See Socialists, Knowledge of History and Agency
. These are letters to the editor of The WSJ in response to an article about socialism by Joseph Epstein. The one below reminded me of a 1992 article by Robert Samuelson in Newsweek.
"Joseph Epstein’s “Socialists Don’t Know History”
(op-ed, May 30) on the abysmal historical knowledge of young people
brings to mind the prophesy of the keenest of economists, Joseph
Schumpeter, in 1942 when he said that capitalism would destroy itself by
breeding a “new class: bureaucrats, intellectuals, professors, lawyers,
journalists, all of them beneficiaries and, in fact, parasitical on
them and yet, all of them opposed to the ethos of wealth production, of
saving and of allocating resources to economic productivity.” The 77
years since then has proven Schumpeter a major prophet.
Larry W. White
Schumpeter: The Prophet
by Robert Samuelson. Excerpts:
"He is best known for his evocative phrase "creative destruction."
Schumpeter saw capitalism as a system that produces material
progress-rising living standards, more creature comforts-through the
turmoil of new technologies and business methods. The "entrepreneur," a
man of great vision and energy (in his day, there were few women in
business), was the driving force of change. Sam Walton and Wal-Mart fit
his theory perfectly."
"It is precisely because the "gale" (his term) of creative destruction
seems so ferocious that Schumpeter has enjoyed a revival. But he had a
second stunning insight that also is relevant. He argued that
capitalism's vast economic success generates popular dissatisfaction
with capitalism. As prosperity increases, progress is taken for granted.
Capitalism's remaining shortcomings-including the disruption caused by
creative destruction-become increasingly intolerable. Finally,,
prosperity expands the class of intellectuals who are contemptuous of
""[C]apitalism ... creates, educates and subsidizes a vested interest in
social unrest," Schumpeter wrote. Popular discontent and intellectual
hostility would, he thought, doom capitalism and lead to socialism."
"capitalist economic success, because it is incomplete and interrupted,
breeds its own backlash. The sour public reaction to the present slow
economic recovery only highlights a longstanding trend. The growth of
Big Government-here, in Europe and in most advanced market societies-has
aimed to placate popular discontent without undermining capitalism's
ability to raise living standards."
"Its [his book Capitalism, Socialism and Democracy] genius is to explain
why capitalism succeeds as Adam Smith imagined, even though modern
economies lack Smith's perfect competition with hordes of tiny
companies. In today's industries, big firms often dominate and enjoy
monopoly profits. But most monopolies are temporary, Schumpeter argued.
Their high profits, far from stifling competition, inspire more
innovation from entrepreneurs and big companies alike. Cable TV assaults
the networks; fax machines replace mail; McDonald's invents fast food.
the drawn-out nature of this process makes capitalism hard to defend
politically, Schumpeter said. The argument for it "must rest on long-run
considerations." The "unemployed [worker] of today [has] to forget his
personal fate and the politician of today his personal ambition." This
was not likely."
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