Tag Archives: Democracy

Book: Capitalism, Socialism and Democracy (Schumpeter)

Capitalism, Socialism and Democracy
Intellectual hundredweight. Medicine for avid intellectual Marxists. Since I'm neither Marxist nor intellectual, reading this book made me feel like a tourist.

Heavy. Like swimming through treacle.
442 pages, ★★★★

Schumpeter begins this book with an intelligent analysis of Karl Marx to grip Marxist readers. In the book’s later chapters, he analyses the logical flaws of socialism only implicitly, allowing Marxists to criticise their own position.

Schumpeter flatters Marx for predicting the rise of private “big businesses”. He also explains Marx’s simplistic two-class ideology by calling it the only means of achieving Marx’s “dictatorship of the proletariat” goal. Schumpeter explains that a revolution’s success can only be measured if the heir to the throne (such as “the proletariat”) is clearly-defined; and if rule were to be given to some nebulous group such as the “middle class”, chaos would result (before the old ruling class settles back in). In musing about global uprising, Marx had no choice but (wrongly) to divide society in two.

While Schumpeter acknowledges the end of capitalism and the onset of socialism, he says (famously), “If a doctor predicts that his patient will die presently, this does not mean that he desires it.” According to Schumpeter, socialism will arrive not by a revolution but by evolution, in which socialist governments are elected democratically with increasing frequency.

This was a very heavy read. It muses over stuff. Here are some highlights:

p47: Schumpeter tells us that big businesses take advantage of a country’s contempt for the rest of the world when advocating protectionist policies. Such policies always prioritize profits for that business over the interests of the country being protected.

p69: Schumpeter criticizes the buying up of patents as investments or to stifle competitors because to prevent the use of technology is invariably a hinderance to human development, and this is morally unjust.

p118: We learn that in the absence of continued innovation, capitalism becomes atrophic and yields to socialism. In other words, capitalism requires growth. This reminded me of Tim Jackson’s poorly-written, CO2-obsessed book, Prosperity Without Growth. Tim Jackson made ridiculous assumptions, extrapolated economic data ad absurdum then drew ridiculous conclusions (for example, that by 2050, a thriving human economy will be primarily concerned with removing CO2 from the atmosphere). Shortly after this outrageous book was published, the environmental quango he headed was cut by the coalition government. Hooray!

p188: the discipline of workers in a capitalist economy was created and handed down by feudal society. Schumpeter tells us that all progress is a result of disciplined, authoritarian training undergone in the past. It follows that socialism would fail unless it fosters more discipline than the capitalist society it replaces (see my review of On Revolution).

On page 136, he talks about higher education. He makes three points:

  1. Higher education is an ineffective means of creating supply. Higher education will lead to sector-specific unemployment.
  2. For the same reason, higher education will lead to unsatisfactory conditions of employment (e.g. white collar workers earning less than manual laborers)
  3. And then there’s my favorite quote from the whole book (pages 136-137),

[Higher education] may crease unemployability of a particularly disconcerting type. The man who has gone through a college or university easily becomes psychically unemployable in manual occupations without necessarily acquiring employability in, say, professional work.His failure to do so may be due either to lack of natural ability—perfectly compatible with passing academic tests—or to inadequate teaching; and both cases will, absolutely and relatively, occur more frequently as ever larger numbers are drafted into higher education and the required amount of teaching increases irrespective of how many teachers and scholars nature chooses to turn out. The results of neglecting this and of acting on the theory that schools, colleges and universities are just a matter of money, are too obvious to insist upon.

One last point of interest: on page 235,

“[ignorance] persists even in the face of the meritorious efforts that are being made to go beyond presenting information and to teach the use of it by means of lecture, classes, discussion groups. Results are not zero. But they are small. People cannot be carried up the ladder.

Everyone will find something of interest in this book. But I couldn’t follow everything. Reading Capitalism, Socialism and Democracy is like walking into a cinema then realizing that the film’s in a language that you don’t speak very well. Fans of politick with a lot of time on their hands will enjoy reading this book the most. And by reading this, I learned that I’m neither of those things. Well-written. ★★★★