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Schumpeter on Democracy

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Colin Bird

on 13 April 2016

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Transcript of Schumpeter on Democracy

Schumpeter on Democracy
Joseph Schumpeter

Austrian (technically moravian) economist, trained in Vienna; had a brief and unsuccessful career as a banker; taught in Germany (Bonn) and then moved to the U.S. before World War II and taught at Harvard until 1950.
Schumpeter’s Capitalism, Socialism and Democracy (1942) is today chiefly remembered for its astute analysis of modern democratic forms, even though the overall book is really about something else:

the question (raised especially by Marx) of whether the long-term tendency of capitalism is to be replaced by some form of socialism (Schumpeter’s answer: a qualified yes, although this is not to say that he advocated socialism – in fact he feared it).
Schumpeter shares many of the misgivings about democratic ideals we looked at last week; indeed, as we shall see, he amplifies and extends those doubts.

Despite his despairing view of democratic ideals, Schumpeter nevertheless thinks that a meaningful and workable form of democracy can be retrieved for modern societies.

Schumpeter’s ultimate aim is to salvage democracy rather than to dismiss it
Schumpeter’s basic claim:

We need a ‘realistic’ theory of democratic politics. Why? Because (according to S) our vision of democracy has been clouded by simplistic and incoherent expectations inherited from 17th and 18th century (and earlier) writing about democratic ideals and institutions.

Schumpeter is reacting against the disaster of the Nazi dictatorship in Germany, which came about through partly democratic means, and that often mobilized naive populist rhetoric to legitimate itself.
Schumpeter's attack on (what he calls) the “classical theory of democracy” is intended to identify the deluded ideas about democracy we've inherited from earlier philosophers and political traditions.

Note that this “classical” theory of democracy does not really exist in the way that "classical physics" exists – it is an artificial amalgam of several other views Schumpeter
for the purpose of developing his argument.
As Schumpeter construes it, the “classical” theory comprises at least:

1. The utilitarian idea (found in Bentham and Mill) that the ‘common good’ or ‘public interest’ is nothing other than the ‘greatest happiness of the greatest number’

2. The idea (prominent for example in Rousseau’s du Contrat Social) that a properly constituted political association has a will of its own, a “Volonté Generale” or “General Will”, that is distinct from the ‘particular wills’ of individuals and private associations.

3. English/American/French revolutionary idea that the people have a right to depose tyrannical rulers -> rooted in social contract ideas about ‘consent of the governed’
Schumpeter relentlessly attacks these elements of the 'classical' theory:

No such thing as a discernible ‘common good’; there is only a proliferating array of opinions about the best interests of society. Even when people agree on certain general social goals ‘health’, ‘peace’, the ‘promotion of well-being’, they disagree about how to interpret them. The political problem is how to manage these disagreements, but it is not clear that democratic procedures have particular privilege in this regard.
Schumpeter also repeatedly mentions the vulnerability of popular discourse to serious cognitive distortion. In particular, he cites (1) the susceptibility of individual opinion to manipulation through techniques of advertising and public relations and (2) the strange dynamics of group psychology (peer pressure, mass hysteria etc.).
[See Solomon Asch’s famous experiments in the 1950s]
How do we discern the ‘people’s will’?

Schumpeter sees two problems:

1. Why does the aggregation of individuals’ wills give us ‘what the public wants’? (see pp.254-5)

2. Political opinions are not at the center of people’s attention – rather they are at the periphery, like hobbies (which is why we often have political discussion only over a few beers at the pub). See esp. pp. 261-2, where Schumpeter foreshadows later claims about the ‘rational ignorance’ of voters.

Schumpeter also regards talk of “the people ruling” and “the consent of the governed” as purely rhetorical: either empty or a complete distortion.
Schumpeter thus regards the enthusiasm for democratic ideals as a kind of secular religion (pp.265-66), based on superstition and confusion. We must, he thinks, reject the idealism of the ‘classical’ theory and replace it with a more realistic picture:

The inevitability of oligarchy
: modern government will always involve top-down rule by small elites.

Democracy as a method for selecting leaders
: Assign democratic procedures a limited role in selecting the elites that are to assume leadership.
Schumpeter's view:

‘the democratic method is that institutional arrangement for arriving at political decisions in which individuals [would-be leaders] acquire the power to decide by means of a competitive struggle for the people’s vote’ (p.296)

On this Schumpeterian alternative, democracy is conceived merely as a means. It has no intrinsic ethical value as an end in itself, as shown by the ‘mental experiment’ offered on pp. 240-3
For Schumpeter, the essence of modern democracy is simply the introduction of formal competition among political elites (normally political parties) vying for the right to assume the reins of public control.

Stable democracies, for Schumpeter, institutionalize this competition among political parties for political leadership.
But it’s a fundamental error, he thinks, to try to see this institutional system as

providing information about a common good
a way for a society to identify its ‘collective will’, or ‘the will of the people’
a condition under which government enjoys the ‘consent of the governed’
We should abandon any pretension that within democratic systems, the ‘people’ governs. Rather, leaders govern. The primary role of the electorate is simply to select leaders.
Note five important features of Schumpeter’s analysis:

1. At the heart of his view is an analogy with market competition

2. Parties not fundamentally ideological: they are just institutions aiming to maximize their vote share, just as corporations are aiming to maximize profits

3. Democracy ushers in the age of the professional politician.

4. Manufactured Will: there is no such thing as the ‘will of the people’, but politicians, skilled in the arts of rhetoric and advertising, can simulate or “fake” a ‘Manufactured Will’ (p.270) .

5. Schumpeter is unenthusiastic about proportional representation (pp.272-3) because it does not necessarily allow clear-cut decisions about leadership.
It’s important to remember that Schumpeter is not recommending this conception of democracy as an ideal. He makes it quite plain that he does not regard democracy as an end in itself, only as a set of procedures for selecting leaders that can (but need not) serve a useful social function.

Thus his advocacy of his own notion of democracy is highly qualified. This is particularly clear when one considers the various ‘conditions for success’ that Schumpeter discusses:
Those who compete for leadership must have appropriate character and ability.
Power of democratic procedures must be limited.
A competent, reliable, bureaucracy is essential
There must be an ethos of moderation within political culture
Possible responses to Schumpeter’s argument:

Is this really very democratic? Schumpeter really just seems to be arguing for a very limited check on the power of political elites. In the end, those elites retain the lion’s share of political control.

Note also that it is not just that elites, on Schumpeter’s view, get to determine the trajectory of public policy once they are in power; it is also that elites set the terms on which democratic elections are fought. Schumpeter accepts, for example, that these elites will manipulate public opinion during election campaigns in order to maximize their vote share.

But is this in any sense ‘rule of the people’? A better description might be: ‘manipulation of the people’. (On the other hand: think about the etymology of ‘elite’)

Note two further points on this:

Schumpeter does not defend this conception on the grounds that it is more representative of the people’s will. For he denies that any such thing exists to represent.

Without elite guidance, Schumpeter says: ‘the electoral mass is incapable of action other than a stampede’ (p.283)
"THE conscious and intelligent manipulation of the
organized habits and opinions of the masses is an
important element in democratic society. Those who
manipulate this unseen mechanism of society constitute
an invisible government which is the true ruling
power of our country.
We are governed, our minds are molded, our
tastes formed, our ideas suggested, largely by men
we have never heard of. This is a logical result of
the way in which our democratic society is organized.
Whatever attitude one chooses to take toward this condition, it
remains a fact that in almost every act of our daily
lives, whether in the sphere of politics or business,
in our social conduct or our ethical thinking, we are
dominated by the relatively small number of persons—
a trifling fraction of our hundred and twenty
million—who understand the mental processes and
social patterns of the masses. It is they who pull the
wires which control the public mind, who harness old
social forces and contrive new ways to bind and guide
the world." (From Bernays
, 1928)
Whether or not one calls this democratic, one can also ask about the general desirability of the sort of politics Schumpeter associates with ‘democratic’ competition for leadership.

Consider: the mass political party, the professional politician, the political ‘boss’, and the extensive use of nonrational means of persuasion (advertising, public relations, etc.) are inevitable features of the sort of democracy he describes.

But are these, in the end, social tendencies that we ought to be encouraging in a modern, supposedly civilized, educated, enlightened society?

One can certainly ask whether these are worth the price.
Should we buy Schumpeter’s analogy between political and economic competition? In his view, political parties are not essentially different from corporations competing for customers, and voters are construed essentially as political consumers.

This view may have some explanatory power: that is, if what we are primarily interested in is analyzing/predicting the behavior of electorates and outcomes of elections, Schumpeter’s framework may not be a bad theoretical model to adopt.

But does it adequately capture the
of a system of democratic party competition?
As you reflect on Schumpeter's analogy between the 'market' and the 'forum' it might be helpful to contrast his view with Tawney's:

Tawney wants to colonize economic life with politics, in that he wants deliberation about the public good to guide and constrain the activities of the free market.

Schumpeter seems to have the opposite in mind: he wants to colonize politics with the logic of market competition.

Where on this spectrum should we be?

Current practice is much closer to the Schumpeter model.
Reasons to think that the logic of the market doesn't belong in the public sphere:

Citizens are not just consumers buying products. Encouraging them to believe that they are is corrosive of democratic deliberation, shared responsibility for common affairs. (think of protests here at UVa over the past year)

Political parties aren't just like firms competing to satisfy essentually private interests. They are/should be organizations imbued with an ideal of PUBLIC SERVICE.
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