“Fettered” and “unfettered” capitalism in J.A. Schumpeter’s concept of Tax State and economic development

Economic development and transformation processes, have become much more intense in economic reality in the last years than they have ever been before. At this time has raised a lot of questions about the causes of the actual Global Crisis, future crises, the factors affecting the modern economy, about the essence of contemporary capitalism, demographic problems and overgrown bureaucracy. The most spectacular threat to capitalism, (based on private entrepreneurship) according to Schumpeter, stems from the high, growing and progressive taxation. Schumpeter saw clearly that the financing of public goods and services (requiring taxes, maybe even relatively high) is something other than a clerical control of the economic system that violates the natural economic mechanism. Moreover Schumpeter says explicitly, that entrepreneur does not have to be one person, he even states that the country (state) itself, or its agenda, can act as an entrepreneur. Therefore can be concluded that we may have to deal with “Tax State” which is typical for “fettered capitalism” and with “entrepreneurial state” which is typical for “unfettered capitalism”. The main goal of this paper is to present two different approaches to economic development concept: Schumpeter’s “fettered” and “unfettered” capitalism in the context of “Tax State” and interventionism.