Essay from noted historian Niall Ferguson. Abstract:
Schumpeter warned that socialism might ultimately prevail over capitalism, for four reasons. Creative disruption is rarely popular. Capitalism itself tends towards oligopoly. Intellectuals are susceptible to socialism. So are many bureaucrats and politicians. Socialism had manifestly failed everywhere it had been tried by the 1980s, apparently proving Schumpeter wrong. But the adverse consequences of the 2008-9 financial crisis, combined with the left-wing bias of much Western education, have led to a revival of interest in socialism among young people. However, what young Americans mean by ‘socialism’ is not the state taking over ownership of the means of production. They merely aspire to policies on healthcare and education that imply a more European system of fiscal redistribution. They fail to grasp that the defining feature of socialism is the violation of property rights. To an extent Schumpeter underestimated, socialism’s greatest weakness is its incompatibility with the rule of law.