This chapter discusses Schumpeter’s views on the development of capitalism, in light of his theoretical ideas on the function of entrepreneurship and credit creation. Schumpeter argued that capitalism will come to an end not because of contradictions spurring revolution, but because of its own completion, and because it leads to a rationalization of society. While Schumpeter held similar views with Marxists, his analyses were grounded in his own idea of entrepreneurship and credit having the crucial function of creating qualitative change in economic development, a function that would be less relevant as capitalism completed its own development, and laid the foundations for a rationalized society. I find that it is important to recognize that both the theoretical and historical-sociological aspects were part of his thinking throughout his career, and that both revolved around an idea of the function of the entrepreneur. This has implications for how Schumpeter’s thought has been understood by neo-Schumpeterian scholars, who have generally assumed there to be two distinct phases in Schumpeter’s views on innovation.