Competition in Transitional Processes: Polanyi and Schumpeter

We examine parallels and differences in the analyses of competition in processes of societal transition by Karl Polanyi and Joseph A. Schumpeter. We argue that although their understanding of historical processes differs - transformational-political vs. evolutionarynatural - the central mechanism of change is strikingly similar. We identify three spheres essential to both authors’ works: the economic, the political and the socio-cultural sphere. Both Polanyi and Schumpeter describe the dominance of the economic sphere over the other parts of society. In capitalism this dominance stems from its emergence and the concept of competition. The consequence is a profound change in societal relations which distort the socio-cultural sphere via rationalisation (Schumpeter) or commodification (Polanyi). This transcends towards the political sphere and can have detrimental consequences for democracy. We capture similarities as well as differences in the respective theories, clarify the role competition plays therein and discuss the consequences for the political process. We make use of the complementarity of the theories to gain valuable insights on the interdependence of capitalism and democracy.