Schumpeter Moment

TAFKAS will be honest.  He has not read as many of the “classics” as he would have liked to.  Too many great books, too many other distractions, too little time.  Perhaps it is too late with the coming book burning festivals.

One book TAFKAS has always meant to read was Joseph Schumpeter’s Capitalism, Socialism, and Democracy.  He knows of some of the content and themes, but was never sufficiently across the detail to write about it.

Then he stumbled across this wonderful piece by The Streetwise Professor (SWP) who writes:

Witnessing the current tumult in the United States, and the West more generally, makes me appreciate the book and its insights all the more. We are experiencing a Schumpeter moment. The factors that he identified as the sappers that would undermine capitalism (and liberal democracy, as distinct from social democracy) are in clearly in operation today: large scale corporate enterprise and intellectuals.

The essence of Schumpeter’s message, at least as translated by the SWP, put words around some of the thoughts TAFKAS has had of late.

Schumpeter, like Marx, predicted the end of capitalism.  But for different reasons.  Schumpeter suggested that the seeds of the demise of capitalism are built into its DNA:

Schumpeter identified two major dynamics. The first was the destruction of the entrepreneurial function and the entrepreneur, and the dominance of the bureaucratic corporation. The second was the rise of an intellectual class, a rise that could only occur due to the massive wealth created by capitalism.

Written in 1943, this prediction seems to be, sadly, bearing truth.

The slow destruction of entrepreneurship, in no small part because the regulatory state both kills it and increases the returns to scale, which also kills it, should be apparent.  Yet the thing that TAFKAS has deep felt for a while was this:

Schumpeter’s most piquant critiques focus on intellectuals. He has something of a difficulty in defining exactly what they are. In the end, he comes to something like Potter Stewart’s definition of pornography: you know them when you see them.

Schumpeter argues that intellectuals are hostile to capitalism because under it they do not receive the economic rewards–and crucially, the status–that they believe that their (allegedly) superior intellectual attainments deserve. But the massive wealth that capitalism creates permits the extension of higher education, and the support of a group of individuals (Schumpeter does not believe they truly represent a “class”) who are inveterately hostile to the system that allows them to exist in the first place.


According to Schumpeter, the essence of the intellectuals is the:

absence of direct responsibility for practical affairs.  This touch in general accounts for another—the absence of that first-hand knowledge of them which only actual experience can give. The critical attitude, arising no less from the intellectual’s situation as an onlooker—in most cases also as an outsider—than from the fact that his main chance of asserting himself lies in his actual or potential nuisance value.

Another near 80 year old scribble.

Can this be reversed?  If yes, how?

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19 Responses to Schumpeter Moment

  1. Peter Greagg says:

    A lack of skin in the game, is perhaps a large part of the problem?

  2. BoyfromTottenham says:

    TAFKAS – in your last Schumpeter quote:
    “…the fact that his main chance of asserting himself lies in his actual or potential nuisance value.’ overlooks the most important factor IMO – ‘intellectuals’ within our higher education sector get to exert huge influence over their students, especially these days by slowly dripping the poison of Cultural Marxism into their tender brains. But of course Cultural Marxism wasn’t around 80 years ago, and higher education was still capable of turning out graduates with some of their commonsense still intact.

  3. duncanm says:

    This also gives capitalism an out, if only it would grow a pair.

    Defund the (meddlesome) intellectuals.

  4. Tom says:

    The objective of Marxism and Marxists — or, at the very least, their consequence — is to destroy wealth creation by destroying the free market. Yet, after two centuries of the unchallenged success of capitalism in creating wealth, children are still susceptible to the myth of a communist Utopia where socialist equality has replaced entrepreneurialism.

    What children aren’t taught by the Marxists now in charge of the Western education system is that if you destroy the free market, you destroy the freedom and incentive of people to create wealth.

    Speak to anyone in eastern Europe about living under the yoke — and poverty — of communism. Marxists are so stupid they think children are going to give up the gadgets and lifestyle the capitalist free market created for them for some pie-in-the-sky promise of “equality”.

    Bring on the cultural revolution — with a civil war if necessary. Capitalism will win in a canter.

  5. Beachcomber says:

    Can this be reversed? If yes, how?

    Probably van’t be reversed immediately. But de-funding the Universities and ABC-SBS would improve the situation fairly quickly.

  6. duncanm says:

    Would encouraging ‘gap year’ tourism to places like Venezuela, Cuba etc. help ?

  7. NoFixedAddress says:

    Can this be reversed? If yes, how?

    Ve haf ze glory of ze Oktoba Revolution based on ze wokes of Vladimir Ilyich Ulyanov or

    ve hav ze doomed glory of ze Reichstag putch based on ze wokes of ze Führer or

    ve hav ze current preferred successful model in operation based on ze glorious wokes and thoughts of our fadder Chairman Mao.

    ve tink you might be needin a bit of kulture revolutions in your life.

  8. Spurgeon Monkfish III says:

    The second was the rise of an intellectual class, a rise that could only occur due to the massive wealth created by capitalism.

    The term “intellectual class” (aka “elites”, etc) really gives me the proverbials. Useless z-grade parasites.

    They’ll exist as a class until they’ve killed their host. The revolutionaries will then liquidate the intellectuals, as the latter will no longer serve any remotely useful purpose (outside of briefly toiling in a gulag somewhere).

    If they were actually intelligent, they’d realise this was their inevitable fate.

  9. thefrollickingmole says:

    You have to be severely educated to believe socialism is the way forward in anything.

    Marx started with a lie (primitive prehistory man live communally) and built his pile of dogshit on those foundations.

    No matter how primitive the society every one of them has had a “big man” in charge of some form of slavery//pre-feudalism arrangement.

  10. bollux says:

    It’s simple really. Stop funding the Left. Vote for anyone that says this. They are useless parasites and if we don’t stop funding them, someone will start shooting them…. en masse.

  11. @bollux

    Too late. They already out number us and control the levers.

  12. NoFixedAddress says:

    A good article by Angelo Codevilla, a Senior Fellow of the Claremont Institute and professor emeritus of International Relations at Boston University.

    Our ruling class transformed America’s regime by instituting a succession of scams, each of which transferred power and wealth to themselves. These scams’ blending into one another compel us to recognize them, individually and jointly, as the kind of governance that Augustine called “magnum latrocinium,” thievery writ large. Thievery of power even more than of money—colloquially, scamocracy.

    Neither Aristotle nor anybody else ever counted scamocracy in their category of regimes because rule by fraud exists naturally only as regimes reach the terminal stages of their corruption.

    How did they do it?

  13. Professor Fred Lenin says:

    The way to destroy lower middle class marxism is simply to remove all Taxpayers money .every cent . Let them find out what abject poverty is really about . Wont be ong before they fall into line ,no money no dogma ,you cant eat dogma .
    Truth beats Facts as Paedo Joe Biden says .
    They havent found an interpreter yet to decipher his confused speech , or is he speaking in code ?

  14. Old Lefty says:

    Another Schumpeter phrase that has become a byword, ‘creative destruction’, explains a lot about contemporary politics. Creative destruction may sound exhilarating in Wall Street, in McKinsey HQ or the Chicago economics faculty, but it’s not particularly pleasant if it affects you. And the creatively destroyed vote.

  15. EllenG says:

    Some irony here given the tendency of posters to often pose as intellectuals. No?

  16. Charles Rasp says:

    Ellen …. haven’t noticed any. Surprised you can see them. Need a new proscription ?

  17. duncanm says:


    Small steps.

    Schumpeter was an intellectual. What does that tell you?

  18. hzhousewife says:

    I would like to see a bit more life experience in people before they tackle tertiary education. Perhaps a reduction in fees linked to the number of years worked at age 17 up to 25? So you leave school with Year 12 under your belt and then have to work in agriculture ( harvesting) or aged care (assistants) or retail or other junior positions before heading off to your ten years in academia earning an undergraduate degree.
    Losing our apprenticeship system of education had been detrimental in lots of ways.

  19. John A says:

    duncanm #3509686, posted on July 11, 2020, at 8:06 am


    Small steps.

    Schumpeter was an intellectual. What does that tell you?

    “Intellectual” is a label best ascribed to a person by others.

    Self-attribution is a demonstration that the term does not apply.

    Does/did Schumpeter describe himself thus, or did others do so?

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