Allan Carlson, Creative Destruction, Family Style

Creative Destruction, Family Style (Intercollegiate Review 37:2, Spring 2002) - 09/17/08

In the wake of com­munism’s late twenti­eth-century rout by a victorious market capi­talism, the pessimistic prognostications of the economist Joseph Schumpeter attract less and less attention. While not a Marxist himself, Schumpeter adapted some of his ar­guments from Karl Marx, particularly the view of capitalism as an evolutionary system, one full of nervous en­ergy, one that could “never be stationary.” Driving this industrial mutation was a process Schumpeter labeled “Creative Destruc­tion,” which “inces­santly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” He emphasized that this “gale of Creative Destruction” did not arise from changes such as new competitors, price fluc­tuations, or the flow of the business cycle. Rather, the impulse came from the intro­duction of new consumer goods, new technologies, new modes of production or trans­portation, new mar­kets, new forms of in­dustrial organization, or new methods of re­tailing (for example, Wal-Mart’s triumph over the shops on Main Street). Such changes command “a decisive cost or quality advan­tage” and strike “not at the margins and the outputs of the existing firms but at their . . . very lives.” In every specific economic field, he wrote, this process leaves “a history of evo­lutions”—and the de­bris of ruined compa­nies that could not keep up.

Controversially, Schumpeter believed that entrepreneurial capitalism could not survive. As he formulated this thesis in his 1942 volume, Capitalism, Socialism, and Democracy, capitalism’s “very success undermines the social institu­tions which protect it, and ‘inevitably’ cre­ates conditions in which it will not be able to live and which strongly point to social­ism as the heir apparent.” He argued that the bureaucratization of large industrial units ousts the entrepreneur in favor of the manager. This “managerial revolution” undoes the bourgeoisie as a social class and undermines the very nature of private prop­erty. More fundamentally, capitalism lev­els the institutions of the pre-industrial world: the class of artisans operating through guilds, the village, the agrarian peasantry, and—most notably—the fam­ily itself.

Observing data from the 1930s, Schumpeter concluded that marriage, fam­ily life, and parenthood meant less to the men and women of modern capitalist soci­eties than they had before. He pointed spe­cifically to tumbling marital birthrates, “the proportion of marriages that produce no children or only one child,” as the clearest sign of this revolution in values. This revo­lution in the family derived from capitalism’s “rationalization of everything in life,” the embrace by moderns of an “in­articulate system of cost accounting” that exposed “the heavy personal sacrifices that family ties and especially parenthood en­tail under modern conditions.” This “de­cline of philoprogenitivity” rendered homes and home life of steadily less value. As “fam­ily, wife and children” faded as figures of motivation for the businessman, “we have a different kind of homo economicus,”one who has lost “the only sort of romance and heroism” that is left “in the unromantic and unheroic civilization of capitalism.” As the processes of capitalism undermined the “props . . . of extra-capitalist material” and the “behaviors” on which it rested, capitalism turned toward self-destruction: the pass­ing of entrepreneurship and family-held firms and the “emergence of socialist civili­zation.”

It is on these points that Schumpeter today is faulted. For has not market capi­talism triumphed around the globe? Even in once-Communist strongholds such as the Soviet Union and the People’s Republic of China, do not entrepreneurs effectively rule? Is not socialism in broad retreat, found today only in crude backwaters like Cuba and North Korea?

The problem with these rejoinders is that Schumpeter was quite clear that there were different forms of socialism. And it was not the Russian Communist version that he thought most likely to triumph in Western Europe and America. Rather, he pointed to Swedish socialism as the more viable and adaptable model.

What were—and are—the main char­acteristics of this model? Sweden’s Social Democrats resolved in the late 1920s to forego most expropriation or nationaliza­tion of industry and private property. Let the capitalists remain as formal owners, they reasoned. Instead, the keys to the so­cialization of society would be a close regu­lation of industry and commerce to achieve social ends, a form of central economic planning through new mechanisms of co­ordination such as state-brokered wage agreements, and expansion of the welfare state into “the People’s Home.” Relative to families, this meant the socialization of re­maining family functions such as early child­care and the provision of clothing and meals. Most importantly, said Alva Myrdal, an influential social theorist in the 1930s, la­bor union socialism itself must change. The goal of “a living family wage” for fathers as heads-of-households must go, as must its companion institution, the “housewife.” They would be replaced by a commitment to the absolute equality of men and women. In the new order, Myrdal explained, both genders would be expected to work outside the home. Marriage and home life would be strictly focused on sex and reproduction; everything else would be the responsibility of private industry or government, now informally merged into a vast corporate state.

This union of individualistic or equity feminism with democratic socialism was an historically strange brew. It was hostile to the century-old goals of the European la­bor movement, which had striven for “the equality of households,” “family au­tonomy,” the “family wage,” and “the special protection of women and children.” And it was not fully realized, even in Swe­den, during the 1930s. But three decades later, in the 1960s, its time had come round at last. It was this socialism, with a vision of a union between “big business” and “big government” built on the ruins of families and small communities, that would tri­umph in developed nations around the globe. Indeed, its success would be so perva­sive, and its details so distracting, that hardly anyone would even notice the apotheosis of the grand Feminist-Capitalist-Socialist cause.