By Neland Nobel

Written by Neland Nobel

Estimated Reading Time: 7 minutes

TPP Editors’ Takes

• When colleges pump out more “elites” than society has elite jobs for, the frustrated ones don’t get humble — they get radical
• Capitalism is so successful it pays people to attack it. Schumpeter called this in 1942.
• Mises: if nobody will pay for your ideas, blaming the system is easier than changing yourself.
• NYC’s new mayor: Africana Studies degree, never made payroll, now a housing expert. Seattle’s new mayor: Oxford dropout, supported by her parents into her 40s, and also a housing expert. Their voters fit the same profile — highly educated, frustrated, can’t afford rent.

 

“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”  Winston Churchill

We recently explored the role envy plays in the spread of socialist ideas.

To some extent, the recent resurgence in the West of these ideas comes in a way even communists themselves never really predicted.

The revolutionary fervor is not coming from people oppressed by capitalism, but largely from those who have benefited immensely from it. Instead, it is coming from university-educated and affluent players.

There are a number of thoughtful theories to help explain this, from four thoughtful men, that overlap to some extent, which we shall explore in a very brief manner.

Professor Peter Turchin, a Russian-American academic, uses cliodynamics, the mathematical and data-driven study of historical social processes. He suggests that societies become unstable when they produce too many aspiring elites, seeking high-status positions.

He has explored this phenomenon in ancient China, the Roman Empire, Revolutionary France, and even the Aztec Empire.  His book End Times: Elites, Counter-Elites, and the Path of Political Disintegration allows the layman to draw on his conclusions without all the complex math and computer modeling.

He also wrote a seminal article in Nature in 2010, predicting such forces would hit full force around 2020.  That is a remarkable call, to say the least.

In a nutshell, when the supply of elites exceeds the available positions, it creates a large pool of frustrated “status-anxious” aspirants who feel status deprivation.  Spending years on pretty worthless educational achievements like gender studies, they become jealous and frustrated that most people regard a good air conditioning repairman as more valuable.

His historical analysis says “elite overproduction” almost always precedes or coincides with assassinations of rulers, revolutions, and state collapse. Some of the frustrated become counter-elites; they don’t accept a lower status but seek to reshape society’s rules and institutions.

Rather than working in the professions or production, they view politics, media, NGOs, and academia as offering the best chance of gaining status and influence.

Joseph Schumpeter, in his 1942 classic, Capitalism, Socialism, and Democracy, argued that capitalism carries the seeds of its own destruction. He does not mean class struggle; instead, he said capitalism “creates, educates, and subsidizes a vested interest in social unrest.”  The very success of capitalism creates a class of professional critics who could not exist without the prosperity and freedom they seek to tear down.

Friedrich Hayek made a closely related argument in his 1949 essay, The Intellectuals and Socialism.

While Schumpeter focused on how capitalism produces a class of intellectuals who then turn against it, Hayek focused on why intellectuals as a group tend to be attracted to socialism and hostile (or at least unsympathetic) to capitalism and the spontaneous coordination of markets.

Isolated in academia and nonprofits from the tug of the markets, they don’t appreciate or understand how free markets can coordinate the economy through price signals.  This coordination allows the delivery of the correct number of bagels to New York City every day, without any coercion or centralized bureaucratic planning.  And it does this spontaneously with millions of products and millions of transactions without the direction of people who believe they are very important.

Moreover, Hayek suggests that the language of “social justice” and “equality” stokes the intellectual’s fervor to change the world through abstract ideas, as opposed to actually producing something their fellow citizens want.  Raising the standard of living for everyone is not one of their goals.  Rather, they seek a more “equitable” distribution of a declining standard of living.

Hayek did not say all intellectuals are socialists, but their isolation from reality and the market makes socialist ideas more congenial.

So Hayek emphasizes the ideological and psychological pull of socialism more than the status frustration emphasized by Turchin.

Ludwig von Mises, in his 1956 book The Anti-Capitalistic Mentality, notes that highly credentialed academics often find little market for their ideas because they don’t really benefit other people. Education in the wrong things does not translate into market power.  College dropouts, or those who never got advanced degrees,  can become millionaires and change the world in more profound ways than academics can.  Bill Gates, Steve Jobs,  Henry Ford, and the Wright Brothers come to mind.

Mises gets pretty close to Turchin when he suggests that elites often turn against capitalism because they don’t achieve the recognition, influence, or income they feel entitled to.  Hardly anyone reads their tangled jargon in obscure journals. This is viewed as a grave injustice by some.

Moreover, capitalism, like sports,  always creates success and failure in a way that permits few alibis.  You either create something of value people will voluntarily pay for, or you try again, or give up and go home. Not able to find excuses, the frustrated sometimes strike out at the system itself.

How many entrepreneurs get tenure?  How many would even seek it?  If tenure really was to protect free speech, how come the tenured are usually the most intolerant of opposing viewpoints?

So, the social revolution is often top-down (from the elites), who join, fund, and agitate among some of the disgruntled lower classes, putting the stable middle class in a vise.

The fact that socialism has created misery and poverty wherever it has been tried is nothing to stop them.  They will always claim previous experiments were never the real thing.  Historical evidence rolls over their intellectual backs because, emotionally, they seek recognition of the high status they believe they have achieved through book learning.

That is why socialism is more popular in the faculty lounge than among automobile repair technicians.

Here is a quick grid to synthesize the thinking of these four men.

 

Lest you think this is just academic gibberish, let’s briefly look at the backgrounds of some of the most dynamic and popular new socialist faces in the Democratic Party today.

The recently elected Zohran Mamdani is the son of a well-to-do professor and a filmmaker.  The family of Indian extraction immigrated to Uganda, where they became very wealthy.  Indeed, the family knows something about colonialism, having practiced it well themselves. Mamdani attended elite schools and graduated from Bowdoin College with a degree in “Africana Studies”.

He worked as a “community organizer” and “housing advocate,” then entered politics, serving in the New York State Assembly in 2021.  He has virtually no experience in the private sector, yet he believes he is an expert in housing.

He has never met a payroll, put his own money at risk to build a rental, or done anything but academic work and social advocacy. Now he is the Mayor of New York.

Katie Wilson is the daughter of two academics. She attended Oxford, but did not graduate. She worked a series of odd jobs and then became a professional agitator with the Transit Riders Union.  Press reports indicate that she has been financially supported by her parents into her early forties.

She, too, has never owned a business, met a payroll, or even kept a family budget without parental assistance.  This also makes her a housing expert.  Now she is the mayor of Seattle.

Polls show they both did particularly well among highly educated people who can’t afford housing and register high levels of frustration.

So, both the candidates and many of the voters who elected them fit the template pretty well.

While the four thinkers we cite bite the apple just a little differently, they all share the core idea that wealthy elites with little real-world or market experience derive their prestige and recognition from politics and agitation.  And, unfortunately, they were all educated by people suffering from roughly the same problem.

The challenge we have is that our system is likely to continue creating highly educated people who know little and wish to rule the world.

Helping to solve this problem would require viewpoint diversity at our colleges, a worthwhile but very long-term project.

Perhaps another path is to educate voters on the sin of envy, their own and that of the people they elect.  But that too is a long-term project.

In the shorter term, the most durable responses focus on system repair, such as more realistic educational pipelines to the jobs that are needed.   Colleges should not be allowed to graduate students with subsidized loans in subjects with few job opportunities.  End government-subsidized student loans.  Many universities sit on billions in wealth and have become hedge funds with a left-wing curriculum.  That money could be used to pay off student debt. Many frustrated students were badly conned and given horrible career advice by colleges and universities. This badly needs reform.

The abuse of “tax-free status” for NGOs needs to be completely reformed. People should be free to engage in whatever political activity they seek, but not on the public dime.  Why is professional agitation a tax-free project?

Radicals are gaining traction because housing prices are excessive and rent control looks attractive on the surface.  But rent control makes the shortage problem worse. The response should be more and less expensive housing for all who need it.  The market will provide that if not constantly interfered with. That means deregulation, increased supply, and fiscal restraint to stop or limit systemic inflation across all aspects of housing, including materials, construction, maintenance, and permitting.

Although the Democratic Party is increasingly influenced by socialists, we still operate in a competitive political system.  That means a profound defeat at all levels will be necessary so that more moderate forces within the party can point to the failure and redirect the party back into the mainstream.

In many ways, the radicalization of the Democrats has revealed their socialism in the open, no longer obscured by claiming a third way through a mixed economy.

It has become the party of the status-starved wealthy elite.  From the top down, and from the bottom up, it is the party of envy.

-Neland Nobel

Neland ‘Neil’ Nobel was born in Uniontown, Pennsylvania, and moved to Arizona in 1961. He attended ASU and earned a B.A. and an M.A. in history, with a specialty in economic and military history.  He graduated Summa Cum Laude and received a Richard M. Weaver Fellowship from the Intercollegiate Studies Institute.  He spent the next 45 years in the financial services industry, ending his career with a 25-year run with UBS as a portfolio manager and Certified Financial Planner. In retirement, he remains active, having founded the Prickly Pear in 2020 and continuing to contribute content.  In his spare time, he is a certified firearms instructor and runs a hiking club and two shooting clubs.  He is married with three children and three grandchildren.

 

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