Some economists talk a lot about socialism these days. There’s a social democrat running for the presidency, and more people are warming up to the idea that social medicine may be the answer to our deteriorating healthcare system. Joseph Schumpeter, the 20th century Austrian-American economist and professor at Harvard University, believed that capitalism eventually leads to socialism. Schumpeter said that perennial inflation plays an important role in the demise of the private enterprise system. That demise is initiated by the bureaucracy and the restrictions and regulations they put on the private enterprise system. These regulations become overwhelming and the system breaks down. Schumpeter said that this process doesn’t seem like a conscious choice, but it happens nonetheless.
There is no doubt that the initial signs of economic change are taking shape. Our political system is broken, and the government is drowning in its own pool of regulations. The United States is no longer the largest economy. That title goes to China, and its communist leaders. It is important to point out that communism and socialism are not the same thing. Socialism, as it is defined, is an economic mentality, and Communism is a political driven theory. Modern day economist are more concerned with our economic mentality not political driven theories. It is possible to have a functioning social democracy that supports people’s needs when a democratic system breaks down.
The Managing Director of Duquesne Capital Management, Christian Broda, was a Professor at the University of Chicago, Booth School of Business. He is familiar with Joseph Schumpeter theory of “Creative Destruction.” Broda holds a Ph.D. from the Massachusetts Institute of Technology (MIT), and a B.A. from Universidad de San Andres. He is also a James S. Kemper Foundation Scholar. Broda has written several articles on China, financial de-globalization, and the strength of the U.S. Dollar. Broda does not advocate socialism, but he is very aware that the economy of the United States is dependent on the economies of other countries. In one sense that is a form of socialism.