7 ideas
Restrictive practices and temporary monopoly positions, often condemned as inefficiencies, can be the necessary conditions for large-scale innovation by giving firms protection against the uncertainty of investing in new methods. Judging capitalism by the standards of perfect competition at a single moment misses that its efficiency lies in long-run growth driven by these protected innovating positions.
Capitalism produces a growing class of educated intellectuals who lack direct managerial responsibility yet possess the verbal tools to articulate and organize social discontent. Because the system tolerates criticism and overproduces graduates without commensurate opportunities, it nurtures the very critics who attack its legitimacy.
As innovation becomes the work of trained specialist teams inside large bureaucratic corporations, the heroic individual entrepreneur loses his economic function and his social prestige. Once progress is automatic and managed, the bourgeois class that lived by entrepreneurship loses its reason to exist, and ownership becomes a passive, depersonalized claim that no one will fight to defend.
The classical doctrine of a common good discoverable by rational citizens fails because individuals have weak responsibility and little real knowledge about national affairs remote from their daily lives, so their political reasoning drops to an infantile, emotional level. The resulting preferences are largely manufactured by parties and propagandists, so what looks like the will of the people is mostly the product of the political process rather than its source.
Capitalism fails through success, not economic breakdown: its rationalizing spirit dissolves the pre-capitalist institutions and loyalties, such as aristocracy, family, and the sacredness of property, that protected it. Mass prosperity and education then produce a large class of intellectuals with no responsibility for practical affairs, whose livelihood depends on criticism and who shape a public mood that turns hostile to the system.
Capitalism is an evolutionary process in which new commodities, technologies, sources of supply, and forms of organization continually revolutionize the economic structure from within, destroying old firms and industries as they create new ones. The relevant competition is not price-cutting among similar firms but the threat of displacement by innovations that strike at the foundations and very lives of existing businesses.
Democracy is best understood not as the people deciding issues through representatives but as an institutional arrangement in which individuals acquire the power to decide by means of a competitive struggle for the people's vote. The voter's role is to produce a government and to remove it, much as consumers choose among products they did not design.