Masters of Peering through the Fog - Joseph Schumpeter

Oligarchic capitalism, crony capitalism, neo-fascism, globalism, or corporatocracy - whatever you prefer to call it, was predicted a long time ago - by Joseph Schumpeter.

Let's say that you (or I) wish to find an investment "guru". For the moment we can skip over the point I merrily keep repeating - that following gurus is a bad idea as it paralyzes growth and reduces effort and resources devoted to research. But instead we can define our exercise as studying a guru, not following one, yes? The study of the masters is and has always been a marvellous way to educate and develop skills whether in logic, or the painting of artworks, or any of a wide number of subjects.

So in this circumstance we want to find a guru to study. It must be a personage from the past, so that we can already verify the track record of our guru, and place him/her in the highest echolons of gurudom, and therefore worthy of our study.

A few weeks ago I wrote a blog post in which I gave a recommendation that Ed Seykota was an interesting person, and his book Govopoly a very interesting book to read. It's this essay: Is Anything Missing?

So Ed wrote about the situation of progress under capitalism, and the tendency for government to get bigger, monopolizing business, frustrating innovation and productivity, until eventually atrophy breaks the system. Well worth reading imo.

What if I told you that somebody else wrote on this very subject? I refer to Joseph Schumpeter born 1882 and died 1950. Back in the year 1942, or 72 years ago Schumpeter placed chapters in his book with the following titles:

The Rate of Increase of Total Output,

Plausible Capitalism,

The Process of Creative Destruction,

Sounds a little bit "dry" right? Well I suppose all economic books are that way to some degree or other. But take note that his term "Creative Destruction" has entered the lexicon of economics forever on the basis of his published works.

I looked this book up today on Amazon, and Wikipedia and laughed, because I found a similar critical comment of the book on both webpages. Here is the critical comment from Amazon:

QUOTE>> Dated and fatally flawed, but sweeping

By E. Husman on January 25, 2004

.... I wanted to read this book because I wanted to pursue the idea of "creative destruction" to its source. However, Schumpeter's Capitalism, Socialism, and Democracy (CS&D) was not what I expected. Though Schumpeter is frequently associated with the Austrian School of Economics, he left early on to pursue a different agenda.
CS&D is an extended defense of Marx's conclusion that capitalism would collapse on itself and be replaced with socialism, but without propagating Marx's errors. ..... In order to make his argument, Schumpeter introduces several ideas that will be at odds with common understanding. For example, many victims of one or two semesters of college economics will have noted that the atomistic theory of competition almost never holds true, so the seductive criticism that capitalism tends toward monopoly is easily accepted. Fortunately, Schumpeter makes a valiant early attempt at showing that this is not the easy argument that Marxists hoped it would be. Likewise, most of us have noted that democracy - except in Classical Greece and small towns in New England - is hardly ever practiced the way we were taught, where citizens guide public policy and politicians carry it out. Instead, Schumpeter reminds (or teaches) that democracy is commonly practiced as a competition among leaders for votes, and voters select the politician whose program most closely matches their idea of the "correct" mix of policies .... << ENDQUOTE

On Wikipedia this paragraph can be seen:

Quote >>  According to some analysts, Schumpeter's theories of the transition of capitalism into socialism were ‘nearly right’ [11] except that he did not anticipate the obvious recent failure of socialism in Eastern Europe nor the role of technology to actually foster innovation and entrepreneurship in western society beginning in the 1980s. This was in contrast to Schumpeter's theory that technology would only serve to concentrate ownership and wealth towards large corporations. << EndQuote

Don't you just love the confidence (I almost said jingoism) of those people? ... the obvious failure of socialism ... transition of capitalism into socialism was "nearly right" ... or this one ... many victims of one or two semesters of college economics will have noted that the atomistic theory of competition almost never holds true, so the seductive criticism that capitalism tends toward monopoly is easily accepted ...

I guess they either wrote those comments before the last decade, or were/are a little blind to what is actually going on today.

Either way Schumpeter got it right, just as Seykota gets it right much more recently. In my humble opinion of course.

So what other chapters did he write which might have pricked some national pride and triggered the critiques mentioned above? Maybe these chapters struck the idealistic capitalistic core of some readers a little:

Monopolistic Practices,

Closed Season,

The Vanishing of Investment Opportunity,

The Civilization of Capitalism,

Crumbling Walls,

Growing Hostility,


A decade ago it was probably easy to say none of this will ever happen to the bastion of capitalism, eh? However we see what is going on now more clearly. And Schumpeter wrote his comments 72 years ago, and .. well ... that's what's going on now!

And how about a chapter called "The Vanishing of Investment Opportunity". What a great way to describe society today, from 1942!

The book? Here is one reference: Capitalism, Socialism, and Democracy [Kindle Edition] but there are many editions of course, and he wrote other books too which might interest those willing to take on an economic based tome or two. Imperialism and Social Classes sounds interesting and is full of comparisons between the Roman Empire and the development of modern states into empires. Lots of people today make that comparison, but seventy years ago during WWII, not so many I expect.

So was Joseph Schumpeter a guru worthy of study? I think so. Time seems to have proven many of his forecasts about society correct, and therefore what of his other forecasts? I leave that to your good selves to decide.

Well that's all for today.


Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.


sierra skier's picture


Just because I can.

Edit in: Investment opportunity today is a mess. Everything has been manipulated to push us into paper and away from real money. I think they are in the final process of pulling the rug out from under those who have their money tied up in their paper. Hopefully the tangibles and real money we hold will help protect us from the complete losses many will face.

Turd Ferguson's picture

Another great post, AM



Can&#039;t Happen Here's picture



I'd add "unextinguishable debt" to the list, something that maybe the author didn't think we'd be dumb enough to do.

silver66's picture

Thrud but really second

AM, you make my mind hurt, my kids hate these posts cause I forward on to them and then want to discuss


Edit.....sigh I guess I really am third

but then again you win gold and lose silver and win bronze

Marchas45's picture

AM Looking For A Guru

Look Me Up, I'll Tell You Anything You Want To Hear. LMAO Keep Stacking

Bollocks's picture

WOW - BitCon

Down 20% in 2 days and it broke below $300 earlier today (has bounced a teeny bit since then to $310).

Down 35% over the last 20 days.

Ten months ago it was about $1150.

Game over.

edit: just changed the figures - it's not 7 days / 30 days but 2 / 20.

Marchas45's picture


Seems like everything is going down except for the Dollar which is getting stronger. Maybe I should sell everything and hold onto those precious paper things, then again maybe not. Keep Stacking

Zoltan's picture

TV Night at Zoltans

I saw this in passing on another thread.  Was my pleasure to host everyone that night (seems so long ago).  Biggest party I have ever had, even if it was via internet.  Haven't posted in a long time because I wasn't sure what I could contribute.  Silver Lease rates are a mystery now.  Kitco continues to kick the can (latest version will be posted by the end of the week on their trustee in bankruptcy site).

Personally I am in my second year back at the "coal mine" since leaving the Gulch.  These prices are a gift to the stackers.  Enjoy and take advantage of with your extra fiat while you can.  Remember to live and enjoy your lives as well.  Will be watching the open tonight with interest to see what TPTB have in store for silver and gold.  Expect a lagged opening time on silver, just a hunch.


PS Hat tip me please if you were there.  Wonder how many of us are still around.

Bugzy's picture

I was there

Zoltans couch

infometron's picture


I wasn't there, but wish I had been. A tip of the hat to ya anyhow!

argentus maximus's picture

Rob Kirby

Fred Hayek's picture

Thank you for bringing Schumpeter to our attention, AM

I've heard the name and read some back and forth commentary, positive and critical from folks much more in the know than myself but know little about Schumpeter.  My interest is piqued by your words.

Maximillion's picture

Investment Guru LMAO

So Bitcoins falling again, along with PM's and Oil, and still the perma bull guru's 'blah blah blah' about how it's all going to change shortly, exactly as they've been doing since silver was in the high $40's, along with whatever new evidence they've found to support their idea. It's simple maths, if 99% of traders are sheep to the slaughter then the only way a guru can financially survive is to sell cr*p advice to the sheep and trade himself in the polar opposite direction. Pm's ain't going nowhere up soon!

Ferd Torgerson's picture


Ms. Torgerson and I were both watching that evening. I recall complaining that you didn't have the decency to provide popcorn or some of those hors d'oeuvre thingies to your guests. Glad to see you post again.


I Run Bartertown's picture

Through the Fog?

"...For decades any objections to the PC program were met with the harshest possible treatment. ... Recently, however I’ve noticed a change ... how upset they are regarding PC, multiculturalism and the war on observable fact. ...that the reservoir of rage now filled by knuckling under to the multicultural Left is brim-full, and the dam behind which it sits is fracturing under the disunity of a failing social system.

... predictably fails, so will the dam holding back all that pent-up rage.

...One day soon the victims of multiculturalism will decide they’ve been beaten and reviled once too often ..."


Zoltan! TV Chat Night was fun. Thanks again for hosting yes.

buzlightening's picture

argentus maximus

Thank you for making my post here more plausible as the truth gets stuffed by the oligarchs.  We the people are deserving of the truth but yet it comes to those who desire to know.  Not all the details of the future but from what is written passed, present, and now future before it's reality is all possible under heaven.  

'What I think is to come' - A possible future for the USA

By Laron

To give this article some context, which John just wrote up and sent in, this information is in relation to Clif High's various webbot forecasts from over a long period of time. This is what John sees up ahead for the USA based upon the current situation and the future forecasts from the webbot.

By contributing writer John

So now all of the old reports make sense in regards to Ebola and the reactions.

The churches all fail because people stop going, to avoid ebola. People stop going to large organizations. The just in time system then collapses easily once people stop moving around. The frigid cold that has already hit in the areas keep people in. People get sicker. they are already horribly unhealthy here and on so many drugs. Major cities start to shut down from scares of the plague and hospitals overflowing from sickness and inability to do anything and incompetence.


A scanning electron micro-graph of the Ebola virus budding from the surface of a Vero cell (African green monkey kidney epithelial cell line) - NIAI

This would explain why Lindsey Williams, who is a mouthpiece for TPTB, has said they don't see any threat from riots or unrest. So they either unleashed this on purpose or they knew it was coming hence all of the prep work they did in the media and the lies of saying it cant come here and not to worry and then suddenly its all over the place within weeks. So clear lying there or insane incompetence.

Previous reports showed that for some reason people stopped going out to shop and that would start to crash the economy and now we see the reason why. The intense cold and the loss of electricity will start to happen here all over. 

The bots see that international trade will stop and that will cause other things to fail. That fuel will fail. Transportation all over will fail since people can no longer cross borders.

In the past IDIR's he (Clif High) saw that people would stop sending kids to schools for some reason but didn't know why. Now the latest bot information shows that people will pull kids out of school for fears of disease. So then you can see why bitcoin takes off as it doesnt involve any contact with another person or even with a material, which is what was mentioned in many older webbot ALTA's and IDIR's.

So this must be what collapses the ponzi scheme of the western banks. They all collapse under this due to lack of use and society running scared. 

The US seems to be split with weather conditions now. The west is getting drought and then intense flooding wiping out crops and infrastructure. Then in Midwest, its just cold, col. and the east coast is starting to be affected by the flooding. They are having to create a sea wall for New York. NY will likely be flooded out in the next few years and with this scare much of the city might flee out to the country side anyways.

Bots see that the empire crumbles here. The power just vanishes because they cant hold onto this level of humanity with people freaking out and scared, trying to survive.


 Moscow City, Russia by Andrew Beirne

Russia signed a treaty with China on Saturday that isn't being talked about much, but its a huge thing as a shift to China and Russia was said that it will start to stop using the dollar as its peg and using internal currencies.

Now the US government just started saying that the jpmorgan hack was by the Russian, I just read that today as predicted by the bots. So you can see how things are starting to swing wildly. The empire tries to keep up propaganda and craziness and at the same time it is loosing all control to chaos and disease and lack of infrastructure.

All of this is leading to the Spring of 2015 as being the point at which the global population finally tips over to the global consciousness awakening. This chaos and disease and utter incompetence and poor way of living here will have to be reexamined and people will have to make a change or die off. 

Previous Articles by John

Julu 3rd - The Breakaway Civilisation

June 28th - Positioning of the Elite   .......................................................................................Lets know that there were people who saw our day in the passed.  Prophecy is key to the future.  Lets know that what brought people to their deaths because of what was said and how they obtained it is now coming to pass on a regular bases.  Prophets often were given a seer stone.  Some call it an urim and thummin which gave them access to information from higher intelligence; advanced perfected beings.  Looking through a plate of glass to receive information, as one gazes at the visions brought through the glass is accepted world wide.  From I pads, smart phones, and continued computerize speeds and advancements, one has all global info at their finger tips.  That one would use this to foretell the future is completely rational for those who know higher intelligence has always communicated with the human family as we are truly children of God; placed here for a plan and a purpose.  One only has to go to revelations and read about a white stone given to each who inherit the right to live in a society of extremely higher intelligence.  A stone with a new name or access code only known to those who receive it. 

murphy's picture


Nice to see you back. Enjoyed tv nite at Zoltans.
@Ferd - good to see you as well. Are we ready to go back in business?

PS- can I cash that check I have been holding since silver was $35?

Bollocks's picture


Thanks for your article. Interesting stuff yes,

Good Rob Kirby interview, thanks for posting that up too.

Just to point again out to non-UK turdites (and those in the UK who don't yet know), don't believe what you see reported by 'The Daily Mail' - that Rob draws attention to. They are well-known for making things up or exaggerating stories to the nth degree for shock-effect.

Not a credible news-source.

@Marchas45  - yes sell everything! (no, don't wink).


Mantis's picture

Bitcoin crashing

I think this bubble still has further to collapse. Heres a log chart showing 1 week candles. I've put some arrows showing how I thought we'd reach bottom trendline, but its shaping up might hit faster than that.

Its not the end of crypto though. Quite likely bitcoin may have another bubble but if not other cryptos will. Theres a lot of inovation in that space.

Marchas45's picture


I'm coming home next year for a family reunion and I'll be staying on the Borders around Dumfries, so hopefully the metals will taken off by then. laugh Then I Can Sell. Keep Stacking

Pining 4 the Fjords's picture

Zoltan, Murph, and Ferd

Great to see y'all in the house!  Lots of water under the bridge since the olden times,  lots of names gone quiet on the board, but strong hands are strong hands.  Good to see you fellas around.

maybe we should all login to the old blogspot- not sure I still remember my password!

transplanted baby's picture

schumpeter to schumacher

Hey AM, it is interesting to see that people some time ago could predict where all this was going. Along those lines and since the name is similar, I recommend a read of Schumacher's Small is Beautiful. Schumacher lived from 1911 to 1977 and wrote on how to place communities ahead of corporations. The book is available on amazon, etc.

Ferd Torgerson's picture


Surprised to see you posting.  I had not expected to hear from you for another couple of years after my plea bargain with several states attorneys-general over that unfortunate set of circumstances that led to my indictment for insurance fraud.  Guess you now have internet privileges at Club Fed.

For those who weren't here then, Murphy and I had a very lucrative underwriting business covering Turdites wanting to insure their stacks against boating accidents.  We had some slick TV ads showing my ex-brother-in-law and e-Commerce Manager Murphy promising, “If you like your boat insurance, you can keep your boat insurance - period”.  Please believe me when I say I had no idea at the time that Murphy didn’t have a clue about how to build a web site until it crashed and he claimed that he completely lost track of all our clients’ funds.  I am so very sorry.

It's ok to cash the check.  You can buy some smokes, candy, toiletries and stationery to write home to the folks.


Bollocks's picture


Yup, it's good to see you back.

Buy your own popcorn, goddamn freeloader.

And get posting again. This place isn't a bed & breakfast y'know.


ag1969's picture

Zoltan, I was there

That was the best episode of Dancing with the Stars I have ever seen.

AM, once again, great stuff.  Thank you.

ArtL's picture

Bitcoin seems to be trading actively today

in the last few hours, I saw over 20,000 BTC traded, Lots more USD trades compared to CNY trades than usual. Usually the CNY trades are multiples of the USD trade. today CHY is only about 1.3 the USD trades.

murphy's picture

Pining, et all

Oh the good old days. The days of wine and roses. It was a lot more fun around here at 1850/45.

I remember one Labor Day weekend party that was off the hook.

BagOfGold's picture


that night in Las Vegas...was the best party I ever had the privilege of viewing!...Perhaps Pining could dig that old photo out of the the rest of the folks here could get the vibe!...It's nice to see Zoltan...Murphy...& Ferd (the old reprobate) back!!!...


Bag Of Gold

agNau's picture

The real "bad" is unleashed .....

I believe we are about to see textbook global pandemic.

This one came from a test tube. A weapon.

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