The German Genius

Institute of Education.
    Mannheim took a “planned society” completely for granted. 8 For him the old capitalism, which had produced the stock market crash and the Depression, was dead. “All of us know by now that from this war there is no way back to a laissez-faire order of society, that war as such is the maker of a silent revolution by preparing the road to a new type of planned order.” He was equally disillusioned with Stalinism and fascism. Instead, according to him, the new society after the war, what he called the Great Society, could be achieved only by a form of planning that did not destroy freedom, as had happened in the totalitarian countries, but that took account of the latest developments in psychology and sociology, in particular psychoanalysis. Mannheim believed that society was ill—hence “Diagnosis” in his title. For him the Great Society was one where individual freedoms were maintained, but informed by an awareness of how societies operated and how modern, complex, technological societies differed from agricultural peasant communities. He therefore concentrated on two aspects of contemporary society: youth and education on the one hand, and religion on the other. Whereas the Hitler Youth had become a force of conservatism, Mannheim believed youth was naturally progressive if educated properly. He thought pupils should grow up with an awareness of the sociological variations in society, and the causes of them, and should also be made aware of psychology, the genesis of neurosis, and what role psychology might play in the alleviation of social problems. He concentrated the last half of his book on religion because he saw that at bottom the crisis facing the Western democracies was a crisis of values, that the old class order was breaking down but had yet to be replaced by anything else systematic or productive. While he saw the church as part of the problem, he believed that religion was still, with education, the best way to instill values, but that organized religion had to be modernized—again, with theology being reinforced by sociology and psychology. Mannheim thought that postwar society would be much more informed about itself than prewar society. He acknowledged that socialism had a tendency to centralize power and degenerate into mere control mechanisms, but he was a great Anglophile who thought that Britain’s “unphilosophical and practically-minded citizens” would see off would-be dictators.
    Joseph Schumpeter had little time for sociology or psychology. Insofar as they existed at all, for him they were subordinate to economics. In his wartime book Capitalism, Socialism and Democracy , Schumpeter declared himself firmly opposed to John Maynard Keynes, to Marx, and to Weber up to a point. It is not hard to see why. 9 Educated at the Theresianum, an exclusive school in Vienna reserved for the aristocracy, Schumpeter was there by virtue of the fact that his mother had married a general after his father, an undistinguished man, had died. As a result of his “elevation,” Schumpeter was always rather self-consciously aristocratic; he would appear at university meetings in riding habit and inform anyone who was listening that he had three ambitions in life—to be a great lover, a great horseman, and a great economist. After a number of adventures in Egypt and Austria, Schumpeter eventually made his way to Harvard, “where his manner and his cloak quickly made him into a campus figure.” All his life he believed in “an aristocracy of talent.”
    Schumpeter’s main thesis was that the capitalist system is essentially static. For employers and employees as well as for customers, the system settles down with no profit in it, and there is no wealth for investment. 10 Workers receive just enough for their labor, based on the cost of producing and selling goods. Profit, by implication, can only come from innovation, which for a limited time cuts the cost of production, until competitors catch up, and allows a surplus to be used for further investment. Two things followed from this. First, capitalists themselves are not the motivating force of capitalism; the impetus comes instead from entrepreneurs who invent new techniques or machinery by means of which goods are produced more cheaply. Schumpeter did not think that entrepreneurship could be taught or inherited; it was, he believed, an essentially “bourgeois” activity, and bourgeois people acted not out of any theory or