I’m not sure it even matters anymore. And please note that I say this as one of the first people on RedState to publicly call Obama a socialist. But at this point, I think the majority of people in this country like and even want socialism. They may still not like the name “socialist” but they seem to like and want socialist policies.

Indeed, even in last night’s townhall-style (yeah, right, but I digress) debate, it was the Republican nominee, John McCain, who said he wanted to use government money to purchase and renegotiate private home mortgages. And it was the current Republican Administration that came up with the bailout plan; neither is exactly what I would call “free market.”

The current situation is reminding me of Joseph Schumpeter, an Austrian economist who argued that socialism would ultimately “win.” Here is a quote from Wikipedia regarding his book, Capitalism, Socialism and Democracy:

Schumpeter’s most popular book in English is probably Capitalism, Socialism and Democracy. This book opens with a treatment of Karl Marx. On the surface level, this piece seems to support socialism. Schumpeter’s reasoning was that an overt defense of capitalism would prompt the book only to be read by those who already supported capitalism. Therefore, he believed that he must masquerade as a supporter of socialism to entice the young socialist to read his work. In the end, he hoped to awaken self-recognition in the reader to the flaws of socialism. While he is sympathetic to Marx’s theory that capitalism will collapse and will be replaced by socialism, Schumpeter concludes that this will not come about in the way Marx predicted. To describe it he borrowed the phrase “creative destruction,” and made it famous by using it to describe a process in which the old ways of doing things are endogenously destroyed and replaced by new ways.

Schumpeter’s theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism; it will be replaced by socialism in some form. There will not be a revolution, but merely a trend in parliaments to elect social democratic parties of one stripe or another. He argued that capitalism’s collapse from within will come about as democratic majorities vote for the creation of a welfare state and place restrictions upon entrepreneurship that will burden and destroy the capitalist structure. Schumpeter emphasizes throughout this book that he is analyzing trends, not engaging in political advocacy. In his vision, the intellectual class will play an important role in capitalism’s demise. The term “intellectuals” denotes a class of persons in a position to develop critiques of societal matters for which they are not directly responsible and able to stand up for the interests of strata to which they themselves do not belong. One of the great advantages of capitalism, he argues, is that as compared with pre-capitalist periods, when education was a privilege of the few, more and more people acquire (higher) education. The availability of fulfilling work is however limited and this, coupled with the experience of unemployment, produces discontent. The intellectual class is then able to organize protest and develop critical ideas.

In Schumpeter’s view, socialism will ensure that the production of goods and services is directed towards meeting the authentic needs of people and will overcome some innate tendencies of capitalism such as conjecture fluctuation, unemployment and waning acceptance of the system.

Of course, on that last point Schumpeter is absolutely wrong. But as for his other points, I think he may have been prophetic. We need only look at the public policies and trends of most of the democratic countries in Europe; indeed, as well as here in the United States. I think you would be very hard pressed to argue that the welfare state has not been expanding in societies and governments all over the world.

As for where Schumpeter is wrong, I think Frederick von Hayek and William Bartley conclusively prove that no state run economy — whether a welfare state, socialist or communist — can adequately collect and analysis the myriad bits of information (e.g. price signals) to incentive and create the productivity and general wealth of that produced by a free-market society. That is ultimately why the West won the Cold War. The pity is that we seem intent on following down the path of the losers.