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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Samizdata quote of the day – our business “class” edition

“Both Adam Smith and Joseph Schumpeter were much more realistic than Marx about the bourgeoisie’s political wisdom. Smith regarded capitalists as short-term actors who never gathered together other than to hatch a conspiracy against the public. Schumpeter regarded them as idiot savants who might be brilliant at building businesses but who were frequently fools when it came to dealing with politics. It’s not clear who can save us from the world of trouble that seems to be brewing. But anybody who is counting on the business elite to fill that role is making a dangerous mistake.”

Adrian Wooldridge. Bloomberg ($)

10 comments to Samizdata quote of the day – our business “class” edition

  • Yet Another Chris

    I can’t comment on Smith or Schumpeter except to say that – after a lifetime in the private sector – my experience suggests they could be correct. That aside, it strikes me that the last two sentences are the most important in this quote. We do seem to be facing ‘a world of trouble’. But then we have many times before over my lifetime.

    I started work in 1968, but my Dad was in business and from a quite early age I would listen to his rants at the dinner table about the problems he faced – unions mostly. My baptism of fire was the 1970s. It was awful to put it mildly.

    The present day has its own particular kind of madness. The many examples of this madness are too many to itemise, but can usually be traced back to politicians. My own ‘bete noire’ is the climate change scam particularly as it applies to transport – I’m an automotive engineer. By picking winners, our government is making a major mistake trying to push us into electric vehicles (EVs). EVs are simply not viable and never will be.

    The answer is as it always has been. All of the strife during my business life has been resolved by the markets, or a recession, or both.

    Taking EVs as an example, it’s clear that private motorists don’t want them. The take-up has been business users because of tax concessions. However, leasing is how business users acquire cars for staff. These EVs will then come off lease after two or three years and go into the used car market. This is already happening and retail used car buyers don’t want them. Sooner rather than later this forced EV market will fall apart and the government will have to back down, just like the ‘boiler tax’.

  • Runcie Balspune

    I think you should clarify it is Battery EVs that are the dead end, chemical battery storage technology is just about at the limits of physics, it won’t undergo a major advance anytime soon, not to mention the massive infrastructure changes needed to implement recharging.

    Hydrogen fuel cell cars are also EVs, hydrogen gas is not combusted but reacted with oxygen to produce electricity, in fact EVs can be powered by any fuel that can be converted to electricity, petrol, methane, propane, even compressed air or nuclear.

    A car using a petrol generator to provide power for electric motors is probably more effective than a battery, it may even be more effective than a ICE car.

    Your point stands, the government has chosen yet another lemon, just like they did with CFLs.

  • FrankS

    The World Economic Forum provides compelling illustrations in support of Schumpeter’s assertion.

  • Kirk

    I think the main point to be taken with any of this is that you cannot transpose expertise from one arena of endeavor into another. Doesn’t matter where, doesn’t matter who, doesn’t matter what they’re proficient at.

    Skillsets do not transfer. If you’re an expert schmoozer and kiss-ass, politics is for you. But, being an expert schmoozer and kiss-ass does not mean you’ve got the necessary skills and acumen to be picking out new technologies to “get behind” and try to impose on the real world.

    Similarly, if you’re a successful businessman, in a specific business environment (and, they do change and evolve…) you aren’t necessarily set for success outside that narrow range of your expertise. If you’re a guy whose entire business career has been spent selling East Asian spices to flavor-deprived Europeans, you’re not automatically going to be a success selling oil-industry equipment worth billions to cold-eyed wildcatters in the North Sea.

    This is why such cases are so rare and celebrated: Nokia got started doing timber industry things in deepest, darkest Finland. That they became a celebrated technology company, whose phones even today are trading on their legacy reputation of incredibly rugged feature phones? That’s a thing of wonder and notoriety.

    Expertise in one area does not translate into success in others. Not at all; the track record for such things is notably barren of really good examples. Instead, what we more often see is utter failure when the ground beneath people’s feet shifts. Witness the fates of all the giants of years past, whose markets changed. Kodak? Hasselblad? Any of the major retailers like Sears, who by rights should have dominated the internet age? Yet, they brilliantly shut down their catalog sales efforts right before Amazon started selling merchandise next to books?

    Ain’t none of these people really all that we make them out to be. You’re a successful businessman? Great; stay where you’re doing well, and shut up. Same-same with the rest of the world’s specialists; you don’t even know what you don’t know outside your extremely narrow range of experience and expertise.

    The number of times I’ve had some expert pronounce on something outside their range to me, and had that wisdom blow up in our faces? You’d be shocked, shocked at how that often goes. Usually, they’re utterly wrong.

    I think there’s some corollary to the supposed “10,000 hours” thing that might actually be real, in that you’ve got to start out at the bottom in a given field, and then work your way up legitimately in order to really understand and be effective at operating in that environment, whatever it is. Unless you’ve seen a thousand iterations of failure in that field, you’re not going to have a good feel for what things will work, and what won’t.

    I’d term this the “practitioner vs. theorist” effect. You have to know and do at the lower levels before you can know and do at the higher ones, and the idea that transferring that experience laterally into another field is purest idiocy. You don’t know what you don’t know from experience and lengthy observation.

    You run into this at the lowest levels in the military; you have a guy transfer between branches once he’s gotten above about Sergeant? Yikes, but is that individual usually a waste of space. The men and women who manage those things are so rare as to be remarkable specimens by all who observe them; good personnel administrators very rarely make good infantrymen, and vice-versa. The engrained experiences that make for “workplace instinct” and tribal knowledge in that field? If you ain’t got them from coming up in that field, you’re almost never going to acquire them after the fact.

    This isn’t unknown out in the civilian world, either. If you observe someone starting an entirely new career in a new field, you’re going to see the same things. Good white-collar workers rarely become good tradesmen, and if you’re a salesman/estimator for a plumbing outfit, you aren’t all that likely to be hugely successful over in something like used heavy equipment sales. Not enough contiguity of experience; I have seen a guy who did well as an estimator for plumbing shift over into HVAC, but that is really about it.

    It’s weird how we think that there are universals; the entire thrust of the MBA system is based on this, but then again, how many times have you seen or witnessed an MBA hire run a company into the ground because they didn’t understand the basics of things that that company is supposed to be doing?

    The syndrome is real, and it is everywhere. Good at one thing? Doesn’t mean you’ll be good at this other, over here…

  • jgh

    Runcie: that’s the principle of diesel-electric locomotives. Electric traction without the disadvantages of transmitting or carrying the power, diesel power without the disadvantages of whatever connecting the diesel motor to the wheels is.

  • bobby b

    “Schumpeter regarded them as idiot savants who might be brilliant at building businesses but who were frequently fools when it came to dealing with politics.”

    So, they’re bad liars. They’re impolitic. They’re bad at picking up on lies.

    But until someone better comes along, I’d say they’re our best shot. At least there’s some rationality in their thought processes.

  • Paul Marks

    “Capitalists” (owners of business enterprises) can have any political opinions – including socialist ones.

    The idea that political opinions are determined by “class interests” is Marxist mythology.

    By the way, the left (Marxist and non Marxist) often gets “class interests” wrong anyway.

    For example, the agitprop book “What’s Wrong With Kansas?” tries to explain why so many ordinary people in Kansas “vote against their economic interests” by voting Republican – the book falls at the first fence as policies of high government spending, high taxes and lots of regulations (the policies the author of the book supports) are NOT in the interests of ordinary people – on the contrary such policies lead to mass unemployment and make poverty worse-and-worse.

    Part of the reason why the political analysis of the academic and media elite is so bad – is because their basic economics is utterly wrong, indeed the reverse of the truth.

    As for the international corporate manager elite – whether they are “capitalists” is open to doubt as they do not own the means of production (they do not actually own the business enterprises they control).

    They do seem to have a world view – but is more a Corporate State (bordering on to the ideas of Henry Saint-Simon two centuries ago), rather than Marxism.

    The funding of Marxist groups (such as BLM) and modern Marxist doctrines (such as DEI) by Big Business is rather odd.

    It is said that (for example) Larry Fink is surprised that the groups he has funded and supported all these years want to kill him – but it would have taken five minutes to find out that the “Black Liberation” groups, and so on, hate Jews.

    It is hard to have much sympathy for someone who will not do five minutes due diligence before giving massive support to groups that hate Jews.

    “But they want to kill me – just because I am Jew” – yes Larry, and that was true of the “Black Panthers” way back in the 1960s, if, after 60 years, wealthy people like yourself are still giving support to groups who want to destroy them, it is hard to have any real sympathy for you.

    “That person became very rich – so they must be very intelligent” is a bit of a myth,

    There are a lot of poor people who are highly intelligent, and there are a lot of highly successful business people who are not very bright.

    For example, I suspect the entire Board of Directors of BlackRock (not just Larry Fink) will be jumping up and down for Michelle Obama in Chicago in August.

    That Michelle Obama hates them (the type of people who are on the Board of Directors of BlackRock) and wishes to do them harm, are facts they will not notice – and they will not even notice that Chicago (where the Convention is being held in August) is falling apart.

    “Very rich – but as thick as pig shit”.

  • lucklucky

    The idea that political opinions are determined by “class interests” is Marxist mythology.

    At this time i would call it Maskirovka, most of Russian revolutionaries were Aristocratic and Bourgeoise. Same in Western Europe.

    From my experience i agree 100% with Joseph Schumpeter. There is nevertheless one point i make, many business leaders – not talking about Larry Finks of this world those already had time – are so focused that they are unable to understand anything outside the confines of their business.

    On another stand i have had business owners praising me Cuba and Fidel Castro…a part of it is squizophrenia, when i asked if their business would exist in Fidel’s Cuba they did not answer… But on some it was clear their were business leaders despite their beliefs… so do not assume a business leader likes business, or capitalism or even less free market, he might just be a business leader because he could not be a Communist leader.

  • Kirk

    lucklucky said:

    At this time i would call it Maskirovka, most of Russian revolutionaries were Aristocratic and Bourgeoise. Same in Western Europe.

    Mmmm… No. They were not “true” aristocrats or bourgeoisie. They were almost all members of those classes who had, for various reasons, failed out of them.

    If they were actual inheriting aristocrats, the majority of them would have had too much invested in the system to be real revolutionaries. They’d have dallied in it, but returned to the fold ASAP once they came into their own inside the existing system.

    The appeal of Marxist or other revolutionary thought is that it validates your various flavors of failure. The failures are the ones who seek it out; this is why they’re often sociopathic or outright psychotic. They’re not so much “fighting the system” as seeking to put themselves in charge of it.

    Do note the rather… Odd, shall we phrase it politely? The “odd” congruities between the old Tsarist aristocracy, and the replacement nomenklatura, right down to the estates, dachas, and all the rest. Putin? Dear God, but look at the man and his fellow oligarchs, with all their yachts and the like. They weren’t seeking to do away with the aristocracy, they wanted to be them…

    If there ever is a true “dictatorship of the proletariat”, you’re going to be able to identify the fact by virtue of the utter lack of pretension towards “nobility” and all that other BS. The people running the show will be like those figures we all laugh at, akin to the Beverly Hillbillies who aren’t even interested in the trappings of the aristocracy.

    If the various Marxists were true to their belief system, they’d have all avoided the trappings of the nobility. Instead, they took them over and got their own. By this hypocrisy, you can tell that the ideology they espoused was merely a tool used in the con job they pulled on everyone else.

  • lucklucky

    Aha! You join the Marxist view that mirrors neoclassical view of “rational” behavior. It is a failed view. Communism and its head Marxism would not exist today if that was the only truth/factor. Narratives can be more important and powerful than interests.

    We often see heirs of multimillionaires being extreme leftists. Dozens or hundreds of rich foundations today are evidence of that. You have thousands of privileged students doing the most to destroy the world that made them.

    A taste

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