When lockdowns happened in 2020, and then went on and on, and small business was smashed and the bourgeois lifestyle criminalized, and churches shut and normally attacked, and the bureaucracies took over and ruled in the name of science that proved wrong time and time again, and a whole generation of students and workers were forcibly demoralized, there was a book I wanted to revisit.
I had read this book years ago but I was too young for the message to resonate. The historical allusions were beyond my reach and the analysis generally too gritty for me to comprehend. The main takeaway from the book I found intolerable. He predicted but deeply regretted the demise of capitalism and the rise of a heavily bureaucratized managerial socialist-like system that would strangle and eventually extinguish the bourgeois spirit.
It seemed obvious to me in the 1990s that Schumpeter had been wrong. Bourgeois capitalism got a massive reboot in the early 1980s, both in the United States and Britain and, by extension, in many countries in the world. Intellectuals who defended freedom in the economic sphere gained traction: Milton Friedman, George Gilder, David Stockman, F.A. Hayek, Ludwig von Mises, Murray Rothbard, Art Laffer, and so many others. Later in the decade, it was socialism, not capitalism, that collapsed, and the fall of the Berlin Wall seemed to capture the poetic essence of the moment.
Surely Schumpeter had nothing to teach us. Surely his prediction had proven wrong.
Sadly, the victories that freedom experienced in those years didn’t last. Gradually over time, the commanding heights of intellectual dominance passed to others. The economic growth driven by policy changes in those years came to be taken for granted. The generation raised with the internet had no clue where the goodies came from and lacked self-awareness of their privileges. Worse, they were taught that their wealth was a reason for self-hatred and class hatred, because it came at others’ expense. Or, at the Earth’s expense. At the expense of justice. Morality demands redistribution and a forcible rearranging of the social order.
We watched the ascendance of anti-capitalist and anti-freedom ideology in the academy and within the corporate world. We fought it as we might play a parlor game: scoring points and debunking errors. We felt satisfied that this was enough. Surely they would never really gain the upper hand in any lasting sense. Surely socialist ideology couldn’t really make a return in mainstream life. It would be forever relegated to faculty lounges and university presses cranking out books that no normal people read.
We all massively underestimated the power of ideas, especially bad ones. We believed that our side would win simply because we had reason and evidence on our side. We underestimated the power of myth, the malevolence of bureaucrats, and the hegemonic ambitions of an entrenched ruling class that had no genuine desire to democratize economic opportunity.
Nothing was more shocking than to observe the passivity of the American public during lockdowns. There were, of course, some protests, but they were easily shot down by a media machine that decided any resistance to regime priorities was a sign of right-wing extremism. All truly good citizens should think of themselves as disease vectors in need of masking. We should be grateful that our public health masters had shut the small businesses, churches, and schools while we waited patiently for the shot to be mandated for the whole population so that we could be free of COVID.
In this way, the resistance, as small as it was, was easily crushed. And here we are today with two years of life expectancy shaved off, a demoralized generation of workers, kids with lower test scores than we’ve seen in generations, inflation raging and killing prosperity, and a population terrified to know what could be next. All we really have are elections, but we aren’t even sure that those will yield lasting change.
So, yes, finally, after years of dread, I returned to the great treatise by Schumpeter. I read it with the overriding question: Was he correct after all? Sadly, I’m afraid the answer from the standpoint of 2022 is yes. He identified all the factors that have led to the undoing of the capitalist spirit. To be sure, he decried its end but didn’t shrink from describing it all in excruciating detail.
The overriding theme: Capitalism generates so much wealth throughout the whole population and creates such unfathomably complex structures of productivity that it becomes too easy to lose track of the institutional source. The “magic of the marketplace” is too abstract and devoid of a tactile connection between what we do in our lives and the resulting plenty that it generates. The life of the bourgeoisie is peaceful and productive but unheroic and its fruits too easily taken for granted.
In addition, as capitalism celebrates rationality, systems, and technique, so too does it give rise to a class of credentialed managers who extol in those virtues alone, apart from the freedom of experimentation in enterprise. The entrepreneurial drive comes to be smothered by managerial bureaucracy both within large firms and within government itself.
Large firms inevitably link up with government as a means of cartelization and protection against competition and grow at the expense of small- and medium-sized firms that are the backbone of the capitalist spirit. They’re gradually extinguished as the bureaucratic machinery grows and kills off entrepreneurial drive. Creative men and women who need freedom above all else find themselves increasingly demoralized when faced with the bureaucratic thicket.
As for the professional intellectual, Schumpeter observes a terrible tragedy: Capitalism can afford to create ever more of them. As the college population grows, ever more people are given the opportunity to detach themselves from productive economic pursuits to live in the imaginary world of coerced utopias. Upon leaving the academy with no real skills, they find a natural home in the managerial machinery of large corporations and governments. There, they deploy their talents for creating ever more elaborate systems and muscling others to fit in with them. Their efforts kill off productivity, but the surplus wealth of the whole of society is so vast as to not make the parasitic nature of their employments obvious to themselves or others.
The result, he says, is the building of a vast bureaucratic state that serves only the powerful. Public and private sectors merge, as dominated by vast fortunes and circles of power-elite influence, all of which are united around the core principle that market competition and bourgeois political empowerment should be kept at bay as a threat to the ruling-class hegemony.
OK, I will stop there and simply observe that this view is exceedingly grim. It also turned out to be untrue. Following World War II, we had a few decades of normalcy and the reascendancy of the bourgeois spirit. His prophecy of doom didn’t come true. And yet, reading his work today really does make one wonder whether he was a prophet before his time. Too much of his book seems uncomfortably true.
Schumpeter tended to write with the confidence of someone convinced of the Hegelian dialectic that would dictate historical trajectories apart from real human choice. It rings true today mainly because we’ve yet to see the emergence of large forces dedicated to stop this from happening. Perhaps, however, it can be stopped. Nothing is written in stone. After all, it happened once only 40 years ago.
I highly recommend revisiting Schumpeter now, not as a book of perfect prediction but as a warning. We dare not take freedom for granted, not now, not ever. Otherwise, the dystopian world that seems like a genuine threat could become our permanent reality, at least for a few generations until the wealth runs out.
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