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 particular capitalist interests and bourgeoisie as a whole behave when facing direct attack. They talk and plead—or hire people to do it for them; they snatch at every chance of compromise; they are ever ready to give in; they never put up a fight under the flag of their own ideals and interests—in this country there was no real resistance anywhere against the imposition of crushing financial burdens during the last decade or against labor legislation incompatible with the effective management of industry.... Means of defense were not entirely lacking and history is full of examples of the success of small groups who, believing in their cause, were resolved to stand by their guns. The only explanation for the meekness we observe is that the bourgeois order no longer makes any sense to the bourgeoisie itself and that, when all is said and nothing is done, it does not really care.13
II
We now have in front of us Schumpeter’s 1942 prediction of things to come—and a most unpleasing prospect it is indeed (at least to those who think even tolerably well of capitalism). What can we say of this prophecy in 1974? Is Schumpeter’s analysis even now being validated by the course of events or is it not? I take no pleasure in reporting to you my own conviction that the course of events is lending ever greater credibility to the Schumpeter thesis. I do not propose to repeat here each piece of evidence that leads me to that conclusion. But here are some samples.
Do we or do we not have a surplus of intellectuals (as defined by Schumpeter)? Are they or are they not, by and large, critical of the American businessman and of the system of which he is a part? Do they or do they not “nurse left wings and scowling minorities, sponsor doubtful or submarginal cases” (such as the lettuce boycott)? Do not these critics of capitalism largely control the world of the academy? of the media? of the pulpit? When did you last see a businessman treated sympathetically in a novel or a play? Whose name is better known to the American people: Ralph Nader or the president of General Motors or General Electric?
Can we find in the masses of the people any real understanding of the system that has heaped riches upon them or any instinct to defend from attack the central figure in that system, the businessman? Are they not, as Ortega has put it, the spoiled beneficiaries of a process they neither understand nor appreciate?
But neither of these would be of first importance if the businessman himself were even occasionally interested in the survival of the system, aware of what that really means, and willing to work for it. That he is not, in the typical case, any of these, most of the time, is more or less clear.
I offer in evidence the following examples: first, the tendency of the corporate leadership of this country to parrot the talk about the social responsibility of the businessman. With Adam Smith, I have never known much good done by a man who affected to trade for the public good. And, as Professor Milton Friedman has put it so many times, the way in which the businessman can best serve society is to try to maximize his profits within the law. Nothing is more clearly anticapitalist than the notion that the profit-directed activities of the businessman are antisocial, and the related notion that he can serve society only by eschewing that goal and directing his activities according to his (or some intellectual’s) idea of the public good.
A second example is the response of the business community to the imposition of wage and price controls in the summer of 1971. For several years prior to that time, I had been collecting a folder of statements by leading businessmen demanding that such controls be established, and I have now added to that folder all of the statements from the same men (and their principal organizations) congratulating the President on his wisdom in imposing controls.
(It is of some interest to note that the first economist of note to congratulate President Nixon on his wisdom in imposing controls was John Kenneth Galbraith. Of course this compliment was a little backhanded; he noted that Nixon had opposed such controls throughout his political life but, as he put it, “fortunately the President is a man without principle or scruple, willing to do what is expedient and necessary.” The fact is that Nixon took over a ship under heavy inflationary stress, induced by the unwise fiscal and monetary policies of his predecessors. It was as if the captain of the Titanic, immediately after his ship hit the iceberg, had turned to his second in command and said, “Now you’ve always wanted a ship of your own. Take over.”)
Direct controls do not and cannot stop inflation (only an end to new-money-financed deficits can do that); they destroy the sensitive signal system that is at the center of a market economy; they are an economic absurdity and a moral monstrosity—yet we find them supported by some substantial part of the American business community. In fact, the response of the businessman to the general encroachment of government in his affairs has been similar to that predicted by Schumpeter and similar to the response of the native girl to Lord Jim’s advances, described by Conrad as follows: “He would have ravished her, but for her timely compliance.”
John Kenneth Galbraith and his friends have indeed taught the businessman well, and what they have taught him is to repeat the phrases that must eventually sound his own death knell. The capitalist fortress is indeed almost naked of defenders and is encompassed round with a host of enemies.
III
Are there no signs pointing in the other direction? Are there no
