Joseph Schumpeter, Entrepreneurs, Creative Destruction, Innovation, and Getting Things Done

Joseph Schumpeter, Entrepreneurs, Creative Destruction, Innovation, and Getting Things Done, by Chris Dawson, based on J.A. Schumpeter’s Capitalism, Socialism and Democracy. Schumpeter is the patron saint of entrepreneurs, a foundation member of the Austrian School of political economics, and the man who coined the phrase economic ‘creative destruction.’

By ‘getting things done’ — whether menial, clerical, managerial, or strategic — Schumpeter meant getting things done in all their minutiae, against all of the small-minded forces railed against anyone doing anything new and innovative. That often involves giving offense to the current crop of entrenched crony capitalists, socialists, and the status quo.

Schumpeter argued that the success of capitalism almost inevitably leads to a form of crony capitalist fascism, or “corporatism.” It ultimately fosters values hostile to capitalism, as people seek the comfort of minimizing competition. This phenomenon is especially marked among intellectuals.

Ironically, the intellectual and social climate needed to allow entrepreneurship to thrive is suppressed in advanced capitalism, replaced by stealth-by-socialism unless entrepreneurs can innovatively intervene. In other words, human affairs tend towards a state of government-assisted crony corruption, unless they are periodically shaken up by innovation and disruption.

His clearest line on the role and nature of the entrepreneur and innovator is as someone who ‘goes beyond familiar beacons…’ and thus attracts the wrath of those of the ‘settled’ variety.

Schumpeter was at pains to point out that he was not advocating a particular political view, but simply analyzing the trends he saw before him in the late 1930s.

He foresaw no Marxist revolution in the West, merely a trend for social democratic parties to be elected to parliaments as part of the democratic process. He argued that capitalism’s “collapse from within” will come about as majorities are encouraged by the intellectuals to vote for the creation of a welfare state.

The ancient Greek city states had a lot of experience with democracy. They found that a democracy lasts about as long as it takes for the populace to learn to vote themselves the contents of the treasury — a welfare state. After that a disruption is required, often in the form of a strong man and autocratic rule for a period.

Modern welfare states place restrictions upon entrepreneurship, which requires freedom of thought, speech and action and access to capital, and tends to challenge the status quo. Modern taxes are a burden on success and on the forces of change, and eventually destroy the capitalist structure.

In the trends he foresaw, the intellectual class will have a critical and destructive role in capitalism’s demise. He saw higher education acquired by an increasing proportion of the population. This would have a negative impact on the structures of the West, as the intellectuals foment and develop critical ideas against free markets and private property — even though these same institutions and intellectual property assets provide for the very comfortable existence of said intellectuals!

Advanced technology often only serves to concentrate ownership and wealth, to accelerate the trend towards large corporations under increasingly socialist government. To survive, this trend needs to suppress the natural process of creative destruction.

It seems he was onto something back in 1939. We are now seeing it emerge in full bloom in the EU, the UN, and even in the US, where the giant crony capitalist corporations are beginning to habitually share power and information with the intellectual global elites in the Deep State. If it goes global, as it seems to be doing, there is no escape. Is this the future, forever?