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Source link: http://archive.mises.org/10968/can-capitalism-survive/

Can Capitalism Survive?

November 4, 2009 by

Capitalism, by providing a previously unknown standard of living actually undermines its own support, essentially by performing its tasks too well, so that the origin of prosperity is overlooked by its greatest beneficiaries. FULL ARTICLE by Matt McCaffrey

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{ 23 comments }

Mike C. November 4, 2009 at 9:02 am

A good preview of “Capitalism, Socialism and Democracy” by Schumpeter is available at Google books. It is not the complete book however it is about 80% of it.

http://books.google.com/books?id=6eM6YrMj46sC&printsec=frontcover&dq=Can+Capitalism+Survive%3F&source=gbs_book_other_versions_r&cad=2#v=onepage&q=Can%20Capitalism%20Survive%3F&f=false

…and since it does not appear to conflict with the Mises.org store I am posting these links to purchase copies of:

Capitalism, Socialism, and Democracy (Paperback)
http://www.amazon.com/Capitalism-Socialism-Democracy-Joseph-Schumpeter/dp/0061561614/ref=pd_bxgy_b_text_b

Can Capitalism Survive?: Creative Destruction and the Future of the Global Economy (Paperback)

http://www.amazon.com/Can-Capitalism-Survive-Creative-Destruction/dp/0061928011/ref=sr_1_1?ie=UTF8&s=books&qid=1257343987&sr=1-1

Brad November 4, 2009 at 10:41 am

As long as its opposite is there to hold sway, then no. Not only do people forget how their prosperity came about, they simultaneously give the credit to that which is killing capitalism and turning them into serfs. It really is a subset of the general concept that enough people to form a solid, vocal minority will avoid the clear and manifest truth in natural laws and look for superstitious answers to their questions. Capitalism is the method of realism and Socialism is the method of witch doctors. History is replete with dark ages led by superstitions with small islands of lucid clarity in between. Our short day in the sun is over. The kill shot for me was when the Repubs, owning the Congress and the White House, signed Medicare Part D. The last little bit of hope, if rather deluded, that there was anybody (or enough bodies) within the Beltway to lead us away from the dark age calamity of superstition was gone. Statism, with its bone rattling and secret handshakes and excruciating poverty for everyone but the Chosen was full steam ahead.

Micael R Stoddard November 4, 2009 at 11:41 am

“Capitalism” needs a Champion in the political arena. Rand got it right with the title of her book “Capitalism The UNKNOWN Ideal”. LVMI does the most incredible job of educating the planet in econ and libertarian sociology. But capitalism does not have an advocate in politics. I have been active in the Libertarian Party since the 70′s. Lower taxes & less govt is just not inspiring enough and the party lacks focus. I propose a “Capitalist Party” focused on teaching a few core economic principles and focused on one key strategy – dismantling the state. I have prepared a preliminary platform. Feed back would be greatly appreciated. Please please request a copy and then share your thoughts.

Micael R Stoddard November 4, 2009 at 11:50 am

Ludwig von Mises identified what should be the core of a successful political platform to save Capitalism in his chapter “The Role of Ideas” in Human Action. LVM’s powerful insights found in this chapter should be used to create the platform for a new political party.
Do you really want to unleash Capitalism? Read “The Role of Ideas” and share with me how you would use LVM’s insights to SELL Capitalism.

Hume November 4, 2009 at 12:06 pm

Part of the problem is the confusion of the word “capitalism.” Much like the socialist left stole the word “liberal,” so too did the fascist right hijack the word “capitalism.” This is unfortunate, and too many now associate the corporate/state alliance with “capitalism.” Proponents of freedom need a new term.

Micael R Stoddard November 4, 2009 at 2:27 pm

HUME – I radically disagree. The “new term” debate is interminable. “Capitalism” is already embedded in the American psyche. So steal it BACK. The fact that it is so misunderstood – leads to great teaching opportunities. Just like in Aikido, one uses ones opponents momentum against him. Reisman wasn’t timid in titling his magnum opus “Capitalism’. Rand used it …. It will make a powerful Brand. While liberal would be difficult to rehabilitate, Capitalism is perfect – it truly is memetic.

Mike November 4, 2009 at 2:32 pm

Maybe we need to found a civilization with various Austrian treatises as its set of grand, sacred, locked-in-airtight-vault documents that everybody worships.

Mike November 4, 2009 at 2:33 pm

(I’m not entirely kidding)

Thomas Talionis November 4, 2009 at 4:26 pm

The theory of “Creative Destruction” is what makes the Left scared. This is why the hardcore Left are anti-technology agrarians.

A line from Atlas Shrugged that strikes me, “we just want everything to stand still.”

Ironic how the Left claims that the Right fears change. Methinks they protest too much. They like to protest.

Luis Ramirez November 4, 2009 at 4:54 pm

In all honesty, Capitalism was term first coined by Karl Marx. At any rate, Capitalism is not just a system or a prefixed set of ideologies. It´s a way of life. It´s respect for other peoples work and our own. That´s why even though it´s been kicked around, tortured and mutilated, the spirit of the free market goes on. We´ve never really experienced full-fledged Capitalism, hopefully, someday we´ll see it for what it is… a belief in people and economic institutions that compromise them as a community of people and depend less and less on government and it´s double standards.

Sean November 4, 2009 at 7:19 pm

“Although Schumpeter was not the first to predict the demise of capitalism, he was the first to claim that capitalism’s success would be the cause of its decline and fall.”

No he wasn’t. See: Das Kapital. Talk about a fundamental misreading/misunderstanding if there ever was one.

“Schumpeter’s insights into the sociological and psychological characteristics of the intellectual class are breathtaking.”

These “insights” are simply dumbed-down regurgitations of the Frankfurt School cultural criticism. Schumpeter’s words abound with the Alienation concept, (Marx, Rousseau, Marcuse, Fromm, etc.). This is anything but original.

RTB November 4, 2009 at 8:32 pm

Was thinking of reading some books by Schumpeter, not anymore.

Makes sense on the surface, especially since I often despair of where we are headed. It seems inevitable. But it’s about people understanding where the abundance comes from, not the inevitability of Socialism rising from Capitalism.

Rings of Marx. Ridiculous.

The question remains: how to educate and reverse this trend?

Bala November 4, 2009 at 9:02 pm

Just addressing the topic – “Can Capitalism survive?”

My simple answer is “Yes”, provided we are willing to recognise that selfishness is a virtue and do not ever feel ashamed when some one tries to make us feel ashamed by accusing us of selfishness.

IMO, selfishness is the noblest of the virtues of a true Capitalist. He forever acts to enhance his own well-being (material and non-material). That’s his “crude” selfishness. On top of this, he acts in such a manner that his well-being is ensured not just for today but for as long a time-frame as he can conceive of. In doing so, he accepts the non-aggression principle and deals with every man as a trader, exchanging value for value. This is his “refined” selfishness.

Champions of Capitalism need, above all, to snatch the moral high ground from those who blindly deride selfishness and praise the “virtues” of selflessness. Without this, Capitalism is “doomed” to remaining an ideal never to be realised.

EIS November 4, 2009 at 11:25 pm

Sean said;

“No he wasn’t. See: Das Kapital. Talk about a fundamental misreading/misunderstanding if there ever was one.”

What are you talking about? Marx didn’t believe that capitalism’s success would be the cause of it’s own downfall. Nor is the notion of alienation found anywhere in Schumpeter’s work. Schumpeter and Marx both see capitalism failing, but for completely different reasons.

I’m pretty sure you’re entirely confused.

Sean November 5, 2009 at 2:34 am

“If capital grows rapidly, wages may rise, but the profit of capital rises disproportionately faster. The material position of the worker has improved, but at the cost of his social position. The social chasm that separates him from the capitalist has widened.”- Marx, Wage-Labor and Capital. Wages improving, profit increasing–what were the goals of capitalism again? I’m pretty sure it is successful.

In Das Kapital, Marx argues that the capitalist cycle will have periodic crises (“booms and busts”), each time, the smaller companies would go under, being absorbed by the larger, destroying the means by which crises are prevented, thus setting up for an even larger crisis the next time. Capitalism would continue to grow until the crisis to end all crises occurred, too large to recover because of the very successful growth of capitalism. This is even outlined in simple form in the Communist Manifesto, when speaking of the “crisis of over-production”: “Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilisation, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions.” This is also, coincidentally, the entire premise of socialism, which for Marx and Engels, must be built upon abundance.

Fortunately I don’t even have to read the book to find mentions of alienation, they’re right in the article: “They swell the host of intellectuals … whose numbers increase disproportionately. They enter it in a thoroughly discontented frame of mind. Discontent breeds resentment. And it often rationalizes itself into … social criticism … [and] moral disapproval of the capitalist order. (pp. 173–175)”.
If you are afraid to read Marx into that, it is still unavoidable to see the (neo-Marxist) words of the Frankfurt School. “Discontent breeds resentment”? This is exactly the alienation from the system felt by the proletariat for Marx.

Micael R Stoddard November 5, 2009 at 8:57 am

For Capitalism to survive and flourish, most if not all of the State must be dismantled. LVMI is at the forefront of Education. An organization (Political Party) needs to take on the active role of dismantling the state. No term captures this better than Capitalism. Yes it carries negative connotations with some – this can be used to reframe Capitalism in the minds of most people. The term Capitalism needs to be retaken and held as a banner for the moral high ground.
Join with me in inaugurating a new Political Party the Capitalism Party. Its time to add action to our learning. If you agree, please contact me to share ideas, platforms, action plans. Learning is only the first part of Human Action. ;-)

erik November 5, 2009 at 10:38 am

The answer to Matt’s last question is accountability in its broadest sense. Capitalism is about the contiuous escape from corporate risk and in its latest manifestations the escape is and has been done by the “socializing ” of losses and risks.

Try as one might to have capitalisim bear its various responsiblities it always fails. Examples abound like the Exxon Valdies oil spill.

Thomas McGovern November 5, 2009 at 11:31 am

I am a supporter of the LvMI and have been for years. It’s pathetic that this book is promoted on this site as having been written by Schumpeter and with the paternalistic footnote, “[1] It is appropriate that the initial and closing chapters of the original book—on Marxism, socialism, democracy, and the history of socialist parties — have been eliminated, considering these chapters are of little contemporary interest for anyone but the specialist. Certainly they involve far less of Schumpeter’s sweeping vision of the capitalist process.” Well, thank you, nanny LvMI.

If the LvMI believes in the free market for ideas as well as the free market for goods and services, why is the LvMI rigging the market by promoting this amputated text as Schumpeter’s book?

This is not the book that Schumpeter wrote; this is something that the publisher cobbled out of parts of Schumpeter’s book and then put Schumpeter’s name on it. Schumpeter’s book is available on Amazon for as little as $3.56 used, so why would anyone want to buy this book? More important, why is the LvMI promoting this book? If the point is to have people read the chapters of Schumpeter’s book that deal with the survival of capitalism, why not say so and tell us which chapters those are? If the LvMI thinks that the other chapters are defective, say so and tell us why.

billwald November 5, 2009 at 11:44 am

Arguing about economics is entertaining but does it matter? Every economic system has a food chain with a top and bottom. The losers will always be losers no matter the system.

No one actually wants “liberty for all.” Everyone actually wants to raise his position on the food chain. Isn’t that what the Christian dogma of “sin nature” teaches us?

Michael A. clem November 5, 2009 at 11:56 am

No one actually wants “liberty for all.” Everyone actually wants to raise his position on the food chain.
Geez, Bill, how long have you been reading the Mises blog now? If the best way for the individual to “raise his position” is to help someone else raise their position (and isn’t that what voluntary exchange does? It’s a win-win for both traders), then why shouldn’t people be concerned with helping other people? Similarly, if the best way to secure my liberty is to help ensure that everyone has liberty, then yes, I DO want liberty for all. That’s the very nature of universal ethical egoism. Did you wake up on the wrong side of bed this morning?

erik November 5, 2009 at 1:33 pm

Billwald unfortunately has it right. In artistic terms the obelisque in Frogner Park, Oslo, is a manifestation of the same reality.
Here in Canada, for the first 200 years of European presence all documents came with the words “peace, welfare and good government’ as a reflection of an economy that needed to function in harmony with the native population and more importantly nature. In that time welfare meant “fairness” which is a concept of justice but since has become a “put down” word. Capitalism then functioned by using enlightened self-interest to avoid starvation (a dramatic form of bankruptcy).
In 1866 the Tories (linerar thinking conservatives, captives to the concept of Empire) substituted “order” for “welfare”. “Order” is not synonymous with comon sense or enlightened self-interest. The change has created a political system held hostage in a corporist straight jacket, the consequences of which we are seeing today. Capitalism today continuously demonstrates disgusting conduct that would be remidied if the real market were encouraged to function as it should. Corporations are regularly given a “go past jail” card by politicians and courts which only encourages worse.
This can’t be the “Von Mises way”.
Perhaps what we need now is the “Solon solution”. 150 years pre-Socrates, Athens was a city of starvation. Farmers were unable or unwilling to grow food because of excessive debt owned by a few city folks (sound familiar?). In despiration all agreed to confer total dictatorship upon the city’s leading poet, Solon. He solved the matter by declaring all debts extinguished. Prosperity then followed and prevailed. This was a case where social justice prevailed over contract law.

Jacob Steelman November 5, 2009 at 3:05 pm

The main thesis in this article suggesting the demise of capitalism derives from increase in corporate bureaucracy and the intellectual class. This corporate bureaucracy is a creation of the state as is the rise of the “intellectual” class. The modern limited liability corporation is created by the state as a means to facilitate organization of large amounts of capital. The bureaucracy that exists is a creature of the state as well – tax accountants, corporate secretaries, regulatory compliance experts (environmental, safety, health, SEC as well industry specific agencies such as FERC,FCC, FED, FDIC etc), state and national lobbyists, legal departments, etc. – whose responsibilities are to liase with the state daily. The modern “intellectual” class is a product of the state’s public education system. These “intellectuals” are merely hired guns retained by the ruling elites to advance arguments for vaious government interventions intended to benefit their clients. They are for sale to the highest bidder. Thus such a mixed economic system naturally continues on the road to serfdom and socialism.

bernardpalmer November 6, 2009 at 9:44 pm

Capitalism only works with gold and not with fiat currencies.

What the article is alluding to is Democratic Socialism which is what all the 1st world countries are using now.

What we are all still waiting to try is Democratic Capitalism wth gold and silver as currency.

Previous Capitalism probably died in 1913 shortly afer Germany and France started paying government workers in fiat irredeemable currency.

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