Commentary on Political Economy

Wednesday 15 October 2014

Schumpeter's Wirthschafts-subjekte

The entrepreneurial Spirit is “un-ethical” or “extra-moral” (Nietzsche) in this sense: its “innovation” is also a breaking of the rules, a making of Value without “being valued”. The entrepreneur is an initiator, an “author” possessing a Nietzschean “extra-morality” (aussermoralischen Sinne), a Heideggerian “authenticity” (Eigentlichkeit) – the recognition of the Zuhandenheit of the world, of its “mundanity” - that therefore, in its “resolve” (Entschlossenheit) is able to rise above the “quotidianity” (Alltaglichkeit) of “the masses” and their Sartrean mauvaise foi (bad faith).


The “State” of equilibrium represents the Ethics of “formal equality”, of equi-valence, identity not difference: the bourgeois liberal State is  bureaucracy (Hegel), Rationalisierung and Entzauberung (Weber) – a “Positivity” (Heidegger’s “presence”) that is shattered by the negativity (“creative Destruction”, not “destructive Creation”) of the Entrepreneur – who represents the dynamic creative Individualitat opposed to the “tranquility” of the body politic. Again, the polemos of the state of nature is turned into the “dynamic energy” (dynamisch, energisch) of the captain of industry, of leadership – against the “statisch, hedonisch Impuls der rationalistischen Typus”, of the “capitalist owner”, the banker and financier reliant not on “entrepreneurial profit” but on passive “interest”. (See Joseph A. Schumpeter: ein Sozialökonom zwischen Marx und Walras by Heinz D. Kurz, p.46.)

The bourgeois liberal State – the “State” of equilibrium – is the true political State of capitalism. But the Schumpeterian entrepreneur is not the pro-duct of this “ethical” and “hedonistic” State! Capitalism creates the con-ditions, the institutional ingredients for the emergence of the entrepreneur – but the entrepreneur must not be confused with and mistaken for a “capitalist”! The entrepreneur is the antithesis of the “capitalist” – as we have sought to demonstrate throughout our study of Schmpeter and his “capitalist metaphysics”. The capitalist seeks the “tranquility” of the economy – its “equi-librium” on the economic side. And the homologation, the equi-valence of Economic equilibrium and Political “tranquility” is the “social Peace” of bourgeois liberal society – its Kantian-Hegelian Ethics. It is not capitalism that induces “creative destruction”: it is the entrepreneur that does so against the “hedonism” of the capitalist financier, against the “social Peace” of the bourgeois liberal State!

These innovations occur whenever the entrepreneur needs them, and if it were not the case that an entrepreneur, in his particular role as an entrepreneur, would already be waiting in order to use any new invention, then these innovations would never be realized in practice. It is not the innovations that have created capitalism, but capitalism that has created the innovations needed for its existence. One could gain the opposite impression only from the fact that we know only of an economy replete with development, and here, everything takes place so fast and immediately, that we cannot always distinguish between cause and effect…. The process of development itself and its driving force would in this case also lie somewhere else, particularly in the personality of the entrepreneur. In the absence of people with such leadership qualities these kinds of innovations would never come alive.[479-80]

In other words, capitalism has created the conditions for the emergence of the entrepreneur: but the entrepreneur is distinct and separate from “capitalism” and its Ethical Ideal of an equilibrated, static and hedonistic liberal bourgeois societyin which the capitalist market economy provides the underpinnings for the Political liberal public sphere of freedom of expression. This neat homologation or equivalence of capitalist Economy and bourgeois Politics is absolutely impossible for Schumpeter because the real essence of capitalism is not “equilibrium” but quite to the contrary it is “permanent crisis”, it is “creative Destruction” – conflict, not “social peace”!

A minority of people with a sharper intelligence and with a more agile
imagination perceive new combinations. … Then there is an even smaller
minority—and this one acts. … It is this type [the Entrepreneur] that scorns the hedonic
equilibrium and faces risk without timidity. He does not consider the
implications a failure will inflict upon him, or care whether everyone depending
upon him will lose their keep for old age. … The decisive moment is therefore
energy and not merely ‘insight’. (Schumpeter, 2002b, 413–14; cf. 1912, 163–4)

Most people tend to their usual daily business and have enough to do at that.
Most of the time such people are on slippery ground and the effort to stand
straight exhausts their energies and suppresses all appetite for further
exploration. … [Furthermore, t]hey do not have the force and the leisure to
think the matter through. The daily work keeps them down, organization as well
as the influence of their colleagues inflict untearable chains on them. This is the
masses. (Schumpeter, 2002b, 412–13; cf. 1912, 162–3)

In each sector there are statically disposed individuals and there are leaders. Statically disposed individuals are characterized by essentially doing what they have learnt, by moving within the received boundaries and by having in a determining way their opinion, dispositions and behaviour influenced by the given data of their sector. Leaders are characterized by perceiving new things, by changing the received boundaries to their behaviour and by changing the given data of their sector. (Schumpeter, 2002b, 428; cf. 1912, 542–3)


Es gibt Wirtschaftssubjekte …deren Verhalten durch den hedonische Impuls definitive charakterisiert ist, Wirtschaftssubjekte die man als “statisch” kat Esochen bezeichnen kann. [Theorie, 35]


By Schumpeter’s own admission, the trans-crescence of the capitalist economy gives rise to profoundly revolutionary and unsettling “crises” or “extraeconomic effects” through the “creative destruction” brought about by the competitive innovation of entrepreneurs that quite simply cannot be “governed” by them and that therefore require exquisitely “politico-institutional” intervention on the operation of the market economy by capitalist State institutions. In other words, far from being a self-regulating mechanism at or near any form of “equilibrium” - whether “static” or “dynamic” or “evolutionary” -, the capitalist economy needs to be constantly guided and governed by a central political institution such as the modern State that necessarily invalidates the notion of entrepreneurial competition and innovation as pure scientific economic categories!

Schumpeter theorises the entrepreneurial spirit and the process of innovation in isolation from the political institutions of capitalism, which he belittles as the “hedonic and static” state of equilibrium. As we saw earlier in this study, the chief objection moved by Max Weber against Schumpeter’s theory was precisely that it unduly neglected the paramount relation between state bureaucracy and private capitalist factory – both of which Weber saw as aspects of “enterprise” (Betrieb). In the words of Cacciari,


“Ecco perche’ Weber parla del Politiker, non dell’ Imprenditore. Egli non dimentica l’ Imprenditore: ne aveva gia’ ricercato le origini. Ma, tra il 1905 e il 1918, il problema decisivo diviene la scelta politica sulla forma e sui tempi del rapporto scienza-sviluppo, le istituzioni politiche atte a assumere gli effetti dell’ innovazione. In realta’, nessun mercato puo’ piu’ funzionare in forma schumpeteriana “pura”. In termini espliciti: nessun Imprenditore potrebbe piu’ esistere senza Stato,” (Pensiero Negativo e Razionalizzazione, pp.158-9).

[That is why Weber speaks of the Politiker, not of the Entrepreneur. He does not neglect the Entrepreneur – he had already traced his origins {in the ‘Protestant Ethic’}. But for Weber the decisive problem between 1905 and 1918 became that of the political choice of the modality and timing of the relationship science-development, of the political institutions able to govern the effects of innovation. In reality, no market could function any longer in ‘pure’ Schumpeterian fashion. Explicitly put: no entrepreneur can exist any longer without the intervention of the State.]

The final point then becomes a question: why, when all is said and done, must capitalist society proceed or evolve or develop or trans-cresce through crises? And what does that tell us about the nature of “innovation” or “technological progress” and its motivation, that is to say, profit?

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