Interesting take. I'm not sure capitalism and academia can be separated here, such that it is one killing the other. In our love-affair with entrepreneurialism -- a term Schumpeter did much to promote -- we forget that Schumpeter himself thinks the great age of the entrepreneur is over. With the advent of the corporation, a necessary vehicle of the build-out of the second industrial revolution, innovation is also institutionalized in corporate R&D. So innovation is bureaucratized in the private sector as well. The result is bureaucracy across society. The reason is fundamentally, the same. As science and technology advances, specialization becomes the order of the day, and the problem becomes to coordinate the ever greater number of specialists, whether in corporations or universities. The age when the individual idea-entrepreneur could run his own organization/institution is at an end.
In academia, we find the rise of research university in the late nineteenth century parallels the rise of the corporation. Darwin, Marx, and JS Mill, three of the great "idea-entrepreneurs" of the mid-19th century, all operated outside the university system in ways that are hard to imagine today. Even a later generation of people like Weber and Durkheim, who were lifelong academics, were not products of undergraduate education in the fields we would see them as belonging to today. They were mostly trained in law and moral philosophy. Alfred Marshall, who founded neoclassical economics in the Anglophone world, was himself trained in mathematics and moral philosophy, as was Keynes. I think it could be argued that the low-hanging fruit in the social sciences has also been picked. As far as I can tell, after the second world war, university education was highly specialized and the age of the generalist idea-entrepreneur was largely over. Ironically, today entrepreneurialism is taught in university business schools, although the vast majority of their graduates will be mid-level managers in corporations.
The crisis here is really one of the conflict between high-levels of specialization necessary to fund education and implement innovation and growth -- and the bureaucratic structure this entails -- working against the individual idea-innovator. It is a problem for capitalism, but also for industrialized societies in general - a sociological problem that Marx, Weber, Durkheim and Schumpeter can all agree on. Kuhn and Foucault essentially tell the same story -- the conflict of the normalizing "scientific" institution and the the anomaly.
A bit of a correction: the modern research university was pioneered in the early 19th century in Germany with the founding of the Humboldt University of Berlin. The intellectual foundations are rooted in German Idealism.
Yes, that’s a good point. As I have read more on late 19th century American intellectual history, the German influence has really struck me. That was the model that Americans followed. It would be interesting to see how the peer review system worked in German universities at that time.
Thank you for that, it’s very helpful and I will reflect on it a lot. I definitely need to think about bureaucratization in the private sector more.
That said, I’d push back and say that the corporate lab and university seemed to work well up to the second half of the twentieth century, which is why I emphasize the post-1960s changes in the creation of knowledge.
Schumpeter was probably wrong to glorify the individual entrepreneur to such a degree?
Regarding bureaucracy and the problems of governance in large orgs (whether private or public), you might want to take a look at Dan Davies. I found him following Brad DeLong (which I think is how I found you). I've also been meaning to read Peter Drucker's On the Concept of the Corporation. I suspect Coase's theorem is in the mix here.
Agreed, I was rather dismissive regarding corporate labs and universities pre-1960's. Though I wonder to what extent their research and innovation was building on and building out the the fundamental inventions of the second IR - electricity, combustion engines and pharmaceuticals. Electricity and combustion engines seemed to have been pioneered by classic individual inventor-entrepreneurs working largely outside corporate and academic institutions (Benz, Diesel, Edison, Ford). That said, pharmaceuticals seems to be much more dependent on the research of university academics (Justus Liebig for example).
I'm not sure that Schumpeter over-estimates the role of the entrepreneur -- but I think popular culture and even certain branches of academia may be guilty of that. Can't help thinking of the glorification of Elon Musk and silicon valley here. More Ayn Rand than Schumpeter. I suspect this glorification of entrepreneurs is a bit of an anxious reaction to the dimly perceived stagnation of innovation starting in the 70's. Might be interesting to see an N-gram for the word entrepreneur and when it takes off!
Intriguingly, the person Schumpeter takes to task for under-estimating the role of the entrepreneur is none other than Adam Smith. Much more to say here but will leave it there for the moment.
It was really "academia" that Schumpeter thought that will destoy capitalism? Or it was more people-who-dream-of-being-academics-but-who-can't-find-a-job-there?
Haha, well, to me, he seems to have a vision of the overproduction of highly educated people, leading to the creation of a malcontented underemployed academic precariat… It seems quite prophetic, except without the socialism part.
So positivist fundamentalism? Only adherence to Popper can save science. Popper is the lynchpin of human civilization. We must stop at the positivist conception of knowledge and go no further.
Well written. I had never known the really history of higher education and scientific/engineering training in this country until somewhat recently, it turns out what e know as higher ed was mostly constructed after WW2, in significant part from a consolidation and centralization of the many elements of the Old Republic's diversified and pluralistic educational system of systems. You may notice one of two numbers if you go look at college attainment rates in tthe 1930s, you'll likely either see a 4.7% or like 9%, big discrepancy, it depends on what one wants to classify as a college, and thats where things get really, really interesting, both those numbers are too low, actually, it seems most of the USA's scientists and engineers -- depending on one defines it -- didnt attend college, including most of its best, this diversified system played several roles -- andd different ones, some quite unobvious-- in not only the advancement of science and engineering but they also had powerful political effects as well
"This class—the academic precariat—would then lead the opposition to capitalism, ultimately forcing it to give way to one form of socialism or another."
This is the same elite overproduction that drives the cycles of Peter Turchin's secular cycles. https://.
Turchin would argue what Schumpeter was worried about is exactly what has happened - an oversupply of college grads form a precariat that then foments social unrest. There is an empirically observed 40-60 year generational cycle of strife that operates within the larger cycles, which nicely explains why 2020 was a rehash of 1968.
Hi, fantastic read. My question is whether and how this has played out in other countries. While your article is understandably focused on the United States, I wonder why it seems that other countries haven’t been able to capitalize on American intellectual stagnation to leap forward in innovation. Did they suffer from the same malaise and, if so, was it because similar processes played out everywhere or because they simply copied American academic institutions and practices?
Thanks, that’s very kind! I’m distracted by something else now, but will come back to this. There is a lot of innovation in the US, but it seems to be outside of the kind of structures that dominate in universities. I’d be very curious to know what’s going on in China...
Interesting take. I'm not sure capitalism and academia can be separated here, such that it is one killing the other. In our love-affair with entrepreneurialism -- a term Schumpeter did much to promote -- we forget that Schumpeter himself thinks the great age of the entrepreneur is over. With the advent of the corporation, a necessary vehicle of the build-out of the second industrial revolution, innovation is also institutionalized in corporate R&D. So innovation is bureaucratized in the private sector as well. The result is bureaucracy across society. The reason is fundamentally, the same. As science and technology advances, specialization becomes the order of the day, and the problem becomes to coordinate the ever greater number of specialists, whether in corporations or universities. The age when the individual idea-entrepreneur could run his own organization/institution is at an end.
In academia, we find the rise of research university in the late nineteenth century parallels the rise of the corporation. Darwin, Marx, and JS Mill, three of the great "idea-entrepreneurs" of the mid-19th century, all operated outside the university system in ways that are hard to imagine today. Even a later generation of people like Weber and Durkheim, who were lifelong academics, were not products of undergraduate education in the fields we would see them as belonging to today. They were mostly trained in law and moral philosophy. Alfred Marshall, who founded neoclassical economics in the Anglophone world, was himself trained in mathematics and moral philosophy, as was Keynes. I think it could be argued that the low-hanging fruit in the social sciences has also been picked. As far as I can tell, after the second world war, university education was highly specialized and the age of the generalist idea-entrepreneur was largely over. Ironically, today entrepreneurialism is taught in university business schools, although the vast majority of their graduates will be mid-level managers in corporations.
The crisis here is really one of the conflict between high-levels of specialization necessary to fund education and implement innovation and growth -- and the bureaucratic structure this entails -- working against the individual idea-innovator. It is a problem for capitalism, but also for industrialized societies in general - a sociological problem that Marx, Weber, Durkheim and Schumpeter can all agree on. Kuhn and Foucault essentially tell the same story -- the conflict of the normalizing "scientific" institution and the the anomaly.
A bit of a correction: the modern research university was pioneered in the early 19th century in Germany with the founding of the Humboldt University of Berlin. The intellectual foundations are rooted in German Idealism.
Yes, that’s a good point. As I have read more on late 19th century American intellectual history, the German influence has really struck me. That was the model that Americans followed. It would be interesting to see how the peer review system worked in German universities at that time.
Thank you for that, it’s very helpful and I will reflect on it a lot. I definitely need to think about bureaucratization in the private sector more.
That said, I’d push back and say that the corporate lab and university seemed to work well up to the second half of the twentieth century, which is why I emphasize the post-1960s changes in the creation of knowledge.
Schumpeter was probably wrong to glorify the individual entrepreneur to such a degree?
Thanks for taking the time to respond!
Regarding bureaucracy and the problems of governance in large orgs (whether private or public), you might want to take a look at Dan Davies. I found him following Brad DeLong (which I think is how I found you). I've also been meaning to read Peter Drucker's On the Concept of the Corporation. I suspect Coase's theorem is in the mix here.
Agreed, I was rather dismissive regarding corporate labs and universities pre-1960's. Though I wonder to what extent their research and innovation was building on and building out the the fundamental inventions of the second IR - electricity, combustion engines and pharmaceuticals. Electricity and combustion engines seemed to have been pioneered by classic individual inventor-entrepreneurs working largely outside corporate and academic institutions (Benz, Diesel, Edison, Ford). That said, pharmaceuticals seems to be much more dependent on the research of university academics (Justus Liebig for example).
I'm not sure that Schumpeter over-estimates the role of the entrepreneur -- but I think popular culture and even certain branches of academia may be guilty of that. Can't help thinking of the glorification of Elon Musk and silicon valley here. More Ayn Rand than Schumpeter. I suspect this glorification of entrepreneurs is a bit of an anxious reaction to the dimly perceived stagnation of innovation starting in the 70's. Might be interesting to see an N-gram for the word entrepreneur and when it takes off!
Intriguingly, the person Schumpeter takes to task for under-estimating the role of the entrepreneur is none other than Adam Smith. Much more to say here but will leave it there for the moment.
It was really "academia" that Schumpeter thought that will destoy capitalism? Or it was more people-who-dream-of-being-academics-but-who-can't-find-a-job-there?
Haha, well, to me, he seems to have a vision of the overproduction of highly educated people, leading to the creation of a malcontented underemployed academic precariat… It seems quite prophetic, except without the socialism part.
This is excellent
So positivist fundamentalism? Only adherence to Popper can save science. Popper is the lynchpin of human civilization. We must stop at the positivist conception of knowledge and go no further.
Well written. I had never known the really history of higher education and scientific/engineering training in this country until somewhat recently, it turns out what e know as higher ed was mostly constructed after WW2, in significant part from a consolidation and centralization of the many elements of the Old Republic's diversified and pluralistic educational system of systems. You may notice one of two numbers if you go look at college attainment rates in tthe 1930s, you'll likely either see a 4.7% or like 9%, big discrepancy, it depends on what one wants to classify as a college, and thats where things get really, really interesting, both those numbers are too low, actually, it seems most of the USA's scientists and engineers -- depending on one defines it -- didnt attend college, including most of its best, this diversified system played several roles -- andd different ones, some quite unobvious-- in not only the advancement of science and engineering but they also had powerful political effects as well
"This class—the academic precariat—would then lead the opposition to capitalism, ultimately forcing it to give way to one form of socialism or another."
This is the same elite overproduction that drives the cycles of Peter Turchin's secular cycles. https://.
Turchin would argue what Schumpeter was worried about is exactly what has happened - an oversupply of college grads form a precariat that then foments social unrest. There is an empirically observed 40-60 year generational cycle of strife that operates within the larger cycles, which nicely explains why 2020 was a rehash of 1968.
Wealth concentration is killing capitalism.
Hi, fantastic read. My question is whether and how this has played out in other countries. While your article is understandably focused on the United States, I wonder why it seems that other countries haven’t been able to capitalize on American intellectual stagnation to leap forward in innovation. Did they suffer from the same malaise and, if so, was it because similar processes played out everywhere or because they simply copied American academic institutions and practices?
Thanks, that’s very kind! I’m distracted by something else now, but will come back to this. There is a lot of innovation in the US, but it seems to be outside of the kind of structures that dominate in universities. I’d be very curious to know what’s going on in China...