Joseph Schumpeter: The Prophet Who Foresaw Zohran Mamdani and the Woke Movement Generally

The victory of Zohran Madmani–excuse me, Mamdani–in New York City’s Democratic primary has unleashed a torrent of commentary. In particular, it has sparked euphoria on the left, who see it as the harbinger of a successful “resistance” to Trump and the dawning of an overthrow of American capitalism.

Much of this is overwrought, and wishcasting rather than forecasting. Matt Taibbi called it socialism’s “American Normandy”: It is more likely socialism’s Anzio, an initial success that will wind up being a strategic and tactical dead end.

Most importantly, New York City generally, and its Democratic Party electorate in particular, are hardly representative of the country at large. Indeed, outside the media bubble and other urban socialist outposts this Mamdani is largely viewed as the winner of a Best of Freak contest. He and his ilk are political pustules concentrated in small enclaves of major cities–many of which are dying, in large part because of them. The perverse rank choice–excuse me, ranked choice–voting system also exaggerates his appeal. Furthermore, his main opponent was Me Too poster boy and grannie killer Andrew Cuomo, who is about as popular as chlamydia.

Mamdani’s win, and the exaggeration of its importance in the media, is attributable to a particular social class that dominates certain precincts in big cities and most of the media. You know the type. Identitarians. Wokies. Highly credentialed “elites” who are inveterately anti-American, anti-Western, anti-freedom (except for the freedom of perversion), and anti-capitalist.

These attitudes are largely a consequence of “elite overproduction,” combined with the technology that now produces the “elite.” The basic idea is that the production of “educated,” credentialed individuals in excess of the career opportunities that provide the financial remuneration and status that these people believe is their due because of their innate superiority creates a class of resentful people who conclude that the system is inherently unjust and should be overthrown.

The concept of elite overproduction was recently popularized by Peter Turchin, but Joseph Schumpeter had it figured out way before–decades in fact. In his seminal Capitalism, Socialism, and Democracy, Schumpeter posed the question: “Can capitalism survive?” He answered in the negative, but not for the classic Marxist reason that the internal contradictions of capitalism produced an immiserated proletarian class that would overthrow it. Instead, the internal contradiction was that capitalism produced a class of decidedly non-proletarians who were hostile to it and who would undermine it from within.

Schumpeter struggled with finding the right label for this class, finally settling on “intellectuals.” He also struggled with identifying its defining characteristics, but it’s a you-know-it-when-you-see-it kind of thing. And when you see Mamdani fans, you know they are the type Schumpeter had in mind.

In particular, look at Chapters XIII (especially section II) and XIV of CSD. They read like a crystal ball for the Era of Woke generally and Mamdani specifically. There is too much to quote so I’ll just pull out a few.

But in the case of capitalist society there is a further fact to be noted: unlike any other type of society, capitalism inevitably and by virtue of the very logic of its civilization creates, educates and subsidizes a vested interest in social unrest.

“The very logic of its civilization” means that because of its incredible fecundity, capitalism can support a large number of individuals who can pursue intellectual pursuits rather than toil for subsistence through the production of goods or services.

That is a necessary, but not sufficient condition for this group–which Schumpeter believed can be characterized as a social class–to be inherently oppositional to capitalism and the bourgeoisie. In addition, the internal logic of capitalism incorporates open inquiry and criticism (parts of “creative destruction”) and a belief in freedom (especially freedom of expression), and therefore finds it difficult to fend off its intellectual critics:

From this follows both the unwillingness and the inability of the capitalist order to control its intellectual sector effectively. The unwillingness in question is unwillingness to use methods consistently that are uncongenial to the mentality shaped by the capitalist process; the inability is the inability to do so within the frame of institutions shaped the capitalist process and without submitting to non-bourgeois rule. Thus, on the one hand, freedom of public discussion involving freedom to nibble at the foundations of capitalist society is inevitable in the long run. On the other hand, the intellectual group cannot help nibbling, because it lives on criticism and its whole position depends on criticism that stings; and criticism of persons and of current events will, in a situation in which nothing is sacrosanct, fatally issue in criticism of classes and institutions.

Furthermore, and crucially, there is a mismatch between the attributes (I hesitate to say “skills” or “abilities”) of the members of this class and their expectations regarding income and status:

Third, it may create unemployability of a particularly disconcerting type. The man [an anachronism!–see below] who has gone through a college or university easily becomes psychically unemployable in manual occupations without necessarily acquiring employability in, say, professional work. His failure to do so may be due either to lack of natural ability—perfectly compatible with passing academic tests—or to inadequate teaching; and both cases will, absolutely and relatively, occur more frequently as ever larger numbers are drafted into higher education and as the required amount of teaching increases irrespective of how many teachers and scholars nature chooses to turn out. The results of neglecting this and of acting on the theory that schools, colleges and universities are just a matter of money, are too obvious to insist upon. Cases in which among a dozen applicants for a job, all formally qualified, there is not one who can fill it satisfactorily, are known to everyone who has anything to do with appointments—to everyone, that is, who is himself qualified to judge.

I say anachronism because today women are far more likely to fit this description than men.

He continues:

All those who are unemployed or unsatisfactorily employed or 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 in the strict sense of the term whose numbers hence increase disproportionately. They enter it in a thoroughly discontented frame of mind. Discontent breeds resentment. And it often rationalizes itself into that social criticism which as we have seen before is in any case the intellectual spectator’s typical attitude toward men, classes and institutions especially in a rationalist and utilitarian civilization. Well, here we have numbers; a well-defined group situation of proletarian hue; and a group interest shaping a group attitude that will much more realistically account for hostility to the capitalist order than could the theory—itself a rationalization in the psychological sense—according to which the intellectual’s righteous indignation about the wrongs of capitalism simply represents the logical inference from outrageous facts and which is no better than the theory of lovers that their feelings represent nothing but the logical inference from the virtues of the beloved.1 Moreover our theory als accounts for the fact that this hostility increases, instead of diminishing, with every achievement of capitalist evolution.

I could quote further, but that gets at the gist of it. Elite overproduction, avant la lettre. (It is rather discreditable that Peter Turchin’s book on elite overproduction, End Times, does not mention or cite Schumpeter. The Austrian was obviously decades ahead of him).

Relatively recent developments in the “elite” production technology have only exacerbated these tendencies. An especially important one is the superabundance of student loans. This has had three perverse effects. The first is simply that it subsidizes the production of the credentialed. The second is that it has caused an increase in the output of those with “unemployability of a particularly disconcerting type.” Namely, all those with expensive but useless degrees, “studies” degrees most especially. (Note that Mamdani has a degree in African Studies. No wonder he has never held a job. Never). Third, those who cannot get employment with compensation or status that they believe their credentials entitle them too are saddled with a crushing debt burden that reminds them daily of the fundamental injustice of society.

Student loans are not the only issue regarding “elite” production technology. Another is its self-reinforcing, reflexive nature. Academia has become infested with oppositional intellectuals who through their control of their institutions indoctrinate students with their resentful ideologies. Resentful intellectuals produce more resentful intellectuals who cannot achieve income and status commensurate with their inflated self-worth. It is the academic version of The Sorcerer’s Apprentice:

Another factor is the feminization of higher education. (Apropos my comment regarding the anachronism in Schumpeter’s analysis). Women tend to be disproportionately represented in the “intellectuals” produced in studies, humanities, and soft social sciences programs that contribute most heavily to the discontented intellectual class. Moreover, women are more likely to be hostile to the competitive, not to say Darwinian, features of capitalism.

It is amusing that Richard Swedberg’s introduction to the version of Schumpeter I have at hand dismisses Schumpeter’s negative answer to “can capitalism survive?”

In short, in areas where Schumpeter perceived a threat to capitalism, there is no apparent threat at all or, alternatively, a very minor one. To illustrate this, let us look at two of the alleged causes for the demise of capitalism: the role of intellectuals in capitalist society and the relationship of property owners to their property. According to Schumpeter, as capitalism develops it gives rise to an increasing number of intellectuals who are basically resentful and hostile to capitalism. The argument, however, does not accord well with our observations; rather, most intellectuals appear fairly well integrated into the various institutions in which they work, and the vocal intelligentsia changes its political opinions at regular intervals, usually oscillating between pro-capitalism and indifference to economic questions, and only rarely lapsing into anti-capitalism. In any case, it is simply not correct to state that Western intellectuals in general have been hostile to capitalism and that they are likely to be hostile also in the future.

Dude. How wrong can you be? This judgment was a dubious characterization of conditions when written (in 1976). It is utterly delusional now.

Consider “most intellectuals appear fairly well integrated into the various institutions in which they work.” Uhm, yes, they are, but not in the way Swedberg meant. As a result of the march through the “various institutions”–especially academia, journalism, and government–they have reshaped those institutions into anti-capitalist bastions. It is pro-capitalists like me that are not well-integrated, to the extent we are tolerated or even exist. (Don’t bother to look in English departments, etc.). Or “the vocal intelligentsia changes its political opinions at regular intervals, usually oscillating between pro-capitalism and indifference to economic questions, and only rarely lapsing into anti-capitalism.” I agree that the vocal intelligentsia changes its positions at regular intervals, from left to more left to even more left. And rather than oscillating between “pro-capitalism and indifference to economic questions,” anti-capitalism has been trending strongly. Yes, there is sometimes “indifference to economic questions” in the sense that modern leftist intellectuals are not obsessively focused on them like 20th century classical Marxists were, but their ostensibly non-economic critiques about race, gender, sexual orientation, etc., identify inequities on these dimensions as the inevitable consequences of capitalism.

That’s the essence of the Gramscian, Frankfurt School turn from traditional Marxism. The proletariat did not behave as Marx predicted, so the critique of capitalism, and the strategy to overturn it, pivoted to race, gender, sexual orientation, and most lately to transgenderism.

Schumpeter did not predict the exact manifestation of the intelligentsia’s non-classical-Marxist attack on capitalism, but he predicted the hostility and coherently explained why it would–and alas has–happen.

Capitalism, Socialism, and Democracy is much richer and more expansive than an exposition on elite overproduction, its causes, and its consequences. But that section was especially prescient, and resonates 82 years after it was written. No more so than when witnessing New York City’s recent election.