We will approach Schumpeter's conclusion by quoting the University of Chicago's George Stigler as our introduction. From The Intellectual and The Market Place, 1967:
The intellectual has never felt kindly toward the market place: to him it has always been a place of vulgar men and of base motives. Whether this intellectual was an ancient Greek philosopher, who viewed economic life as an unpleasant necessity which should never be allowed to become obtrusive or dominant, or whether this intellectual is a modern man, who focusses his scorn on gadgets and Madison Avenue, the basic similarity of view has been pronounced.
Now you and I are intellectuals, as this word is used. I am one automatically because I am a professor, and buy more books than golf clubs. You are intellectuals because you are drawn from the most intelligent tenth of the population, most of you will go on to graduate school, and you would rather be a United States Senator or a Nobel Laureate than the head of the Great Atlantic and Pacific Tea Company. The question I wish to pose to us is not whether we should love the market place-even a professor of economics of outrageously conservative tendencies cannot bring himself to say that the chants of five auctioneers rival a Mozart quintet.
The questions are rather: What don’t we like about the market place; and, are we sure that our attitudes are socially useful?
Let us begin by noticing that from certain important viewpoints one would have expected the intellectuals to be very kindly disposed toward that system of private enterprise which I call the market place.
First, if I may introduce a practical consideration, intellectuals by and large have elevated tastes-they like to eat, dress, and live well, and especially to travel. The late Walton Hamilton, lawyer and economist, once said that our customary salutation, “Good Day,” was a vestige of an agricultural society where people were asking for good weather, and he expected city dwellers eventually to greet each other with the phrase, “Low Prices.”
If Hamilton’s theory is correct, the intellectuals will come to the salutation, “Fair Fullbright.”
Since intellectuals are not inexpensive, until the rise of the modern enterprise system no society could afford many intellectuals. As a wild guess, the full-time intellectuals numbered 200 in Athens in the extraordinary age of Pericles, or about one for every 1,500 of population. And at most times in later history the intellectuals fell far, far short of this proportion. Today there are at least l,OOO,OOO in the United States, taking only a fraction of those who live by pen and tongue into account, or one for each 200 of population. At least four out of every five of us owe our pleasant lives to the great achievements of the market place.
We professors are much more beholden to Henry Ford than to the foundation which bears his name and spreads his assets. Not only have the productive achievements of the market place supported a much en-larged intellectual class, but also the leaders of the market place have personally been strong supporters of the intellectuals, and in particular those in the academic world.
If one asks where, in the western university world, the freedom of inquiry of professors has been most staunchly defended and energetically promoted, my answer is this: Not in the politically controlled universities, whether in the United States or Germany-legislatures are not overpopulated with tolerant men indifferent to popularity. Not in the self-perpetuating faculties, such as Oxford and Cambridge from 1700 to 1850-even intellectuals can become convinced that they have acquired ultimate truth, and that it can be preserved indefinitely by airing it before students once a year. No, inquiry has been most free in the college whose trustees are a group of top quality leaders of the marketplace-men who, our experience shows, are remarkably tolerant of almost everything except a mediocre and complacent faculty. Economics provides many examples: If a professor wishes to denounce aspects of big business, as I have, he will be wise to locate in a school whose trustees are big businessmen, and I have....
....MUCH MORE
And with that better-than-any-intro-I-could write here is Mises.org:
[Capitalism’s] very success undermines the social institutions which protect it, and “inevitably” creates conditions in which it will not be able to live and which strongly point to socialism as the heir apparent. (p. 2)
*****
....Secular improvement that is taken for granted and coupled with individual insecurity that is acutely resented is of course the best recipe for breeding social unrest. (pp. 159–160)
Therefore, capitalism, by providing a previously unknown standard of living — unobtainable through other forms of social organization — actually undermines its own support, essentially by performing its tasks too well, so that the origin of prosperity is overlooked by its greatest beneficiaries.
This brings us to another of Schumpeter's pathbreaking contributions to understanding capitalism: his work on the "Sociology of the Intellectual." As mentioned above, eroding social protections of capitalism and feelings of grievance against the system itself provide the basis for an assault on the capitalist system. All that remains is that "there be groups to whose interest it is to work up and organize resentment, to nurse it, to voice it, and to lead it" (p. 160). The intellectual class provides this driving force.
The intellectuals watch the economic process from the sidelines; by definition, they essentially have no direct experience in economic affairs. However, they wield decisive power in influencing public opinion, and their bias is strongly anticapitalist. They represent a very real threat to the capitalist system.....
*****
....Capitalism provides the means the intellectuals require to attack it: innovations that make disseminating opinion both possible and extremely inexpensive; education delivered to enough of the population to provide an audience big enough to influence lasting social changes; and perhaps most important, capitalism encourages the principle of freedom of expression which is necessary for public criticism of social institutions (pp. 155–179).
Schumpeter's insights into the sociological and psychological characteristics of the intellectual class are breathtaking:
The man who has gone through a college or university easily becomes psychically unemployable in manual occupations without necessarily acquiring employability in, say, professional work.… All those who are unemployed or unsatisfactorily employed or unsatisfactorily unemployable drift into the vocations in which standards are least definite or in which aptitudes and acquirements of a different order count. 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)
Thus the intellectual opposition is built and supplied with weapons by the very system that it opposes. Through no fault of its own, the capitalist system is attacked by those whose very occupations are made possible by the efforts of the entrepreneurs and capitalists who drive the economy in a ceaseless process of innovation and improvement.....
https://mises.org/library/can-capitalism-survive
Schumpeter was definitely an interesting person:
The Most Fascinating Thing I Have Read This Week
...is about the economist Joseph Schumpeter and written by Wolfgang F. Stopler in his book, Joseph Alois Schumpeter: The Public Life of a Private Man:
Schumpeter always took his teaching seriously. His Czernovitz students--unlike his Graz students--adored him--as well they might since he fought a duel with a librarian to gain them better access to books.Thomas McGaw fills in some of the details:
Schumpeter had given out heavy assignments, the librarian had refused to allow the students to check out the assigned books, and when Schumpeter threw a tantrum (he was only 26, and had just started teaching), the librarian challenged him to a duel. Schumpeter won the duel by cutting a small slice out of the librarian's shoulder. The two men later became good friends, and the students got access to the books.
October 2012 - "Schumpeter on the Effects of College on the Willingness to Do Manual Labor"
September 2018 - "Schumpeterian Profits and the Alchemist Fallacy"
Originally posted September 18, 2021 without the Stigler introduction.
