There are several things to note with Schumpeter
1. Schumpeter (1942 p91) opposes indiscriminate trust
busting. He opposes this beacause monopolies can
improve LT growth through innovation, so the model of
perfect competition "has no title on being set up as a
model of ideal efficiency" (p106).
2. Schumpeter thought that the entreprenerial function
was becoming obsolete. Schumpeter lauded capitalism's
past successes, but thought that innovation was
becoming bureaucratized (1942 p131-134), and could be
taken over by the state. Dr Hoover suggested that
Schumpeter was not anxious for socialism. While he
admired capitalism of the past he did not think that
capitalism would be the same in the future- capitalism
"tends to automize progress" and "ousts the
entrepreneurs and expropriates the burgeoisie ...
which loses its income and more importantly its
function" (p134). Lange (1937) made similar statements
about how capitalism had delivered progress in the
past, but would not do so in the future. Many
socialists have admitted to capitalism's past
successes while advocating socialism as the way of the
future. Schumpeter is not really pushing for
intervetion at this point, but he is certianly
allowing for it, and is also open to socialism.
3. Schumpeter allowed for welfare payments so long as
it did not interfere with LT growth (p384-5)
4. Schumpeter thought that once the transiton to
socialsm was complete socialist managers would have an
easier time managing things than did the capitalist of
"modern capitalism" (p202).
5. Schumpeter (chaper 16) endorsed the "market
socialist" trial and error price fixing proposal, and
thought it would be "natural" for the congress or
parliment to plan capital accumulation as a part of
the social budget (p180).
6. in a 1949 speech Schumpeter said that he did not
advocate socialism but also claimed that price
controls "may result in a big stride toward the
perfectly planned economy".
Schumpeter did warn against possible problems with the
future socialist bureacracy, but so did Lange (1936,
1937, 1957). I do not see Schumpeter as an enthusiatic
supporter of intervention or socialism, or as a clear
cut Austrian. However, some of his ideas were
consistent with Austrian economics and he was quite
comfortable with intervention and socialism. Getting
back to the email that started this, it is quite
possible for one to appreciate dynamic entreprneurial
capitalism yet also favor some intervention. Mises,
Hayek, and Schumpeter all appreciated dynamic
capitalism and they all accpeted some form of
intervention. Even commited socialists had their
Austrian moments. Here is a little gem from Dickinson-
"the attempt to check irresponsibility will tie up
managers of socialist enterprises with so much red
tape and bureaucratic regulation that they will lose
all initiative and independence. In this case the
chief advantages of the price system will be lost --
managers would be simply bureaucratic officials taking
their orders from the supreme planning authority --
they would never be in a position to make independent
economic judgments, to exercise choice between
different markets or sources of supply, and what is
worse, they would have no financial responsibility for
success or failure." (Dicknson 1939 p214)
Mises made the same exact argument- same idea,
different words. Anyway, the point I am getting at is
that there are no set rules for determining membership
in a school of thought, and hardly anyone is 100% in
or out of any particular school. Rothbardians deny
that Hayek was a real Austrian, given their strict
interpretation of "their" schools membership
standards. I dont think that it is so unreasonable to
include the man who thought of the creative
destriction angle of entreprneurship as an Austrian,
broadly speaking. Does this violate some objective
rule or set standard for determining school
affiliation?
Doug MacKenzie
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