It seems that Schumpeter’s despair was somewhat premature: the entrepreneur will most likely survive capitalism. A stratum of young Party functionaries has developed in Yugoslavia, for instance, the main function of which is to manage the constipated economy whenever a bottleneck occurs. True, they still tend merely to react to such crises, but there is a sufficient number of forward-looking people among them to suggest a new and stable trend. They are willing and able to take risks, to disregard a maze of laws and regulations (thereby displaying the derived character of everything legal), to venture into the uncertain. They are exceedingly pragmatic. The young commissars are business-like, as Lenin required them to be. They are interested in new products and processes, and new organizational arrangements. All this reminds us of Schumpeter’s discussion of the entrepreneurial function:

To undertake such new things is difficult and constitutes a distinct economic function, first, because they lie outside of the routine tasks which everybody understands and secondly, because the environment resists in many ways that vary, according to social conditions, 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 as well as the entrepreneurial function. This function does not essentially consist in either inventing anything or otherwise creating the conditions that the enterprise exploits. It consists in getting things done.[1]

Indeed, there is a host of fresh Party functionaries in Yugoslavia capable of getting things done. They are gradually abandoning the narrow confines of purgatory politics. The process of management of social capital and social labor nowadays demands more: an active and leading rôle. The new entrepreneurs are young and daring. In their “private” lives they are reckless racing car champions, brutal ice hockey players, big game hunters, Monte Carlo enthusiasts—in short, a colorful and rowdy bunch. And yet they are soldiers of the Party first and foremost.

The process of substitution is generally reaching a new stage. Very soon the new entrepreneurs may become daring enough to tackle the social structure. For the time being this is mere speculation, however. The only important aspect of this speculation is that it does not reach beyond the range of what is already possible. As a substitute for the national bourgeoisie, the Party may well venture a few steps closer to its hidden roots. The new entrepreneurs may become free to perform their function without fear and without remorse from the Party summit, still occupied by the revolutionary aristocracy. Time itself will soon remove this last obstacle, and we may witness a spectacle: the transformation of the Party into a collective entrepreneur.

Addendum (February 24, 1981)

This provincial account is problematic from at least two points of view. First, the entrepreneurial “deformation” has long been debated by many students of the Soviet Union, who consider it inherent in Marxist-Leninist ideology. Thus Azrael writes:

For all its appeal to rigidly authoritarian and essentially noninnovative personalities, Marxist-Leninist ideology contained many themes calculated to appeal to the entrepreneurial personality, especially in a cultural milieu that placed a relatively low value on enterprise and efficiency. Adam Ulam is undoubtedly correct when he suggests that one of the chief selective functions of Marxism in Russia was “to draw into the Leninist party the people who, under cover of their revolutionary doctrinairism, possessed in the highest degree of managerial and administrative instincts required to erect the modern industrial state.”[2] Marxism made industrial development a primary goal, and the Leninist party always conceived of itself as an “organizational weapon” and consistently sought to train its members in organizational skills. In consequence, the party had a sizeable pool of skilled organizers when it seized power, and it rapidly expanded this pool in the post-revolutionary period, when it made a conscious effort to convert itself into what one Soviet historian has aptly called “a colossal … apparatus for the recruitment of organizers.”[3] Moreover, it took special steps to ensure that a large proportion of its best organizers were assigned to managerial posts.[4]

And second, the Party entrepreneurs are very unlikely to materialize the “process of substitution,” whereby the Party itself would undergo a significant social transformation. Their position is seriously circumscribed by the apparent possibility of such a transformation. Once recognized, however, the danger can be effectively removed. Azrael consequently concludes:

Although theories of political development which cast the engineers and managers in the rôle of foreordained “grave diggers of Communism” have been common for over fifty years, they have found little confirmation in events. At almost every step, the technicians have bowed to the dictates of the ruling élite, and, in those cases where they have proved somewhat recalcitrant, their resistance has ultimately been futile. What political influence they have had has been primarily a function of their unquestioning acceptance of an instrumental and dependent rôle, and the only periods during which they have acquired a certain independence have been those in which the central leadership has been internally split. Far from growing at a progressive and ever-accelerating rate, in other words, managerial power has been both marginal and contingent, and there is little doubt that it will remain so for some time to come. And the probability is high that this power will be used in the future, as it has in the past, for essentially functional, system-supporting goals.[5]

This applies to the young Party functionaries in Yugoslavia as well. Their rôle has been, and will most likely remain, marginal and contingent. Their power is and will remain derived.

It may be noted that the search for the “gravediggers of Communism” concentrated upon the engineers and managers precisely because the entrepreneurial function was interpreted from an extremely narrow perspective—that of capitalism. Schumpeter’s misconception was thus unwittingly propagated into a new realm of social study. In short, my note perhaps remains relevant only in the context of a belated polemic with Schumpeter, whose relevance is itself debatable.

Footnotes

1. Schumpeter, J.A., Capitalism, Socialism and Democracy, New York: Harper and Row, 1950 (first published in 1942), p. 132. He concludes (p. 134):

The perfectly bureaucratized giant industrial unit not only ousts the small or medium-sized firm and “expropriates” its owners, but in the end it also ousts the entrepreneur and expropriates the bourgeoisie as a class which in the process stands to lose not only its income but also what is infinitely more important, its function. The true pacemakers of socialism were not the intellectuals or agitators who preached it but the Vanderbilts, Carnegies and Rockefellers.

Quelle horreur! But, we need not worry. Schumpeter commits here the same error von Mises made in connection with the function of prices (as Lange aptly demonstrated): he could not imagine that form and substance might be separable. His error only points at his despair, an emotion that clouded his vision.

2. Ulam, A., The Unfinished Revolution, New York: Random House, 1960, p. 199.

3. Kritsman, L., Geroichesky period velikoi russkoi revolyutsy (The Heroic Period of the Great Russian Revolution), Moscow: Gosudarstvennoe Izdatel’stvo, 1926, p. 78.

4. Azrael, J.R., Managerial Power and Soviet Politics, Cambridge, Mass.: Harvard University Press, 1966, pp. 66-67.

5. Op. cit., pp. 173-174.