Without a doubt, Marx is the most famous proponent of the thesis that capitalism contains the seeds of its own destruction. But what of sympathetic observers of capitalism? Joseph Schumpeter was unusual among free-market economists in agreeing with Marx that capitalism would die of internal causes. His 1942 book Capitalism, Socialism and Democracy can be read as an extended dialogue with Marx on the subject of capitalism’s inevitable collapse.1
The book is also, incidentally, a paeon to the founder-entrepreneur—the sole or controlling owner of a corporation whose familial and entrepreneurial ambitions coalesce around the dream of founding a new dynastic lineage, perhaps a new race. As such, it contains striking resonances with the neoreactionary visions of founder-entrepreneurs such as Peter Thiel and Elon Musk, as well as their cohort of B-grade philosophers (Mencius Moldbug, Nick Land, and the like).
As if looking at Marx through a distorted mirror, Schumpeter concurred that capitalism was destined to self-destruct. But he arrived at this conclusion by a very different route. Where Marx thought that the final revolutionary overthrow of capitalism would emerge from its tendency to polarize wealth and accelerate crises of overaccumulation, Schumpeter believed that capitalism would succumb to the increasingly socialized, massified forms it had assumed in the early twentieth century.2 For Schumpeter, then, capitalism was threatened not by its tendency to accentuate its own contradictions but rather by its success in alleviating them. Capitalism’s time arrow led to equalization, not polarization. It contained socialized production in germ, and this was its death warrant.
Schumpeter saw the rise of the modern, publicly traded corporation as the beginning of the end. With the gradual, seemingly inexorable separation of the functions of owner and manager, the democratization of stockholding, and the convention of absentee ownership, the modern corporation extinguished the basic motive forces of the entrepreneurial spirit: direct personal property and unmediated contractual freedom (73).
Like other romantic observers of the modern corporation, Schumpeter thought that the ascent of professional management opened up a stultifying distance between the would-be entrepreneur and the property of the firm.3 The entrepreneur of yore was demoted to the role of administrator, while the sole owner was supplanted by the democratic mass of largely indifferent, absentee stockholders. Somewhere along the way, the modern corporation had replaced innovation with administration and thus destroyed the “essential fact” of capitalism: what Schumpeter (again paraphrasing Marx) called “creative destruction” (73).
Yet latter-day prophets of creative destruction would probably be surprised to learn that Schumpeter saw dynastic capitalism as the ideal vehicle for the entrepreneurial spirit. One of the chief reasons why he lamented the rise of the large, publicly traded corporation was the destructive effect it had on the family-owned businesses and majority shareholders of the nineteenth century, who almost invariably lost control of the firms they had founded once they were traded on the stock market. With the democratization of corporate ownership, he complained, the “most glamorous of bourgeois aims, the foundation of an industrial dynasty, had in most countries become unattainable” (139).
More than the rise of the public corporation then, Schumpeter saw the decline of the bourgeois family as responsible for the dwindling prospects of capitalism (140). This was because, in his eyes, family formation was the ultimate driver behind the will to innovate. Only someone who thought in intergenerational terms was capable of the heroic leap of faith required for true innovation. The true entrepreneur was prepared to sacrifice his own short-term enjoyment precisely because he was animated by the desire to create new wealth for his children and grandchildren (143). Without the prospect of succession, Schumpeter argued, no wealth seeker would countenance the kind of personal risk exposure implied by true innovation. The heroic entrepreneur was also by definition a would-be founder of dynastic wealth.
Thus, by a circuitous route, Schumpeter arrived at the insight that capitalism at its most future-oriented only ever reinvented tradition. The future it inaugurated was always a new foundation—a new order of reproduction or a new lineage. If the time arrow of modernism was progressive and entropic, doomed to forever repeat the present, Schumpeter thought that capitalism at its most innovative unfolded in the temporal register of reactionary futurism. Was it coincidence that the most vital form of mid-twentieth century capitalism, namely the British form, maintained a working monarchy? (121–22).
By the time he published Capitalism, Socialism and Democracy, Schumpeter thought that the entrepreneurial spirit of capitalism was in terminal decline. Besieged on all sides by the regulatory fervor of the administrative state, and subject to increasingly prohibitive estate taxes, the heroic founder-entrepreneurs of the nineteenth century would soon capitulate to the “socialized” production methods of the publicly traded corporation. Yet while Schumpeter was relentlessly pessimistic about the future of capitalism, a new generation of entrepreneurs have rediscovered the seductions of reactionary futurism. The fiscal and monetary environment of the new millennium, combined with the long-term erosion of New Deal securities law, has fatally undermined the infrastructures of the publicly traded corporation and produced a new elite of private investment and entrepreneurial founders endowed with outrageous executive power over the firms they own or control.4 In power, Trump has surrounded himself with cabinet members and advisors drawn from the same sections of the business world.
Peter Thiel has done more than anyone to promote the mystique of the founder-entrepreneur. In his own words, founder-controlled firms “resemble feudal monarchies” and are very different from the publicly listed, widely owned and controlled managerial corporations that “are supposedly more ‘modern.’” “A unique founder can make authoritative decisions, inspire loyalty, and plan ahead for decades,” he explains, “while impersonal bureaucracies staffed by trained professionals” are hopelessly focused on the short-term returns demanded by the mass shareholder.5 Thiel’s business philosophy celebrates the founder as a kind of primal father, an antinomian figure who destroys old laws and creates new ones, who looks to the far-off technological future while seeking to resurrect the most arcane social hierarchies. In his imagining, founders may be orphan sons, fratricidal brothers, and patricidal sons, but for this same reason they are also creators of new dynastic lineages and new family fortunes.6
Trump’s circle of founder-entrepreneurs are playing Schumpeter’s entropic timeline in reverse. To facilitate a new birth of capitalism, they are intent on destroying both the New Deal administrative state and what they see as its economic counterpart, the “woke” corporation. As libertarians, their antisocial proclivities are considerably more advanced than those of mere neoliberals. In fact, they are determined to destroy not just the last vestiges of New Deal social welfare, but also the neoliberal model of state-subsidized or state-backstopped social markets represented by mega institutional investors like BlackRock. It is becoming clearer by the day that the war on “woke capitalism” is more than just theater. Trump’s minions really are prepared to take down the summits of neoliberal capitalism to elevate their own faction of collapse finance: company founders, private investment partners, and controlling shareholders.
But can founder capitalism survive its own destructive impulses? Trump will drill and burn until the whole earth catches fire—all in the name of American energy independence and the personal wealth of his oil- and gas-prospector allies. His tariffs threaten to destroy the foundations of US dollar imperialism. By brutally upending the trade arrangement by which the US exchanges Treasury debt for cheap imports, Trump is playing with the economic security of his base—the many American workers who rely on cheap manufacturing imports as compensation for stagnant wages and job insecurity. Yet there is no easy way to step on the reverse pedal. If Trump reneges on his tariffs, the long-term impact will surely be the same (no trade alliance can survive this kind of volatility).
Unwittingly perhaps, Trump has unveiled the brute military force that lurks behind the consensual facade of international monetary politics. When the US’s chief creditors and long-term purchasers of Treasury debt have second thoughts, how can the US maintain its position as world hegemon without resorting to the weapon of war? What can Trump offer his base except ecstatic rage against the world (and perhaps some form of military welfare state)? The self-annihilating drive of founder capitalism defies conventional political reason. The conundrum for Trump’s allies—and everyone else—is how to avoid going down with it.
Continued in Part 4
For an illuminating discussion on Schumpeter’s relationship to the Marxian left, see Michel Feher, Rated Agency: Investee Politics in a Speculative Age (Zone Books, 2021), 7–10.
Joseph A. Schumpeter, Capitalism, Socialism and Democracy (1942; Taylor & Francis, 2010), 119, 139–40. All subsequent page references to this work appear in-line.
Similar arguments can be found in the work of former Trotskyist turned conservative James Burnham, The Managerial Revolution: What Is Happening in the World (John Day Company, 1941) and the paleoconservative thinker Samuel T. Francis, Beautiful Losers: Essays on the Failure of American Conservatism (University of Missouri Press, 1993).
Melinda Cooper, “Patrimonial Capitalism: Agency Theory and the Return of Dynastic Wealth,” in Rebooting Political Economy, ed. Greta Krippner, Sarah Quinn, and Marion Fourcade (Duke University Press, forthcoming 2026). Available at →.
Peter Thiel with Blake Masters, Zero to One: Notes on Startups, Or How to Build the Future (Penguin, 2014), 188.
Thiel’s mythical role models are Oedipus and Romulus and Remus—that is, orphans, fratricidal brothers, patricidal sons, and founders of new civilizations. Thiel, Zero to One, 180–81.
