Pondering on Schumpeter


I've been brushing up by Schumpeter as part of my research on other subjects, and I have been interested to re-discover his views on the future of capitalism. Like Marx, he thought it didn't have much of a future, but for quite different reasons.

Marx thought it would end in giant, exploitative monopolies and then revolution. Schumpeter, by contrast, thought capitalism would drift into a sort of corporatism, where businesses went along with, and perhaps unwittingly promoted, values that were hostile to capitalism itself. (Think about all the cash that big business spends on sponsoring left-wing think-tanks, or sponsoring university chairs for academics who don't have an ounce of feeling for free markets.) So, he thought, the intellectual tide would turn against capitalism, and soggy socialist ideas would rise. People would vote for parties that promised higher welfare spending than greater competition and market freedom. More widespread state-funded education would fuel people's resentment that the market was under-rewarding them (think of all those angry poets and political thinkers). And there would be more and more calls to 'improve' or 'restrain' business with more and more regulation. So capitalism simply finds the life being drained out of it.

Sound familiar? I would say that this has already happened.