Everyone has heard about "the collapse of communism," but how many are familiar with the "collapse of capitalism"? Several decades ago, Joseph Schumpeter delivered an address titled "The March Into Socialism." At the outset Schumpeter said that socialism was "that organization of society in which the means of production are controlled ... by public authority instead of by privately-owned and privately-managed firms." He further clarified his idea by stating: "All that we mean by the March into Socialism is, therefore, the migration of people's economic affairs from the private into the public sphere."
There are many versions of socialism, but all involve "public control" of private property. Whatever mistaken notions we have about the global triumph of capitalism over socialism, the gradual advance of government control continues in America and elsewhere. The process may be as subtle as environmental regulations that effectively prevent an owner from harvesting resources on his own land, or as blatant as "nationalization" (i.e., outright seizure). The truth is, private business increasingly finds itself under bureaucratic management. This management is often guided by government rules and regulations. At the same time government and the public sphere increasingly resemble a circus in which the clowns grow more demented with each passing year. What emerges is a madness that arguably precedes the breakdown of democracy itself. "What grotesque false pretenses!" exclaimed H.L. Mencken (referring to this process). "What a parade of obvious imbecilities! What a welter of fraud!" The sequence that caught Mencken's attention in the 1920s and 30s is occurring again. Mencken noted that democracy is a "self-limiting disease, like measles." It has a tendency to "abandon its whole philosophy at the first sign of strain." The free market and democracy rose together, and it is likely they will collapse in a single heap.
If Mencken believed that democracy was "self-limiting," Schumpeter believed that "the capitalist order tends to destroy itself and that centralist socialism is ... the likely heir apparent." Centralist socialism might dispense with the word "socialism" altogether. It might portray itself as "decentralizing" even as it strangles the small property-holder. But it is all part of the "march into socialism," which continues for the following reasons (given by Schumpeter):
The success of the business class in building the economy, in raising the standard of living (and education), paves the way for the replacement of owners and entrepreneurs with bureaucrats and managers.
Capitalist activity encourages "rational habits of mind" in the populace, destroying national and religious loyalties, as well as habits of subordination essential to institutionalized leadership. As Schumpeter noted: "no social system can work which is based exclusively upon a network of free contracts between (legally) equal contracting parties and in which everyone is supposed to be guided by nothing except his own (short-run) utilitarian ends."
The development of an intellectual class (and a management class) independent of the ownership class, with different views and interests, logically leads to the promulgation of anti-capitalist ideas and to the creation of a generation of administrators who no longer cherish private ownership of the means of production. Consequently, the elite that runs the country is superficially attached to capitalism. The administrative staff of America's leading institutions can nimbly switch allegiance to centralist socialism, with the obvious advantage of getting more power for themselves.
Therefore, wrote Schumpeter, "the scheme of values of capitalist society ... is losing its hold not only upon the public mind but also upon the 'capitalist' stratum itself."
Perhaps there is no better example of this last point than Alan Greenspan, who long ago recognized the error of expanding the money supply and manipulating interest rates. Now Mr. Greenspan is chairman of a Federal Reserve that makes the sins of the 1920s appear as misdemeanors in comparison. Today's intellectual climate can force the strongest personalities away from their original thoughts and opinions. The values that built capitalism are lost and new values have taken their place. These new values are as unchallengeable in practice as they are dangerous to political economy. And why are they dangerous? The foundational values of any order are fundamental to the maintenance of that order. When the foundation is undermined the structure itself begins to totter, with tragic results.
Of course, revolutionaries believe that the aforementioned "tragic" result is necessary to the "forward movement" of history. The culture rebels of our time have courted tragedy with eyes "wide shut" (as it were), encouraging the collapse of capitalism and its values. Whatever justifications are offered, loss of life and property is the raw stuff of revolutions. In the end, the revolutionary bosses either resemble the old bosses or - quite typically - they are worse. Having attained their leadership through violence instead of peaceful promotion, they are sinister exemplars.
Some may debate the issue of capitalism's decline or collapse, but anyone familiar with environmental law knows that property rights have now been set aside in favor of birds, rodents and trees. Production is not what it used to be, and consumption continues as debt mounts. What Schumpeter called "the march into socialism" can be seen today in the socialist impulses of state legislatures. Principles that built a nation over two centuries have been replaced by urges. Despite lip service from a few politicians, we have not merely abandoned the economic principles of our forefathers. We have abandoned legal and moral principles as well. A sort of dementia has set in on every front. In his book, The Revolt of the Elites, Christopher Lasch wrote of a new "disinclination to subordinate self-interest to the general will." Standards of personal conduct have fallen. "A lust for immediate gratification pervades American society from top to bottom," noted Lasch. "There is a universal concern with the self - with 'self-fulfillment' and more recently with 'self-esteem,' slogans of a society incapable of generating a sense of civic obligation."
America is the world's greatest military and economic power. The collapse of capitalism, apparent the full light of day, will simultaneously engender an American crisis, a world crisis and a global upheaval. When the balance of power is disrupted a new order is bound to emerge. What countries will dominate? What social system will take the helm? Schumpeter believed that socialism was the leading candidate.
