Can Capitalism Survive?. Benjamin A. Rogge

under the influence of potential rivals, the figure has gone up to no less than $250 a year!)

      (4) Schumpeter’s case for capitalism is now complete and it is impressive indeed. Why does this not assure the public and political acceptance of the system? Because, says Schumpeter, “it is an error to believe that political attack arises primarily from grievance and that it can be turned by justification.... In no case is [rational argument] a match for the extra-rational determinants of conduct.”⁸

      In effect if capitalism is to survive, it must defend itself in the arena of values and emotions—and here its very success as an economic system reduces its chances of victory. We can best see Schumpeter’s analysis of this by examining the impact of capitalism on each of the groups in society that might serve as a bulwark against the system.

      (5) We begin with the principal beneficiaries of capitalism—the masses. Why do they not defend the system that has made them the most affluent people in the history of man? Because they do not connect their affluence with the capitalist system, because they are incapable of understanding any economic system as such, because they are more aware of their daily frustrations and insecurities under the system than they are of their long-run gains from the system, and because they are taught by the intellectuals in society to resent the capitalist system and its central figure—the businessman.

      This same point is eloquently made by another distinguished social observer, Ortega y Gasset. In Revolt of the Masses, he writes:

      The common man, finding himself in a world so excellent, technically and socially, believes it has been produced by nature, and never thinks of the personal efforts of highly endowed individuals which the creation of this new world presupposed. Still less will he admit the notion that all these facilities still require the support of certain difficult human virtues, the least failure of which would cause the rapid disappearance of the whole magnificent edifice.⁹

      (6) The traditional aristocratic element in society that in the nineteenth century tended to protect the liberal capitalist system from its radical critics is itself a victim of the capitalist success. Capitalism is rationalistic in nature and creates an unfriendly climate for the tradition-based class system of the precapitalist society.

      (7) But why does any of this matter? Can’t the businessman be his own defender? Why must he rely on others? Why indeed. The response is that even if he were fully aware of the problem and determined to do something about it, the businessman lacks the capacity to capture the imagination of the society. In the words of Schumpeter,

      A genius in the business office may be, and often is, utterly unable outside of it to say boo to a goose—both in the drawing room and on the platform. Knowing this he wants to be left alone and to leave politics alone.... There is surely no trace of any mystic glamor about him which is what counts in the ruling of men. The stock exchange is a poor substitute for the Holy Grail.¹⁰

      But this is not all. As capitalism matures, the form of the business firm and the role of the businessman change in such ways as to weaken the businessman’s will to resist the critics of capitalism. Most importantly (to Schumpeter), with the growth of the large organization so essential to economic efficiency, the role of the individual entrepreneur is replaced by the work of the team, and innovation itself is reduced to routine. Personality is blotted out and with it the gut sense of ownership of the means of production that characterized the self-made man of early capitalism. Capitalism creates the organization man—and the organization man is indifferent to the fate of capitalism. He eventually comes to care little whether he reports to the anonymous stockholders or the anonymous citizen-owners of socialism.

      A case in point from my own experience: As a college student, I was employed one summer by the privately owned gas distribution system in Hastings, Nebraska, to try to persuade the citizens of the city that it would be a most unwise action for them to vote yes on a referendum proposal for the city to take over that system. Each Monday morning we “customer relations” men were given an impassioned lecture by the manager of the system on the evils of socialism. In spite of our eloquence (or because of it), the good burghers voted four to one to take over the system. One week later the manager of the now socialized enterprise was appointed, and who was it? Old God-how-I-hate-socialism himself! (This illustrates a point I have long argued: the kind of aggressive, ambitious, effective person who succeeds under capitalism is also likely to rise to power under most other economic arrangements. It is only under capitalism that his drive is harnessed in service to the interests of the consumers.)

      (8) The result of all this is to make of capitalism a virtually undefended fortress, but this alone would not mean its destruction. What is needed is an enemy force—and this too capitalism provides, in the form of the intellectuals.

      How is the intellectual defined?

      Intellectuals are people who wield the power of the spoken and written word, and one of the touches that distinguishes them from other people who do the same is the absence of direct responsibility for practical affairs.... The critical attitude [arises] no less from the intellectual’s situation as an onlooker—in most cases, also an outsider—than from the fact that his main chance of asserting himself lies in his actual or potential nuisance value.¹¹

      The intellectual tends always to be a critic of the system, of the establishment, whether he is in Russia or the U.S. In Russia he is not tolerated—or is attuned solely to serving the current rulers and their ideology. But the businessman is by nature tolerant. He wants to sell people something—not send them to Siberia.

      The growing affluence of a mature capitalist society permits a continuing expansion in systems of higher education and hence in the ranks of the intellectuals. In fact, in 1942 Schumpeter accurately foresaw the current surplus of intellectuals, surplus in the sense of there being far more intellectuals than employment opportunities with income and prestige equal to the self-evaluations of such people. For this, said Schumpeter, the intellectuals will hold the capitalist system responsible, which will add fuel to their already burning critical fires. Moreover, the widening gap between their own incomes and those of the businessmen will induce them to find ego-restoring explanations of the businessman’s success—luck, exploitation, fraud, monopoly, etc. These rationalizations are described by Schumpeter as “the autotherapy of the unsuccessful.”

      One group that the intellectuals will seek to identify with and to stimulate to greater anticapitalist activity will be the workers. Schumpeter describes the advances of the intellectuals to them in words that would seem truly prophetic to anyone who has recently seen pictures of the adulatory groups around a Cesar Chavez. “Having no genuine authority and feeling always in danger of being unceremoniously told to mind his own business, he must flatter, promise and incite, nurse left wings and scowling minorities, sponsor doubtful or submarginal cases, appeal to fringe ends, profess himself ready to obey.”¹²

      A second group with which the intellectuals will feel a natural alliance will be the governmental bureaucrats, with whom they share a common educational background. In addition, of course, the bureaucrats will be increasingly involved in administering anticapitalist legislative policies. I might note that, to the intellectuals, these anticapitalist legislative creations will have a second happy feature—employment opportunities for themselves and their friends, carrying with them both decent pay and indecent amounts of power over others.

      (9) The enemy and his allies are now at the gates of the capitalist fortress. Is there any hope that the businessman will finally sense the danger to himself and the system of which he is a part and rise to meet the challenge? As Schumpeter sees it, quite the contrary. Here are his words:

      Perhaps the most striking feature of the picture is the extent to which the bourgeoisie, besides educating its own enemies, allows itself in turn to be educated by them. It absorbs the slogans of current radicalism and seems quite willing to undergo a process of conversion to a creed hostile to its very existence. Haltingly and grudgingly it concedes in part the implications of that creed. This would be most astonishing and indeed very hard to explain were it not for the fact that the typical bourgeois is rapidly losing faith in his own creed.

      This is verified by the very characteristic manner in which