In the last 200 years startling technological and material advances have drastically changed our world—advances brought about by the rise of capitalism and the bourgeois/middle class. Yet, can such advancement continue? Can capitalism, democracy and the middle class way of life survive?
One man, who pondered these ideas, was Joseph Schumpeter. Schumpeter was an Austrian-trained and educated economist, and later Harvard Professor, who developed the idea of business cycles, and more famously, greatly expanded upon a theory of evolutionary economics. So prescient was Schumpeter, that our current age has been called the “age of Schumpeter,” and his economic theories have been suddenly seriously talked about as the seminal theory and ideas of 20th century economics (not bad considering his competition: Marshall—who became influential in the beginning of the century, Keynes, Hayek, Friedman to name just a few). So, what were Schumpeter’s ideas? (if I am to assume that most here—although very intelligent—are oblivious to theoretical economics and Jos. Schumpeter).
Schumpeter, borrowing and revising upon Marx, Weber, and his own exhaustive understanding of economics and society, argued that Capitalism—which he found to be the most successful and beneficial force in human history—would destroy itself. He begins his seminal book Capitalism, Democracy and Socialism with a critical analysis of Marxian thought: cataloguing all of the many economic and evolutionary (for lack of a better term) errors of Marx, yet upholds Marx’s evolutionary form or theory of analysis. Schumpeter also criticized the untenable nature of democracy, and the errors of all neo-classical economics (equilibrium, rationality) and mathematical models. Let us start with his ideas on Capitalism
Schumpeter, argued that Capitalism would destroy itself from within, not from without or through class warfare like Marx and other commentators. Capitalism Schumpeter famously said was a process of, “Creative Destruction”. That is: “Innovation by the entrepreneur, led to gales of "creative destruction" as innovations caused old inventories, ideas, technologies, skills, and equipment to become obsolete.” Thus, Capitalism is in and of itself an intensely destructive process: the most destructive and revolutionary in all of human history Schumpeter argued. A process where the entrepreneur is the major creative force to bring about this gale. The entrepreneurs innovate, not just by figuring out how to use inventions, but also by introducing new means of production, new products, and new forms of organization. These innovations, Schumpeter argued, take just as much skill and daring as does the process of invention. Yet the future problem is how capitalism administers this creative destruction. Capitalism in its later forms as we are in, destroys this Creative Destruction. New innovations, processes, etc, are after the first few years of free and open market flurry, eventually stagnated and monopolized by a few big businesses; bureaucratized businesses which bureaucratize research and development, entrepreneurship, and thus effectively kill, or seriously stagnate the creative destruction process. Think of the Internet, hell, think of every innovation in the past 100 years. Each and every one has had a flurry of activity and innovation, which eventually peters out and falls into the hands of a few companies, which due to the very nature of Capitalism, monopolize and bureaucratize this innovation. Most of these big companies do not survive in this bureaucratized innovation, and disappear after 20-30 years. Again, look at the top companies of just 30 years ago, how many are still around? IBM (which has reinvented itself), and the flailing and failing car companies: Ford and GM.
But the elimination or stagnation of Creative Destruction was not limited to just these business and economic factors, but to the very nature of capitalism’s effects on society itself. As Schumpeter argued in 1942 (written in 1935), capitalism destroys, and continues to destroy traditional social structures and families, it produces short-term hedonism, it promotes education, and it supports or creates a bureaucratic professional class. The education, Schumpeter argued, would produce more and more intellectuals who would become more and more critical of capitalism; eventually all social structure which supported humanity so well throughout history would disappear creating immense problems, and the short-term hedonism and/or interests of people would create a world where politics, long term economic needs and desires, family life, etc, would become so short sided, that persons could become easily manipulated, would lose that old bourgeois long term goal to better their children, etc. Although the ideas about intellectuals have perhaps been the least fruitful of his predictions (although I know most intellectuals hate, or secretly and unknowingly hate Capitalism), the rest have been incredibly prescient.
Hence to sum up, in the distant future, Capitalism will lose that creative gale of destruction as the economy becomes bureaucratized by fewer and fewer, and larger and larger big-businesses; and thus the entrepreneurial function of capitalism which attracts the great minds of society (as wealth equals prestige) will eventually be lost. In essence, the world will become more amiable to socialism than democracy.
Schumpeter also probes the faults of democracy and socialism, and how socialism can be democratic, and why Socialism (not Communism, or in any way related to Marxism) is more amiable to the future bureaucratic monopolism of big-businesses and short term thinking, non traditional populace, than democracy.
(I think I’ve written too much for one thread, so perhaps his ideas on democracy and socialism will be discussed in more detail later.)
Hence, I ask if anyone has any ideas on this? Clearly, and as Schumpeter himself would be quick to point out, there is no set or fixed form of economic and social evolution, nor a time period, nor any fanciful appeals to revolt, etc; rather it is merely a general trend that most likely will occur sometime in the future if current economic and social trends continue. Moreover, I remind everyone that Schumpeter was not in anyway against Capitalism, and instead, proclaimed himself sad to make such an analysis.
One man, who pondered these ideas, was Joseph Schumpeter. Schumpeter was an Austrian-trained and educated economist, and later Harvard Professor, who developed the idea of business cycles, and more famously, greatly expanded upon a theory of evolutionary economics. So prescient was Schumpeter, that our current age has been called the “age of Schumpeter,” and his economic theories have been suddenly seriously talked about as the seminal theory and ideas of 20th century economics (not bad considering his competition: Marshall—who became influential in the beginning of the century, Keynes, Hayek, Friedman to name just a few). So, what were Schumpeter’s ideas? (if I am to assume that most here—although very intelligent—are oblivious to theoretical economics and Jos. Schumpeter).
Schumpeter, borrowing and revising upon Marx, Weber, and his own exhaustive understanding of economics and society, argued that Capitalism—which he found to be the most successful and beneficial force in human history—would destroy itself. He begins his seminal book Capitalism, Democracy and Socialism with a critical analysis of Marxian thought: cataloguing all of the many economic and evolutionary (for lack of a better term) errors of Marx, yet upholds Marx’s evolutionary form or theory of analysis. Schumpeter also criticized the untenable nature of democracy, and the errors of all neo-classical economics (equilibrium, rationality) and mathematical models. Let us start with his ideas on Capitalism
Schumpeter, argued that Capitalism would destroy itself from within, not from without or through class warfare like Marx and other commentators. Capitalism Schumpeter famously said was a process of, “Creative Destruction”. That is: “Innovation by the entrepreneur, led to gales of "creative destruction" as innovations caused old inventories, ideas, technologies, skills, and equipment to become obsolete.” Thus, Capitalism is in and of itself an intensely destructive process: the most destructive and revolutionary in all of human history Schumpeter argued. A process where the entrepreneur is the major creative force to bring about this gale. The entrepreneurs innovate, not just by figuring out how to use inventions, but also by introducing new means of production, new products, and new forms of organization. These innovations, Schumpeter argued, take just as much skill and daring as does the process of invention. Yet the future problem is how capitalism administers this creative destruction. Capitalism in its later forms as we are in, destroys this Creative Destruction. New innovations, processes, etc, are after the first few years of free and open market flurry, eventually stagnated and monopolized by a few big businesses; bureaucratized businesses which bureaucratize research and development, entrepreneurship, and thus effectively kill, or seriously stagnate the creative destruction process. Think of the Internet, hell, think of every innovation in the past 100 years. Each and every one has had a flurry of activity and innovation, which eventually peters out and falls into the hands of a few companies, which due to the very nature of Capitalism, monopolize and bureaucratize this innovation. Most of these big companies do not survive in this bureaucratized innovation, and disappear after 20-30 years. Again, look at the top companies of just 30 years ago, how many are still around? IBM (which has reinvented itself), and the flailing and failing car companies: Ford and GM.
But the elimination or stagnation of Creative Destruction was not limited to just these business and economic factors, but to the very nature of capitalism’s effects on society itself. As Schumpeter argued in 1942 (written in 1935), capitalism destroys, and continues to destroy traditional social structures and families, it produces short-term hedonism, it promotes education, and it supports or creates a bureaucratic professional class. The education, Schumpeter argued, would produce more and more intellectuals who would become more and more critical of capitalism; eventually all social structure which supported humanity so well throughout history would disappear creating immense problems, and the short-term hedonism and/or interests of people would create a world where politics, long term economic needs and desires, family life, etc, would become so short sided, that persons could become easily manipulated, would lose that old bourgeois long term goal to better their children, etc. Although the ideas about intellectuals have perhaps been the least fruitful of his predictions (although I know most intellectuals hate, or secretly and unknowingly hate Capitalism), the rest have been incredibly prescient.
Hence to sum up, in the distant future, Capitalism will lose that creative gale of destruction as the economy becomes bureaucratized by fewer and fewer, and larger and larger big-businesses; and thus the entrepreneurial function of capitalism which attracts the great minds of society (as wealth equals prestige) will eventually be lost. In essence, the world will become more amiable to socialism than democracy.
Schumpeter also probes the faults of democracy and socialism, and how socialism can be democratic, and why Socialism (not Communism, or in any way related to Marxism) is more amiable to the future bureaucratic monopolism of big-businesses and short term thinking, non traditional populace, than democracy.
(I think I’ve written too much for one thread, so perhaps his ideas on democracy and socialism will be discussed in more detail later.)
Hence, I ask if anyone has any ideas on this? Clearly, and as Schumpeter himself would be quick to point out, there is no set or fixed form of economic and social evolution, nor a time period, nor any fanciful appeals to revolt, etc; rather it is merely a general trend that most likely will occur sometime in the future if current economic and social trends continue. Moreover, I remind everyone that Schumpeter was not in anyway against Capitalism, and instead, proclaimed himself sad to make such an analysis.
