Tag Archives: Schumpeter


“But we had better be careful. An apparent verification by prima facie favorable cases which are not analyzed in detail may be very deceptive. Moreover, as every lawyer and every politician knows, energetic appeal to familiar facts will go a long way toward inducing a jury or a parliament to accept also the construction he desires to put upon them. Marxists have exploited this technique to the full. In this instance it is particularly successful, because the facts in question combine the virtues of being superficially known to everyone and of being thoroughly understood by very few. In fact, though we cannot enter into detailed discussion here, even hasty reflection suffices to suggest a suspicion that “it is not so.””

-Joseph Schumpeter, Capitalism, Socialism and Democracy (1942)

Schumpeter was arguing against Marxian orthodoxy which insists that every event and occurrence can be explained and predicted by the inherent logic of history that points to the inevitable endpoint of capitalism.

But while Marxists eventually, grudgingly had to give up on their “arc of history” fantasies, the appeal of the technique outlined above persists, most obviously on the matter of climate change. I have my strong opinions about it and people are free to theirs, but the point Schumpeter makes is instructive and should discourage climate zealots from being so self-righteously assured of their position. The scientific method was conceived in response to the understanding that the science is almost never settled and any honest broker must acknowledge that shutting down debate with the “denier” epithet is the opposite of good scientific norms and practices. It’s the mentality that got a whole bunch of heliocentric advocates burned at the stake in yonder eras.

So much of the modern left is ignorant of the degree that Marxist tenets and arguments still reign over their thinking. Those who know from whence their ideology springs are keen to disguise the heritage of their ideas and, more importantly, their tactics. If it was conventional wisdom that modern leftwing methods are just warmed-over Marxist retreads, far fewer people would embrace them.

Climate change demagoguery takes a page directly from the Marxist playbook and that makes sense once you appreciate how the rise of the green movement and its activist impulses directly correlates with the fall of the Soviet Union. All those Commies had to end up somewhere and in the environmental movement they found their home.

Schumpeter’s critique of the flaws of Marxian “synthesis” as a means of explaining the logic of history (an endeavor championed more by early 20th century Neo-Marxists than by Marx himself) were incredibly prescient. His analysis of mid-20th century Marxist tendencies translates quite well to those of the Western left today. Climate change is the most acute example of modern leftists channeling techniques from a time when unabashed reverence for their ideological godfather was a matter of pride and rebellion rather than a secret. But the left’s reliance on “verification by prima facie favorable cases which are not analyzed in detail” and which “may be very deceptive” extends to many other topics as well. Every lie told about Obamacare, for instance. The left’s entire economic model of redistribution is itself a barely-disguised Marxist policy founded on the ridiculous idea that there exist always and forever only two classes, owners (capitalists) and workers (labor), and that the obligation of government is to take from the owners – who only could have accumulated their capital through theft – and distribute to the workers. Their cultural agenda is rooted in the Marxist belief that tradition and social norms are the sole provenance of the bourgeoisie and must therefore be eradicated everywhere. Thus are we subjected to notions of “patriarchy,” “white privilege,” “systemic bigotry” and “us against them” populism aimed at nothing more than placating the jealousy cultivated by the Marxist idea of permanent class war. It does not end there. The family and religion are under assault everywhere you look, displayed most openly by MSNBC’s Melissa Harris-Perry in a fine bit of #Grubering that included this nugget of Marxian wisdom:

“We’ve always had kind of a private notion of children. Your kid is yours, and your responsibility. We haven’t had a very collective notion of ‘These are our children.’ So part of it is we have to break through our kind of private idea that ‘kids belong to their parents’ or ‘kids belong to their families,’ and recognize that kids belong to whole communities.”

Whether the nuclear family, religion, property rights, conscience rights or the Bill of Rights, the neo-Neo-Marxists that comprise much of the Democratic Party in the U.S. and many elements of Canadian, Australian and UK Labour are hell bent on burning it all down. Like all good Marxists they can never lose sight of the ultimate goal of bringing about the inevitable demise of capitalism, so for all the shiny cultural distractions into which they pour considerable energies, the animating impulse can always be traced back to the fundamental misconception that society is locked in a fateful struggle between classes, of which there can be only two. Having only two classes – like political parties – creates a situation of permanent adversaries, an alluring construct for the aggrieved and the charlatan alike, never mind that this construct has little tether to reality. Once established in the popular mind, it is exceedingly difficult for critics to persuade the converted that they are being sold false hope based on a lie. The intoxicating promise of seeing the capitalists ultimately succumb to their own evil system of theft and greed has endured to today. How else to explain Occupy Wall Street and the inchoate ramblings of faux-populist Elizabeth Warren?

The goal of the Marx-inspired left is simply to stand for the advancement of government interests over individual or traditional interests at every turn. If you adhere to a belief that social progress is fixed to a logical arc of history defined by the never-ending class war and that the “good guys” are predestined to triumph over the “bad guys” and their ill-gotten capital accumulation, you’re unlikely to be receptive to philosophical or economic arguments in favor of capitalism. Instead your concern falls to the “little guy” who can only be made whole by dint of an aggressive correction to the unjust and immoral status quo of market economics. The vehicle for the correction is the state. No matter how much academic evidence emerges to prove the fallacy of the project, no matter the real world evidence that confirms the futility of collectivism in practice, and no matter the human toll erected on the mantle of socialism, the cult of Marx persists because he offered a moral foundation to anticapitalism. The world was rigged in favor of the bourgeoisie and against the proletariat. Entreaties to trust the invisible hand or the beautiful twin phenomena of innovation and creative destruction would always be met with derision and contempt, for they purported to put the onus for solutions on the very class the workers had been indoctrinated to never trust. The same dynamic at play in 1914 is alive and well in 2014.

The left will not allow us to dissolve the broader class war narrative because it suits them to perpetuate. As Schumpeter might say about the left’s overriding world view today, “even hasty reflection suffices to suggest a suspicion that “it is not so.””

Uber Alles

There are few things I enjoy more than the idiotic leftwing backlash against Uber. Besides revealing an utter lack of comprehension of market forces, those on a moral crusade against Uber are actually engaged in a transparent effort to carry water for cartels, aka the taxi unions. Because nothing says “progress” like championing the perpetuation of inefficient, corrupt, politically protected 19th century labor practices over spontaneous order and innovation.

Customers love Uber. Political hacks on the left hate it because it threatens unions and therefore threatens their donor base.

In Sydney last night, Uber’s decision to respond to spiking demand by quadrupling rates as a way to attract more drivers caused more hubbub on twitter than the actual hostage crisis. How dare that evil, greedy, private company raise its rates in the middle of a crisis? Well, if the intent was to incentive more Uber drivers onto the road to provide their in-demand service, what the hell is the problem? The problem apparently, is that profits are inherently evil, but especially so when sought amid a crisis. Mollie Hemingway corrals some representative tweets here and lobs justified scorn at the mob.

My favorite Uber anecdote is from this past summer, when European capitals saw coordinated protests against the disruptive taxi app by having all their taxi drivers block traffic at key arteries and walk out in solidarity, causing massive traffic jams. The result? Uber subscriptions skyrocketed 850% across the continent in a single day as many who had never heard of Uber were suddenly inclined to check them out. Talk about your all time backfires. Who among us would not leap at cheaper and more efficient modes of travel, especially when those already tasked with public transport merit such disdain for their petty and annoying protests, not to mention for their general performance?  As if the intent is to conform to stereotype, Paris taxi unions are back at it again today, blocking traffic and demanding an end to Uber while determined to learn nothing from their last failed protest. Hope it goes just as well as last time.

One would think the writing would be on the wall and the taxi union would understand that their days of holding a protected monopoly are over. Alas, the unions are doubling down and their allies in media are drooling for any story that can undermine Uber’s credibility. The constant harping on unfair pricing betrays a thorough ignorance of how markets work, though even more disturbing is the lack of imagination on display by these critics. In order to not only appreciate but celebrate the free market, one has to tap the frontier explorer mentality within, which will allow for the acceptance of “creative destruction.” Every innovation we love is born from this basic concept: existing products and services are displaced by new ones that invent better and cheaper ways to satisfy customers. This process requires businesses, jobs and brands to sometimes disappear. Executives and employees alike at firms such as Research in Motion (makers of Blackberry), Blockbuster, LaserDisc and the legacy music labels would undoubtedly have preferred to see their companies remain viable, but economics is like gravity – it is futile to fight. Now think of the firms that took their place: Apple, Netflix, BluRay and Spotify. In ten years, we may or may not still have these popular companies with us. The thing to do is accept reality and applaud the lower prices, better products and services and technological wonder at hand, while the thing one should not indulge is barking at the moon or vainly wielding one’s fist at the heavens because one is uncomfortable with the metaphysical reality that things always change. (Ironic that the vapid slogan “Change” deployed by Obama in ’08 should be so utterly lost on he and his followers when it comes to the constantly changing dynamics in the marketplace, otherwise known as “capitalism”). If you are in favor of change and progress, it makes no sense to stand opposed to innovative and disruptive new technologies just because they threaten old models which you favor and wish to see preserved.

By all accounts, Uber CEO Travis Kalanick is kind of a jerk and has perhaps gone out of his way to stoke the ire of his antagonists. Frankly I could care less what the man’s personality is like or whether he encourages his employees to aggressively (but legally) recruit drivers away from competitors. Competition is not always polite and ethics are important to maintain even in a ruthlessly competitive and nascent market such as the booming sharing economy. But forgive me if I perceive every “Uber is shady” story as part of a broader unease with these carefree, ambitious and cocky tech titans who are supposedly planning to take over the world and turn it into Galt’s Gulch.

While it is surely not the driving motivation behind their attempt to discredit and ultimately destroy Uber, one factor must be that these champions of the uber-state and haters of anything that can reasonably be attributed to the philosophy of Ayn Rand are petrified of the growing “libertarian moment” and feel it is their moral obligation to stop it in its tracks. The level of Ayn Rand paranoia on the left is staggering. There are at least a dozen more influential philosophers and economists on the right than Rand, though she is unquestionably among the canonized thinkers for libertarians. As Robert Tracinski lays out in a wonderful piece, the one enduring lesson the left could learn from Ayn Rand is that “there are no evil thoughts except one: the refusal to think.” Rather than do the hard work of reading Hayek or Schumpeter, or even bother much to think, critics of free market economics lazily single out Rand as our one true prophet because she is easier to demagogue and her arguments easier to caricature. But I think the fundamental explanation for the left’s passionate assault on anything to do with free market economics or deregulation has to do with the libertarian moment coming directly on the heels of what was supposed to be the great progressive resurgence of 2008.

We are the ones we have been waiting for” was only six years ago but it feels a generation ago now. For all the starry-eyed millennials and social justice warriors and would-be authoritarians in cloistered academia, the rapid erosion of Hope and Change is surreal and responsible for massive whiplash. Beaten and bloodied and staring the demise of their movement in the face, progressives are behaving as any cornered animal would, by lashing out. “The Liberal Hour,” as the WSJ editorial page characterized the national mood in April of 2009, is no more. All that remains is an embittered hostility to actual, observable change.