The Mont Pelerin Society
A SPECIAL MEETING THE MONT PELERIN SOCIETY JANUARY 15–17, 2020 FROM THE PAST TO THE FUTURE: IDEAS AND ACTIONS FOR A FREE SOCIETY CHAPTER FOURTEEN CAPITALISM, SOCIALISM AND NATIONALISM: LESSONS FROM HISTORY NIALL FERGUSON HOOVER INSTITUTION • STANFORD UNIVERSITY 11 Capitalism, Socialism and Nationalism: Lessons from History Niall Ferguson I Joseph Schumpeter was pessimistic. ‘Can capitalism survive?’ he asked in his book Capitalism, Socialism and Democracy (1942). His answer was stark: ‘No. I do not think it can.’ He then posed and answered a second question: ‘Can socialism work? Of course it can.’1 Perhaps the Austrian-born economist’s pessimism was simply the effect of teaching at Harvard. (By temperament a conservative who was hostile to the New Deal and allergic to Keynesianism, Schumpeter gradually tired of the ‘cocoon’ on the banks of the Charles, and came very close to moving to Yale on the eve of World War II.)2 Yet Schumpeter offered four plausible reasons for believing that socialism’s prospects would be brighter than capitalism’s in the second half of the twentieth century, even if he signaled his strong preference for capitalism in his ironical discussion of socialism. First, he suggested, capitalism’s greatest strength—its propensity for ‘creative destruction’—is also a source of weakness. Disruption may be the process that clears out the obsolescent and fosters the advent of the new, but precisely for that reason it can never be universally loved. Second, capitalism itself tends towards oligopoly, not perfect competition. The more concentrated economic power becomes, the harder it is to legitimize the system, especially in America, where ‘big business’ tends to get confused with ‘monopoly.’ Third, capitalism ‘creates, educates and subsidizes a vested interest in social unrest’—namely, intellectuals.
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