Nietzsche’s Marginal Children: On Friedrich Hayek
The second challenge confronting the philosophers of capital was more daunting. While Nietzsche’s transvaluation of values gave pride of place to the highest types of humanity—values were a gift, the philosopher their greatest source—the political implications of marginalism were more ambidextrous. If on one reading it was the capitalist who gave value to the worker, on another it was the worker—in his capacity as consumer—who gave value to capital. Social democrats pursued the latter argument with great zeal. The result was the welfare state, with its emphasis on high wages and good benefits—as well as unionization—as the driving agent of mass demand and economic prosperity. More than a macroeconomic policy, social democracy (or liberalism, as it was called in America) reflected an ethos of the citizen-worker-consumer as the creator and center of the economy. Long after economists had retired the labor theory of value, the welfare state remained lit by its afterglow. The political economy of the welfare state may have been marginalist, but its moral economy was workerist.
The midcentury right was in desperate need of a response that, squaring Nietzsche’s circle, would clear a path for aristocratic action in the capitalist marketplace. It needed not simply an alternative economics but an answering vision of society. Schumpeter provided one, Hayek another.
Schumpeter’s entrepreneur is one of the more enigmatic characters of modern social theory. He is not inventive, heroic or charismatic. “There is surely no trace of any mystic glamour about him,” Schumpeter writes in Capitalism, Socialism and Democracy. His instincts and impulses are confined to the office and the counting table. Outside those environs, he cannot “say boo to a goose.” Yet it is this nothing, this great inscrutable blank, that will “bend a nation to his will”—not unlike the father figures of a Mann or Musil novel.
What the entrepreneur has—or, better, is—are force and will. As Schumpeter explains in a 1927 essay, the entrepreneur possesses “extraordinary physical and nervous energy.” That energy gives him focus (the maniacal, almost brutal, ability to shut out what is inessential) and stamina. In those late hours when lesser beings have “given way to a state of exhaustion,” he retains his “full force and originality.” By “originality,” Schumpeter means something peculiar: “receptivity to new facts.” It is the entrepreneur’s ability to recognize that sweet spot of novelty and occasion (an untried technology, a new method of production, a different way to market or distribute a product) that enables him to revolutionize the way business gets done. Part opportunist, part fanatic, he is “a leading man,” Schumpeter suggests in Capitalism, Socialism and Democracy, overcoming all resistance in order to create the new modes and orders of everyday life.
Schumpeter is careful to distinguish entrepreneurialism from politics as it is conventionally understood: the entrepreneur’s power “does not readily expand…into the leadership of nations”; “he wants to be left alone and to leave politics alone.” Even so, the entrepreneur is best understood as neither an escape from nor an evasion of politics but as its sublimation, the relocation of politics in the economic sphere.
Rejecting the static models of other economists—equilibrium is death, he says—Schumpeter depicts the economy as a dramatic confrontation between rising and falling empires (firms). Like Machiavelli in The Prince, whose vision Nietzsche described as “perfection in politics,” Schumpeter identifies two types of agents struggling for position and permanence amid great flux: one is dynastic and lawful, the other upstart and intelligent. Both are engaged in a death dance, with the former in the potentially weaker position unless it can innovate and break with routine.
Schumpeter often resorts to political and military metaphors to describe this dance. Production is “a history of revolutions.” Competitors “command” and wield ”pieces of armor.” Competition “strikes” at the “foundations” and “very lives” of firms; entrepreneurs in equilibrium “find themselves in much the same situations as generals would in a society perfectly sure of permanent peace.” In the same way that Schmitt imagines peace as the end of politics, Schumpeter sees equilibrium as the end of economics.
Against this backdrop of dramatic, even lethal, contest, the entrepreneur emerges as a legislator of values and new ways of being. The entrepreneur demonstrates a penchant for breaking with “the routine tasks which everybody understands.” He overcomes the multiple resistances of his world—“from simple refusal either to finance or to buy a new thing, to physical attack on the man who tries to produce it.”
To act with confidence beyond the range of familiar beacons and to overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type.
The entrepreneur, in other words, is a founder. As Schumpeter describes him in The Theory of Economic Development:
There is the dream and the will to found a private kingdom, usually, though not necessarily, also a dynasty. The modern world really does not know any such positions, but what may be attained by industrial and commercial success is still the nearest approach to medieval lordship possible to modern man.
That may be why his inner life is so reminiscent of the Machiavellian prince, that other virtuoso of novelty. All of his energy and will, the entirety of his force and being, is focused outward, on the enterprise of creating a new order.
And yet even as he sketched the broad outline of this legislator of value, Schumpeter sensed that his days were numbered. Innovation was increasingly the work of departments, committees and specialists. The modern corporation “socializes the bourgeois mind.” In the same way that modern regiments had destroyed the “very personal affair” of medieval battle, so did the corporation eliminate the need for “individual leadership acting by virtue of personal force and personal responsibility for success.” The “romance of earlier commercial adventure” was “rapidly wearing away.” With the entrepreneurial function in terminal decline, Schumpeter’s experiment in economics as great politics seemed to be approaching an end.
* * *