of monopoly, costs, and price discrimination.
Technology receives stronger approval. Sombart treats technical change as a social process and illuminates the organization and routinization of invention. Because future possibilities cannot be inferred from existing resources and methods, confident economic pessimism lacks a secure scientific foundation. His account of depersonalized enterprise is similarly suggestive, although its distributional consequences remain underexamined.
The concluding discussion finds unresolved connections among capital, credit, entrepreneurial profit, and interest. By contrast, the historical account of workforce formation retains considerable value despite gaps concerning mobility, population, and statistical methods. Schumpeter’s final assessment preserves his opening distinction: weak theoretical passages need not invalidate the historical construction. Sombart’s importance rests on transforming the agenda of inquiry, even where causal analysis remains unfinished.
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