Wednesday, August 18, 2004

Eat the Academic (not the Rich)

From the archives:

“... unlike any other type of society, capitalism inevitably and by virtue of the very logic of its civilization creates, educates and subsidizes a vested interest in social unrest.”

Joseph Schumpeter Capitalism, Socialism, and Democracy

The above quote from Schumpeter highlights the most ironic feature of capitalism: the extension of freedoms necessary for capitalism has led to the creation of an intellectual class who, while well rewarded within capitalism, are nevertheless bent on destroying it. Schumpeter, in Capitalism, Socialism, and Democracy describes entrepreneurs as taking a laissez faire attitude toward their social critics; while most definitely annoyed by them, business leaders make no effort to restrain their critics because doing so may only be accomplished by the removal of more general economic freedoms on which their business success depends.

But is there a ready market for “social unrest,” absent the direct support of the business community, that provides its peddlers a living? Socialist intellectuals, rather than facing reluctant intolerance or outright opposition from the business community, have flourished with the direct support of those they mark for criticism. Some of our most esteemed universities, in which our socialist friends find their haven, came into existence as a direct result of the philanthropy of business moguls, and continue to enjoy their support.

The University of Chicago, for example, was funded entirely by John D. Rockefeller, and counted among its first faculty Thorsten Veblen, who made his academic reputation at Chicago with a stinging criticism of the “leisure class”, among whom he most assuredly placed his employer’s benefactor, and not himself. Great businessmen seem inclined to establish institutions populated by persons who despise them.

One would think that entrepreneurs would reciprocate the general contempt they are held in by many intellectuals, producing a relationship between the two that Wilhelm Ropke described as one of “mutually intensifying resentment.” It is difficult to reconcile that “mutually intensifying resentment,” which does in fact exist, with the soft glove treatment academics receive at the hands of the business community. It is not as if the two groups share a consensus of belief with respect to issues tangential to matters of economic justice - entrepreneurs and statist intellectuals are separated by more than differences in economic philosophy. The contrasting nature of the work each performs quite naturally leads to the self-selection of people into these respective fields who possess very different backgrounds and interests, and who will therefore differ with respect to class origins, religious inclinations, and the type of influence each seeks.

The business leader occupies a world of decisive action. Again taking Rockefeller as an example, a month did not go by when he did not make a decision that affected the entire oil market in the U.S. Until the turn of the century, Standard Oil primarily refined oil into kerosene, whose primary use was as a cheap fuel for lamps. Rockefeller employed thousands of laborers in his refineries, and affected the livelihoods of countless more in the industries that were affected by the oil business. His product provided a cheap source of lighting that was especially beneficial to the poor. His business practices were sometimes benevolent, and other times quite mean, but all were scrutinized by the press and the university because of the influence they wielded. For better or for worse, he changed the world by very simply supplying a product in great demand at a low price.

The intellectual, in contrast to the business leader, occupies a world of critical examination and continual contemplation. Intellectual work is no less demanding than that done by businessmen, but its practitioners are distinguished from the business class by what Joseph Schumpeter called an “absence of direct responsibility for practical affairs.” In Rockefeller’s work, no decision made was free from having direct consequences for many, and therefore all were wrought with moral implications. The intellectual confronts no analogous responsibilities, and this feature of intellectual work may be one of its primary attractions to its adherents. This is not to say that the intellectual’s criticism of those like Rockefeller is not valuable, but only to point out that such criticism is often made from the sidelines by the intellectual who has inoculated himself from making errors of comparable significance. The sins of commission that the intellectual attributes to the entrepreneur could just as easily be considered his own sin of ommission.

Widespread support by university professors for the minimum wage provides one issue where the interests of businessmen and academics collide. One can easily poll the faculty on a college campus picked at random and find at least 75 percent will favor increasing the minimum wage. Of that 75 percent, most will classify wages beneath that level as exploitation. But few, if any of these people, will invest their own capital and take the risks inherent to running a business so that they may be able to hire someone who would otherwise be “exploited” at a wage well above the minimum. Despite this fact, each is more than happy to be critical of the small businessman, who in many cases may make less than the average college professor. Yet the “exploited” worker owes his bread to the efforts of the businessman, and profits not at all from contact with intellectuals.

Indeed, the intellectual has very little contact with the working classes, while it is not uncommon for successful businessmen to rise out of that class, and to maintain ties to it. At the very least, the businessman, at some level, must deal with the common workers. And to do so in a way that is conducive to his business, he requires knowledge of their concerns that goes beyond the intellectual’s removed speculation of the same. Again, for better or for worse, it is the businessman who influences these working classes in a direct way. And if he is sometimes guilty of base motives and actions in his dealings, he is not naïve about the motives of others, even the poor.

Intellectuals, convinced that the influence of businessmen is malevolent, seek their own influence with these groups through indirect political action. Such a route holds the advantage of not requiring that the intellectual deal with impoverished workers directly. Instead, he acts as a would-be savior to these “oppressed” groups from above. And when his grand poverty schemes fail bitterly, and leave a society racked with illegitimacy and the resultant crime, he absolves himself from responsibility because he knows his motives were pure.

If both groups were to be judged exclusively by what they offer to the poor (which is often how we measure moral worth), not in the way of warm sentiment, but instead in the way of basic necessities, the entrepreneur looks far better. The academic’s resentment for the entrepreneur stems from this central fact – though he places the relief of poverty (if not the welfare of the poor themselves) as a top moral priority, he is largely powerless to affect that goal. The entrepreneur, on the other hand, succeeds where the academic fails in raising the living standards of the poor, whether or not that end is intended as his goal (and it is usually the assumption of the academic that the entrepreneur actually seeks to exploit the poor).

W.H. Mallock describes the resulting resentment the academic holds for the entrepreneur: “They see that a number of men by whom great social results are produced – men who make successful inventions and who found great businesses – are narrow-minded, uncultivated, and contemptible in general conversation, and that a number of other men who produce no such results are scholars, critics, thinkers, keen judges of men and things; and contrasting the brilliancy of those who have produced no great social results with the narrow ideas and dullness of those who have produced many, they proceed to argue that great social results cannot possibly require great men to produce them; or, in other words, that they might be produced by almost anybody.”

Mallock goes on to point out that the academic is not capable of doing the work of the entrepreneur. The successful entrepreneur “would probably devote a large part of his life to the consideration of a particular kind of seemingly sordid detail. To a man of wide culture and imagination, the concentration of his faculties on details such as these would be impossible; and if he wished to produce any of the results in question, he would soon discover that he could not. The men who do produce them are rendered capable of doing so, not by the width of their minds, but by the exceptional narrowness.”

Any economic system that is to achieve real benefits for its most impoverished workers must provide the freedoms that allow the entrepreneur his just rewards for his decisive role, thus providing the proper incentive. Capitalism provides those incentives, and saves the poor man from being left in the hands of intellectuals, in which he would surely starve.


Anonymous Anonymous said...


I’ve read a few of your blogs (some of which are quite entertaining), but I have to admit this time you’ve pissed me off a bit. Excuse me while I vent a little bit.

While I think what you are saying might describe a handful of people in the English or Sociology departments, it's not really representative of academia, at least as I’ve experienced it.

First, a lot of academics are involved in business and engaged in entrepreneurial activity. This is particularly true in engineering, medical schools, businesses school and even some economists. In many universities, the most rapidly expanding divisions for the past decade have been in engineering, medical schools and business schools. Staffing levels in the typical English or Sociology department are stagnant. This is because these departments don’t generate big grants and contracts. Therefore, Deans are less willing to generate extra slots. Overall, the trend is definitely towards increased interaction with the private sector.

Second, the university system in the U.S. is a competitive business. It's one of our great exports to the world and something the U.S. does very well compared to other countries. As a working academic, I face regular and brutal competition. I am evaluated based on my teaching and my research continuously. My wage is set through a competitive market for my services between universities. I can’t think of one assistant professor I worked with who was not under tremendous pressure from the tenure process. Overall, working economists and other academics I know find the business to be highly competitive, if not downright brutal.

Our services are highly valued by the market. Kids (and their parents) fork down serious coin to attend top institutions. People come from all over the world to attend US universities. Universities are a subcontractor on billions of dollars of research from both the public and private sector. Claiming that universities are divorced from the market is just not true. It’s a competitive business and, at least the places where I have worked, modeling them as a profit maximizing organization would not be a bad approximation.

Third, the thing that I find a bit sad about this business is that we sometimes spend too little time chewing over big issues. Research in many fields, including economics, is increasingly specialized and focused on fairly narrow questions. This is useful for society but maybe less fun for the people in this business.

As a working academic, I wouldn't mind getting into a few arguments with some of my PC colleagues from the English and Sociology departments. The sad truth, however, is that we are so under the gun to produce research and teach that most of the top people in my field (economics) don't have the time to discuss big picture issues. In fact, contrary to the stereotype of our business, I don’t think I’ve ever had a conversation with a rabidly PC person as an academic. I have met a few rabid Republicans in academia, however, after spending a year at the Hoover Institution (I’m an independent myself).

If you want to talk about what is fucked up with academia, it is that making money through grants and private sector contracts has taken priority over the education of undergraduates. I’m not always sure they are getting a good deal. That’s why guys like you and I, instead of the faculty, taught the vast majority of undergraduate courses at Minnesota.

My apologies for the slipshod editing- have to get back to work.

Pat B.

9:12 AM  
Anonymous Anonymous said...


Great article! I'm a former academic and current entrepreneur. I never liked the incentive/reward system in academia. I felt like I was doing a lot of unimportant work either for someone else's benefit, or for no one's benefit. And the opportunity for financial advancement was quite limited, although I would have been guaranteed a comfortable existence.

I have never understood why academics (and I understand, this is not true for _all_ academics) feel the need (perhaps the obligation?) to be liberal in their politics. In my mind, the liberal stance makes little sense for people who believe that most good and great things in life come as a result of personal initiative, hard work, and honest good intentions.

It seems like the intellectual class, of which I am a member but would not be socially acceptable in, is quite narrow-minded in adopting a conformist stance of liberalism. I honestly believe that if these highly intelligent people would use their brains to think objectively, their politics would be different. Instead, I think they are just afraid to stand out as different, lest they not receive the advancement they seek.

I understand that I am making some broad generalizations about academics here, but I think my message is clear. This was all hammered home recently when I went to a wedding that was heavily attended by academics (including bride and groom). During the toasts, someone found it necessary to make pro-Kerry statements. If that was the person's opinion, fine. But why did I have to be in a position where it was virtually assumed that I shared the political affiliation of the speaker? Oh, yeah. It's because I was at a wedding that had a lot of academics/intellectuals. Great. It made me want to abandon any remaining claim I have to the title "intellectual". The people on either side of me at the table happened to share the exact same feelings I had. We are not alone! Perhaps we should unite and rise up to bring the intellectual class back where it belongs.


9:51 AM  
Blogger Stax said...

Good blog entry. Very Rand-y.

I'd expect the angry reaction coming your way from anyone academic on your blog list. Some academics do work very hard. But they work for different rewards. I agree that some academics have no room to reflect on the motives and morality of entrepreneurs & capitalists. Neither do some capitalists have any room to reflect on the motives & morality of the academics. Both serve their purpose in our society and are of great value.

It would be nice if both acknowledged that. But some academics are generally more vocal and have the ear of the press. I think its more a problem of who the press seems to let air their views. I blame mainstream media who air the views of whacky academics...not academia itself.

12:47 PM  

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