Entrepreneurial Economist Predicted Socialism
Capitalism is doomed to be replaced by socialism. At least that was the view of the well-known Harvard economist Joseph Schumpeter who is most famous for his popularization of the term “creative destruction”— the process by which new entrepreneurial innovations arise and subsequently cause the old way of doing things to disappear. Somewhat ironically, despite Schumpeter being a staunch defender of free-market capitalism and its long-run merits, this view put him in agreement with the noted socialist writer, Karl Marx.
Schumpeter explicitly discussed his agreement with Marx’s prediction, though he also stressed that his view of both the causes and desirability of the transition were clearly different. While Marx believed that the end of capitalism would come in the form of a working-class revolt due to capitalism’s failures, Schumpeter instead believed that capitalism’s very successes would eventually destroy the system from within. Rather than Marx’s view that the transition would then lead to an improvement in the living standards of the average person, Schumpeter saw the transition as leading to economic decline and stagnation for the entire society.
Many people today believe that Schumpeter’s predictions are coming true or at least the wheels of this transition are in motion in many of the world’s historically capitalist-based economies such as Canada, the United States, and most of Western Europe. These countries have all witnessed the size of government and economic intervention both growing rapidly. But to some, perhaps the clearest indicator that Schumpeter’s predicted transition, and its causes, are emerging is the growing prevalence of anti-capitalist views among the intellectual elite on college campuses.