Capitalism, Socialism and Democracy

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1. deeThrow94May 2025
   I highly recommend reading Schumpeter, both "Business Cycles" and "Capitalism, Socialism and Democracy".

   He discusses how motivations fundamentally change after profit margins peak and argues that profit after this point necessarily produces less economically efficient processes (in terms of the flow of demanded goods and services, not the shareholder, who does receive further productivity gains). In this context, undesired market advantage (legal or illegal) is just a symptom of profit, but it can be analyzed like any other sort of inefficiency. The core prescription is to nationalize the process or otherwise remove the profit motive around peak profit (which is, to be clear, not always easy or possible to identify... but in the worst case, this would open further opportunity for private capital to invest in the next generation of improvements).

   He also discusses how failed investment cycles can resonate into market crashes faster than capital can rationally reallocate. Both of these above observations seem very very relevant to our current situation in the US today, and should cause everyone to look askance at people who aren't concerned about how healthy our political economy actually is.

   > fundamentally undermined by science and technology creating a new market that upends the old one.

   The kicker here is that there's no reason to expect either to continue yielding the same rewards. Some industries have projectable, plannable, investable growth patterns; others do not. Almost all the industries with predictable growth rely on consumption driven by yields from the lucrative exploitation of frontiers, mostly technological recently as you point out. I suspect that the market is going to get incredibly volatile as capital sees this frontiers dry up and adjusts expectations. ideally by cannibalizing itself and not eating us, but it might need a little help in that regard....

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2. barry-cotterSep 2023
   Your understanding of the practical and philosophical backing for capitalism is limited and reads more like an Econ 101 description of perfectly competitive markets than anything else. If you would like to learn more you could read Joseph Schumpeter’s Capitalism, Socialism and Democracy[1] or Deirdre McCloskey’s Bourgeois Virtues[2]

   [1] http://libgen.is/book/index.phpmd5=21EE8F203D5C3F9530D55985B...

   [2] https://press.uchicago.edu/ucp/books/book/chicago/B/bo375063...

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3. Barrin92Jul 2023
   He addresses it in IIRC chapter 7 & 8 of Capitalism, Socialism and Democracy. But another more recent book I'd recommend that takes this kind of framework is The Entrepreneurial State by Mariana Mazzucato.
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4. __kaJun 2021
   Somewhat surprised there's nothing from Schumpeter. Many more popular thinkers drew inspiration from these two classics:

   1. Capitalism, Socialism and Democracy

   2. Theory of Economic Development

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5. achillesheelsOct 2020
   Yes things have. For instance, potato chip bags have shrunk since the 2008 financial crisis while pricing has increased. Mass market textiles are also no longer durable like they were even twenty years ago (has anyone purchased Marc Jacobs apparel recently?).

   I was just reflecting on The Organization Man last night and received from the get-go a nice little gem from a man giving a Yale commencement address in 1908:

   "Here merit is the sole test. Birth is nothing...Here only a natural order of nobility is recognized, and its motto, without a coat of arms or boat of heraldry, is 'Intelligence and integrity'." (p16 2002 UofPenn Press)

   And then the author, Walter H. Whyte, remarks:

   "But the very industrial revolution which this highly serviceable ethic begot in time began to confound it...by the 1880's the corporation had already shown the eventual bureaucratic direction it was going to take...the big organization became a standing taunt to this dream of individual success. Quite obvious to anyone who worked in a big organization, those who survived best were not necessarily the fittest but, in more cases than not, those who by birth and personal connections had the breaks." (pp16-17 ibid)

   The argument being, America escaped the moral inefficacies of the old world, yet it slowly crept back in once it became more profitable - and above all convenient - to be ambitious on a career ladder than ambitious before the nakedness of the sun and stars. Which means it is common to have to lie and conspire in order to get ahead - and how many people are willing to for a nicer car to drive around the neighborhood!

   The Visible Hand by Alfred D. Chandler, Jr. is a great read corroborating the growth of agglomerated industry, and Joseph Schumpeter's Capitalism, Socialism, and Democracy also has some good passages relating to this phenomenon of the homestead getting saturated.

   But I'm an eternal optimist and see this as the price of progress :)

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6. dmccunneySep 2018
   An assortment: "The Silent Language" by Edward T. Hall. Hall was an anthropologist attached to the University of New Mexico. He and his research partner, linguist Norman Trager, were doing research in comparative culture. Hall realized they would need a comprehensive theory of culture to describe what they were comparing and provide ways to compare them. Hall's model was "culture as communication", and the results were presented in the book above. His key point was that most of culture was like the iceberg - 90% of it is processed on an unconscious reflex level. We are no more aware of most of our culture than a fish is of the water it swims in. We only become aware when we are set down in a culture that does things differently than ours. The Silent Language is about how we use space. The followup "The Hidden Dimension looks into how different cultures use time. Many things fell into place when I read Hall.

   "Games People Play" by Eric Berne. Berne was a psychiatrist and founder of the discipline of Transactional Analysis. Games People Play was a PopSci bestseller when first published, which was odd because it's a highly technical volume written for other psychiatrists. His thesis was that most human behavior could be viewed as games, and most of what we did were ways of structuring time. Follow up with his "What Do You Say After You've Said Hello?" and "Beyond Games and Scripts". Hall's work above did much to explain teh behavior of societies. Berne's work does much to explain the behavior of people in societies.

   "The Anatomy of Criticism" by Northrop Frye. Frye was a Professor of English at Toronto University. He had completed a study of William Blake called "Fearful Symmetry", and was attempting to do a study of Spencer's Faery Queen. But he found himself trying to make sense of various terms used in literature, and the result became a work of pure theory, unconnected with any specific works. He refers to poetry and poetics, but his canvas is broader. Part of his problem was that there was no general term in English for a work of prose fiction. It's a set of four essays, covering Historical Criticism, Ethical Criticism, Archetypal Criticism, and Rhetorical Criticism, but makes clear that while each form is valid in its own terms, none fully described literature, and a more synoptic view was required.

   "The Structure of Scientific Revolutions" by Thomas S. Kuhn Kuhn's work challenged the accepted notions of scientific progress, and the notion of steady accumulation. His thesis was that the real progress came from notions that lay outside accepted theories, and provided new paradigms by which reality might be understood, and faced all the resistance transformative ideas face from entrenched doctrine until they are demonstrated to be correct.

   "Management: Tasks, Practices, Responsibilities" by Peter F. Drucker. Drucker was our present generation's primary primary theorist and consultant on the practice of management, and just what management was and what mangers did. This work was probably his magnum opus, where he pulled together the ideas he'd formulated elsewhere into a coherent whole. It's a liberal education not only in management, but in the nature and structure of market based economies.

   "The Making of Economic Society" by Robert F. Heilbroner. This is probably the best single volume overview I'm aware of on economics and economic history, beginning with just what an economy is, and the changing conception of economics through history, with the transition from Traditional through Command to Market economies and the issues involved with each. Many animated discussions I see online about economics make me say "Those words don't mean what you think they do. Please read Heilbroner, and come back when you have. Then we might at least be talking about the same things."

   "The Problems of Philosophy" by Bertrand Russell. Russell is concerned with knowledge, and how we know what we know. He asks "Is there any knowledge in the world so certin that no reasonable man could doubt it?", and concludes that it's one of the most difficult questions that can be asked. When we understand the obstacles in the way of a straightforward and confident answer, we are launched on the study of philosophy, which is concerned with precisely such questions. If philosophy is of interest, this is a superb place to start.

   "Religion and the Rise of Capitalism" by R. H. Tawney. Economies don't exist in vacuums. The are aspects of the societies in which they exist, and reflect the values of those societies. Religion has been a critical part of the value systems of societies for as long as there have been societies, and religious notions on what sort of behavior is acceptable affect the structure of economies by determining what sort of transactions are permissible. Tawney is specifically concerned with religious thought in England affecting social organization and economic issues in the period immediately preceding the Reformation and the two following centuries, but while his focus in England, his description of the way in which Christian religious doctrine changed gradually to make a capitalist economy possible in England, the underlying processes could be applied through Europe in general. Read this as a companion to Max Weber's "The Protestant Ethic and the Spirit of Capitalism", originally written in German and concerned with the Netherlands and Germany.

   "Capitalism, Socialism, and Democracy" by Joseph A. Schumpeter. Schumpeter was an Austrian economist, a contemporary of John Maynard Keynes, and (briefly) Austria's Finance Minister in the 1920's. Like Keynes, he considered himself influenced by Marx. But unlike many others, he believed Marx "asked all the right questions, and got all the wrong answers". Capitalism, Socialism, and Democracy was Schumpeter's (often delightfully snarky) attempt to understand what Marx got wrong and why. It's a useful brainwash after you've spent any time reading MArx or other folks who consider themselves Marxists, and provides a needed sense of perspective.

   There's more, but I have to stop somewhere...

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