3 Schumpeter and Weber: Unternehmer-geist and leitender Geist between Freedom and Necessity The Law of Value as reformulated

in the new marginal utility theory of the Neoclassical Revolution represents the scientific specification by political economy of the market price mechanism as the optimal system for allocating existing scarce resources according to individual choices. The machinery of production, the technologies adopted in the process of production, is determined independently of the system of needs and wants that demands its rational and systematic utili ation through bureaucratic rule so that its technically!determined output or supply can be maximi ed to satisfy the individual choices as fixed by the capitalist market price mechanism aimed at profit. The nature of the matter "das #esen der $ache% for the &conomics is that it needs to determine precisely from the standpoint of the individuals self-interest the individual contribution to the production of goods for final consumption "in $chumpeter's words (uoted below, the community has occasion to become conscious of the economic value of its members to itself%, which is what interests the individual ultimately, and what determines the value and distribution or allocation of privately!owned social resources between individuals in society)
Another application of this theory [marginal utility] is the next step to a height from which a wide view into the innermost working of an economy is gained. Means of production are also complementary goods. But [171] their values are not directly determined: we value them only because they somehow or other lead to consumers' goods and their value can thus from the point of view of the sub!ective theory of value be derived only from the value of these consumers' goods. But many factors of production are always involved in the production of a single consumers' good, and their productive contributions are seemingly indistinguishably intermixed. n fact, before !enger, one economist after another thought it impossible to speak of distinguishable shares of the means of production in the value of the final product with the result that further progress seemed impossible along this route, and the idea of sub"ective value appeared to be unusable. #he theory of the value of complementary commodities solves this seemingly hopeless problem. "t enables us to spea# of a determinate 'productive contribution' $%ieser& of such means of production and to find for each of them a uni'uely determined marginal utility derived from its possibilities of productive applica( tion ) that marginal utility which has become* the basic concept of the modern theory of distribution and the fundamental principle of our e+planation of the nature and magnitude of the incomes of economic groups. $%. &chumpeter, Ten Great Economists, ch. on Bohm'Bawerk.(

*s former professor of +olitical &conomy, #eber was well aware of and versed in the new theories of the marginalist revolution propagated by the *ustrian $chool against the Historismus of the old and new ,erman -istorical $chool. -e had already published

in ./01 a ma2or critical review of the old $chool, when it was led by Roscher and 3nies, critici ing heavily the logischen Probleme of its philo!-egelian emanationism in which the economy was interpreted in the holistic and teleological perspective of the Volksgeist that denied the possibility of a scientific study of economic facts in isolation from other political and social phenomena. #eber would also have been perfectly aware that the central message of all bourgeois intellectual forces ! most stridently advanced by the emerging Neoclassical Theory ! was incessantly to denounce the futility or the impossibility of $ocialism at this critical time of global conflict and in the face of the 4olshevik challenge and the spread of revolutionary worker movements in &urope. Rational socialism cannot escape this beautifully closed chain of logic5 $ocialism can only amount to or end up in the identical system of production as capitalism, with only a lot more bureaucracy and a lot less free choice. *t the very best, rational socialism could minimi e the frictions of the market mechanism, its transaction costs and the negative effects of disturbances or exogenous shocks. *t the worst, it would distort the free individual choices made by free labor by removing the ability of labor to determine freely the individual choices of workers, in such a way that bureaucracy would rule alone and would no longer be kept in check by private capitalism with its free market and free labour, through those conflictual and ir! reconcilable self!interests5 *lternatively, were there to be no state bureaucracy, then free market capitalism would not be able to maintain the laws of free market competition that determine scientifically its optimal level of production for the satisfaction of individual needs and wants understood as self!interest.
$)*+( ,e now approach the last step of the stairway that takes us to the top of Bohm'Bawerk's edifice . -e was the first to reali.e fully the significance of the length of the period of production in its two'fold aspect ' the aspect of productivity and that of the lapse of time. -e gave both aspects their exact content and their places in the foundation of the system of marginal utility analysis. /ur proof shows further that, because only an agio on present goods puts the relative demands of present and future into proper $)*0( balance with one another, the values of present and future goods can( not stand at par even in a socialist community that the value phenom( enon which is the basis of the rate of interest cannot be absent even there and hence demands the attention of a central planning board. ,rom this it follows that even in a socialist society wor#ers cannot simply receive their product since wor#ers producing present goods produce less than those who are employed on the production of future goods. #hus, whatever the community decides to do with the 1uantity of goods corresponding to that value agio, it would never accrue to the workers as a wage $but only as a profit( even though it were divided e1ually among them. #his could very well have practical conse1uences whenever, for example, the community had occasion to become conscious of the economic value of its mem( bers to itself2 in such a case it could assess the value of a worker only at the discounted value of his productivity, and since all work' ers e1ually able to work must obviously be evaluated e1ually, a

'surplus value' must even here emerge which would appear as an income sui generis. $)*0( -wo corrections of the idea of e+ploita( tion are now also in order: first one can spea# of 'e+ploitation' as a cause of profit only in the sense in which such e+ploitation would occur also in a socialist state. second, there is exploitation not only of labor, but also of land. 3or moral and political "udgment this is of course irrelevant, since the socialist state would use its 'exploita' tive gains' in a different way2 but it is all the more important for our insight into the nature of the matter.$)*0(

$ocialism may well be able to remove some of the anarchical features of capitalism ! which preserve in large part the individual choices of free labor. 4ut it would do so at the cost of removing in large part that very free consumer choice and free labor that capitalism makes possible5 6n no way whatsoever could the Sozialismus prevent or abolish the separation, the Trennung, of the worker from the means of production 7 the source of the 8arxian alienation, of the ante litteram 9ukacsian and -eideggerian loss of totality, reification and facticity 7 , or still less remove profit, because these are technically necessary aspects of the efficient utili ation of resources for the satisfaction of the system of conflicting and irreconcilable individual wants and needs5 There is not and there cannot be a capitalist economy and a socialist economy) these are only formal differences in ownership of the means of production that must give rise in any case to the separation of all workers, individually and collectively, from control over their work in favour of a technocratic bureaucracy for the sake of the paramount technical and rational efficiency of production and the paramount satisfaction of the system of needs and wants, of the iron cage5 There can only be one &conomics, one economic science) the time for Political &conomy is past because politics cannot determine the rationally calculable technical efficiency of industrial production and its utili ation of resources.
#heoretically more important, however, is the result ' to use a terminology that has become accepted in treatments of this topic 4 that the rate of interest is a purely economic and not a historical or legal concept.$ibid., p.)*0(

This is the task and the supreme achievement of capitalism as a mode of production based on free labor) ! that it organi es rationally the factors of production, chief among them labor, for the maximi ation of individual utilities. 6ts ultimate aim is the efficient production of consumption goods, not 2ust for the present but also for the future, in accordance with the conflicting sub2ective valuations "needs and wants% of self! interested individuals5
n applying this 'theory of imputation' $,ieser(, which owes to Bohm'Bawerk one of its most perfect formulations, we arrive at the law of costs as a special case of the law of marginal utility. As a conse1uence of the theory of imputation, the phenomenon of cost becomes a reflex of sub!ective value, and the law of the e1uality of

the cost and the value of a product is derived from the theory of value 4 never in our science has there been a more beautifully closed chain of logic. But all this so far still refers only to the world of values. #hat all of its forms e+press themselves also in the mechanism of the e+( change economy can be shown only by a corresponding theory of price. Bohm'Bawerk therefore turns to price theory, developing the implications of the law of value for the behavior of buyers and sellers, and his investigation culminates in that celebrated proposi' [)56] tion $for the case of bilateral competition( which has since become 'historic'7. All this is developed first for the situation with given 1uantities of exchangeable commodities with the conclusion that, since the forces operating on the supply side of the mar#et are the same as those operating on the demand side the old 'law of demand and supply' turns out to be simply a corollary of the law of marginal utility. -his is then e+tended to the case of the formation of the prices of commodities whose available 'uantities can be varied by production.

6n reviewing the theoretical masterpiece of his :iennese mentor, Die Positive Theorie des apitals, $chumpeter remarks first on the beautifully closed chain of logic of 4ohm!4awerk's elaboration and extension of marginalist theory 7 forgetting in the process that it was precisely the attempt by 3arl 8arx to close his system by trans! forming values into prices that had led 4ohm!4awerk to accuse the ,erman theoretician of indulging in metaphysics in the appropriately named article The ;<lose' =*bschluss> of 3arl 8arx's $ystem5 $chumpeter is unable to see that the metaphysics of the socialist and 8arxian labor theory of value have now become the metaphysics of neoclassical marginal utility5 6t is precisely 4ohm!4awerk's attempt to identify and define a 9aw of :alue that would allow him to close the sub!ective estimation of value with the ob!ective manifestation of prices that lands him inexorably into the metaphysical trap that nullified 8arx's own efforts in :olume Three of Das apital) for it is impossible, outside of meta!physics, to (uantify mathematically what are inextricably social relations of production5 The 9aw of :alue 7 whether in its socialist or 8arxian or Neoclassical form 7 seeks to reconcile the respective inputs of the factors of production with their respective shares of income 7 to homologate values and prices. 4ut what distinguishes economics from engineering is precisely the element of individual" sub!ective choice in the specification of needs and wants5 6t is therefore im!possible to certify the scientific status of the capitalist market economy and, at the same time, to preserve its freedom, its #reiheit 7 precisely the con!fusion, the closing of the system that Niet sche had so devastatingly demolished with his criti(ue of ,erman 6dealism, and 4ohm!4awerk in his 8achian criti(ue of 8arx's *b!schluss 7 echoed by #eber in his polemic against the emanationism of Roscher and 3nies. *lready in ./.., $chumpeter had celebrated at the very beginning of chapter two of the Theorie the advent of the #eberian $ationalisierung as the overcoming

"?berwindung% of metaphysics and the triumph of empirical science 7 totally mis! comprehending yet again the %ietzschean connotations of the word as applied by &eber' &hat Schumpeter overlooks in his (achian exultance is the evident and dramatic conflict that Bohm-Bawerks theory contains and exudes! @or behind 4ohm! 4awerk's scientistic and lucid exposition lies all the explosive conflict of capitalist society even at the level of market pricing according to consumer choice ) according to *marginal utility+ or *supply and demand+, -owever much the different sub2ective valuations of goods on the market may be based on fair and e(ual exchange, the terrifying fact remains that the self!interests of the individual market agents are determined by the sheer violence of imposition of their sub2ective, egoistic choices and preferences5
-he level of price is determined and limited by the level of the sub!ective valuations of the two marginal pairs' ' i.e .on the one hand by the valuations of the 'last' buyer admitted to purchase [8] and of the seller who is the 'most capable of exchanging' among the ones already e+cluded from the e+change, and on the other hand by the valuations of the seller 'least capable of e+changing' [8] among those still admitted to the exchange and of the 'first' e+cluded buyer.

The full conflict and sheer violence of the market mechanism is made evident here in all its stark nakedness5 6t is futile to seek recourse to the beautifully closed logic of the Neoclassical theory reformulated by 4ohm!4awerk) the inescapable fact remains that even behind the most beautiful and elegant e(uations there is all the ineluctable conflict of what #eber will soon call with astonishing "8arxian5% insight the capitalist rational organisation of free labor under the regular discipline of the factory5
[,]or value to emerge relative scarcity has to be added to utility. ,ith the aid of a distinction between want categories $or want directions( and want intensities, and under careful consideration of the factor of substitutability, Bohm'Bawerk arrives$in !enger's sense, and in a way similar to ,ieser's( at the law of decreasing marginal utility with increasing 'coverage' of wants within each category ' i.e. with increasing 'uantities of the commodity in the possession [/] of an indi( vidual. $)9:(

*s $chumpeter (uite uncritically reveals and concedes with this summation, this scientific!rational economic mechanism is still self!consciously dependent on the conflicting self!interests of individuals and on their historical or legal ac(uisition of possessions which determine both the relative scarcity of commodities as well as the increasing or decreasing (uantities of commodities in their possession5 6t follows inexorably, by definition, that this conflict can never result in e(uilibrium and that contrary to what $chumpeter claims above it can never be a purely economic and not a historical or legal concept5 Auite to the contrary, this economic concept and process must be guided and governed politically instead5

(The horrifying spiral of bourgeois possessive individualism descending from Hobbes to the scientific administration of terror in the Third Reich is traced masterfully by Hannah Arendt in The Origins of Totalitarianism [1949] !ith une"ualled perspicacity# Arendt then goes on to trace the historical process $hereby the parallel transformation of the capillary bureaucratic administration of %the most basic needs of social life& (!eber's phrase( arising out of the capitalist %sociali)ation& turned into the *a)i and +talinist nightmares of totalitarian control and terror in both the more advanced bourgeois civil society of ,ermany and the desolate peasant steppes of Russia -n her later study# On Revolution [19./]# Arendt see0s to distinguish Hobbes's %common$ealth& from Rousseau's volonte generale# for $hich the 1renchman $as even tagged $ith the charge of %plagiari)ing& the 2nglishman# in the sense that the latter is an introspective concept 3 the bellum civium becomes the bellum psychologicum in $hich %the e4ternal threat& is the %common enemy& of %selfishness& that stands in the $ay of %compassion& or le salut public 3 and therefore more a0in to totalitarian ideologies !e have canvassed these matters thoroughly in our %5ivil +ociety& and shall return to them in 6art 1our# but it may suffice here to observe that Arendt %over7psychologises& the nature of totalitarian movements at least in the initial stages of their sei)ure of political po$er After all# ho$ever much Robespierre's %Terror& may have leaned on Rousseau's political philosophy# this $as certainly not the case $ith the *a)i dictatorship $hich# if anything# found its geistesgeschitlich avatar in 5arl +chmitt's un"uestionably %Hobbesian& early 8urisprudence of %the totalitarian state& This palpable change in her attitude to %Anglophone& political theory as against its %continental& counterparts [though she rescues 9ontes"uieu and properly chastises# in chapter .# the %charlatanry& of t$entieth century 1rench philosophes] rhymes $ith Arendt's anointment of %the 1ounding 1athers& of the American 5onstitution 2"ually# Arendt absurdly oversimplifies as %compassion $ith the poor and do$ntrodden& and a prelude to +talinism# 9ar4's entire analytical effort to develop a comple4 theory of social development in antithesis to the capitalist $age relation# especially in the Grundrisse (

BBBBBBBBBBBBBBB #e intimated above that #eber will soon call this conflict the capitalist rational organisation of free labor, ! but not yet5 #e have 2umped too far ahead. This revealing re!formulation of the +roblematik of rational $ocialism indistinguishable from that of rational capitalism will not come out until #eber's Vorbemerkungen to the -ufsatzen zur $eligionssoziologie published in ./C0, a #eberian terminus ad .uem that we are tracing here. #e need to retrace our steps and continue with our linear analysis of #eber's political formulation of the +roblematik of bureaucratic rule in ./.D, when Parlament und $egierung is first published and then re!worked and extended in ./.E 7 after the /olshevik $evolution,

@or the moment, after the publication of $chumpeter's Theorie, #eber has discovered the one element in it that will help him reformulate his entire theory of bureaucratic rule most closely related to the rise of modern capitalism by seeking to integrate into it the $chumpeterian notions of the trans!formation mechanism "Ver0anderungs0 mechanismus% that characterises capitalist development "1ntwicklung%) development understood as crisis, ! not simply as evolution but as meta0morphosis, not simply as growth but as trans0crescence, as growth0through0crisis, as Niet schean creative destruction "the concept appeared in Niet sche's 2arathustra long before $chumpeter made it popular%. 6n this re!working and extending of his previous formulations dating back to the 1thik in ./01, #eber gives proof yet again of having grasped much more thoroughly than $chumpeter the powerful and unprecedented Niet schean criti.ue of #estern thought and society, of its 3ultur and Fivilisation, of its +olitics 7 and a fortiori of its political economy "see our %ietzscebuch, end of +art Gne, on his ontogeny of economic relations and categories in #estern societies%. 4y the time #eber returns to the theori ation of this transition, however, it is clear that it is no longer the inexorable powerHof external goods that interests him, but rather the rational organi ation of modern industrial work under the pervasive aegis and control of machine0like bureaucratic rule, rational and systematic. #hat troubles #eber above all is the decisive leap forward of the 4olshevik Revolution and the possibility of its upsetting his seemingly inescapable fate of bureaucracy. The iron cage has now meta!morphosed from the simple seculari ation of the ascetic spirit of capitalism 7 its glorification of labor 7 to the dependence of the provision of the most basic needs of society on the rational organi ation of that labor. The 4olshevik Revolution of Gctober ./.D has forced #eber to re!work and extend for publication in ./.E the original series of five articles that had appeared in the #rankfurter 2eitung between *pril and Iune ./.D. 6f bureaucrati ation is the fate of human social development, if capitalism represents its closest relation and possibly its foundation, then the 4olshevik experiment needs to be understood and re!configured within #eber's overall interpretative and methodological 1ntwurf "framework% so that its political impact can be anticipated and even neutrali ed. The Russian Revolution and its 9eninist variant represent a (uantum leap in the linear, scientific, rational and systematic 3rdnung of bourgeois society. $pecifically, precisely this vital element of conflict needs to be re!articulated and re!inserted organically within an overall theory of crisis and trans0formation of capitalist society and industry. #eber understands that conflict is the very nature of the matter of &conomics and that he needs to theori e and devise an institutional framework capable of capturing this conflict, to encapsulate it and turn the energy of its antagonism into the motor of development, the source of real dynamism of bourgeois society and of the modern nation!state. Of course, the political realities that need to be considered are the incipient and
seemingly unstoppable democrati ation of go ernmental rule due to the irrepressible push on the part of the urban industrial proletariat for representation of their interests that are no longer mere indi idual interests but ta!e on instead an organi"ed form as class interests # in the urgent instance with the formation of imponent and $sit enia erbo%& bureaucratic social democratic parties that reflect and e en replicate the ery rational organi"ation of labor that characteri"es the modern industrial wor! of the factory in modern capitalism'

#hereas the static e(uilibrium scientific analysis of Neoclassical Theory describes wishfully the e(uivalence of these conflicting self!interests in the marketplace as indicated by prices, it fails to com!prehend, to grasp practically the process whereby this conflict can be mustered and governed5 There may well be no exploitation in the marginalist view of economics) certainly, there is no inter esse or teleological reconciliation of economic antagonism. 4ut 2ust as certainly there is conflict because there is self!interestJ there are wants that cannot be satisfied due to lack of provision, due to scarcity 7 a scarcity induced and provoked by the very conflict of want and provision 7 of the (uantity of possessions, as $chumpeter put it earlier. *nd it is simply unscientific and irrational to believe that these conflicts, these self!interests can be in e(uilibrium% That they can be balanced without evolution, without development 7 without crisis'
)he static and trans*historical analysis of the ascetic origins of capitalism carried out in the !thik , the scientific, alue*neutral framewor! of "irtschaft und Gesellschaft are no longer applicable to the highly specific reality of capitalist industry and the trans*formation it has effected through the +#o ialisierung, of the most basic needs of social life' )his anti(uated analytical framewor! has been superseded and dissol ed -ust as completely as the old .rotestant wor! ethic' "*s the editor of 1conomy and Society, ,unther Roth, put it, with

all its seemingly static typologies, the =p.KKK:6> work is a sociologistLs world history, his way of reconstructing the paths of ma2or civili ations. This is the principal reason why we are ignoring completely #eber's sociological lexicon in this work.% To prove the point, if proof is needed, one need not do more than point to the profound upheavals of the ,reat #ar and the revolutionary workers' movements spreading rapidly throughout &urope at this time5 The (uestion is) what ideal type of institutional structure can both reflect the conflictual and antagonistic reality of capitalist industry and its economy and muster the energy of this conflict to transform its existing static structures into the dynamic motor of capitalist and national developmentM 6n short, what institutional structures can capture and govern the class antagonism of modern capitalism and turn it into the dynamo of its developmentM The problem is one that invests not merely the reality, the experience of modern capitalism, but also the conceptual categories that can be used to com!prehend it) how can science, which involves a system of determinate concepts, com0prehend, under0stand "verstehen% dynamic, vital social processes that are by definition indeterminate and freeM <an there be a dynamic science of capitalist development, or is this 2ust an oxymoron, a contradictio in ad!ectoM The central problem here for #eber as for $chumpeter will be to analy e and theori e the interplay of a science of 1conomics in determining an optimal process of production that is managed rationally and systematically with the Political resolution of the conflict over wants and provision that the process of production 7 the machine 7 is meant to serve5 6f indeed there is conflict between want and provision, then the process of production cannot stand still5 6t will have to be driven by this conflict and by the crises to which it will un(uestionably give rise. This antithesis between static science and dynamic transformation, between ob!ective factors that can be weighed, (uantified, and sub!ective forces impossible to rationali e and calculate, had already

occupied #eber in his $oscher und nies and again in the 1thik both written and published between .E/N and ./01. 6t also became the central problematic for $chumpeter in a work first published seven years later in ./.. of which #eber must have been aware even because it cites him at the very beginning of chapter two5 -aving only recently succeeded 3arl 3nies in the <hair of +olitical &conomy at -eidelberg, #eber was (uick and keen to tackle the methodological diatribe that had seen the emerging *ustrian $chool of &conomics riding high on the early acceptance of its marginal utility theory in <entral &uropean industrial capitalist circles pitted against the more established ,erman -istorical $chool of Roscher, 3nies and -ildebrand and now led by ,ustav $chmoller, also close to ,erman industrial circles. 6n his review of the by then notoriously heated (ethodenstreit, #eber cuts to the (uick and singles out the central bone of contention between the two $chools around the issue of whether it is possible to reconcile idiosyncratic =or ideographic> freedom and rational calculation, nomothetic necessity and irrational individuality in social science, ! whether it is possible to build such a social science methodically on the individual idiosyncratic in(uiry in a manner that is consistent with sociological nomothetic measurement. 6ntriguingly, #eber openly sides with the methodological individualism of the *ustrian $chool, denying that any sociological categories can legitimately or logically abstract from the role of the individual in society against the emanationism of the -istorical $chool that starts from broad idealistic concepts such as people or nation. Oet, as we are about to see, #eber's apparent championing of individual freedom very soon veers in the direction of social necessity in such a way that, whilst he recogni es the ultimately irrational forces that motivate human action, that make it peculiar and sub2ective', as he does in the 1thik, he ultimately asserts the logical rationality of Neoclassical Theory basing himself on the historically specific characteristics of modern capitalist society 7 and therefore also on the full legitimacy, and indeed the theoretical necessity, of the kind of scientific!logical approach to the &conomics propounded by 8enger and the *ustrian $chool that would seem to contradict the very methodological individualism that was ostensibly its theoretical point of departure5 #e shall see soon enough that despite #eber's truly astounding and profound insight into the differentia specifica of capitalism, that is, its ability to transform apparently irrational social relations into apparently rationally calculable ones 7 which is the formal significance of the rationalisation 7 this trans!formation is indeed only apparent once the ultimate significance of the $ationalisierung, its effectuality, is fully com!prehended. 4ut #eber lacked the theoretical tools and his theori ation was historically too precocious to enable him to formulate it ade(uately. 7 #ith the conse(uence that his own articulation of his theoretical 1ntwurf led him to oscillate and vacillate between the poles of decisionist voluntarism and Neo!3antin formalism. BBBBBBBBBBB #e open $chumpeter's Theorie at the very start of chapter two)

#he social process which rationali.es our life and thought has led us away from the metaphysical treatment of social development and taught us to see the possibility of an empirical treatment2 but it has done its work so imperfectly that we must be careful in dealing with the phenomenon itself, still more with the concept with which we comprehend it, and most of all with the word by which we designate the concept and whose associations may lead us astray in all manner of directions. ;losely connected with the metaphysical preconception7. is every search for a <meaning= of history. #he same is true of the postulate that a nation, a civili.ation, or even the whole of mankind must show some kind of uniform unilinear development, as even such a matter'of'fact mind as >oscher assumed7 $&chumpeter, Theorie, p.+5(

The footnote at rationali es was expanded for the &nglish translation and reads as follows)
#his is used in !ax ,eber=s sense. As the reader will see, ?rational@ and ?empirical@ here mean, if not identical, yet cognate, things. #hey are e1ually different from, and opposed to, ?metaphysical@, which implies going beyond the reach of both ?reason@ and ?facts@, beyond the realm, that is, of science. ,ith some it has become a habit to use the word ?rational@ in much the same sense as we do ?metaphysical@. -ence some warning against misunderstanding may not be out of place.

&vident here is the maladroit manner and dis!comfort "not aided, and perhaps exacerbated, by the dis2oint prose% with which $chumpeter approaches the (uestion of the meaning of history. The $ationalisierung, which $chumpeter adopts from #eber, has made possible a scientific empirical treatment of social development "&ntwicklung%, but has done so only imperfectly, not to such a degree that we are able to free ourselves entirely of metaphysical concepts 7 which is why we must be careful in dealing with the phenomenon =of 1ntwicklung> itself. Nevertheless, $chumpeter believes that it is possible to leave metaphysics behind and to focus on both ;reason' and ;facts', and therefore on the realm of science. 6n true 8achian empiricist fashion, $chumpeter completely fails to see the point that #eber was making in adopting the ante litteram Niet schean concept of $ationalisierung to which he gave the name. The social process which rationali es is an ex(uisitely #eberian expression) far from indicating that there is a rational science founded on reason and facts that can be opposed epistemologically and uncritically to a non!scientifc idealistic and metaphysical rationalism, #eber is saying what Niet sche intended by the ex!ertion of the #ill to +ower as an ontological dimension of life and the world that imposes the rationali ation of social processes and development in such a manner that they can be sub2ected to mathesis, to scientific control5 #hat #eber posits as a practice, one that has clear Niet schean onto!logical "philosophical% and onto!genetic "biological% origins, $chumpeter mistakes for an empirical and ob2ective process that is rational and factual at once 7 forgetting thus the very basis of Niet sche's and #eber's criti(ue of Roscher and the Historismus ! certainly not that they are founded on metaphysics "5%, but rather that they fail to (uestion critically the necessarily meta0physical foundations of their value!systems, of their historical truth or meaning, of their scientificity5

@ar from positing a scientific0rational, ob0!ective and empirical methodology from which Roscher and the ,erman -istorical $chool have diverged with their philo!-egelian rationalist teleology, Niet sche and #eber attack the foundations of any scientific study of the social process or social development that does not see it for what it is 7 $ationalisierung, that is, rationali ation of life and the world, the ex!pression and mani!festation of the #ille ur 8acht5 4y contrast, $chumpeter believes that the mere abandonment of any linearity in the interpretation of history, of any progressus "as Niet sche calls it%, is sufficient to free his rational science from the pitfalls of metaphysics5 4ut he would certainly have been enticed into this misapprehension by #eber's own e(uivocal notion of ideal type "a $immelian #orm%, which was intended to preserve the historicity of sociological in(uiry by confining the reach of its categories to a specific situation "$immel's content% re(uiring the selection of specific means to achieve specific ends 7 whence the distinction between 2weck!rationalitat and &ert! rationalitat "purpose and goal, Sein and Sollen, soul and forms, content and form, form and norm% ! whilst simultaneously insisting within this limited historical domain on the scientificity or rational basis of the sociological procedure and methodology utili ed for such selection. #eber's central failure was not that he mistook scientificity for science, for its corresponding practical conduct 7 which mostly he did not5 #eber's failure was rather that his insistence on categori ing his scientific pursuit with the introduction of the ideal types distracted him from the fundamental (uestion of how the $ationalisierung is possible5 This failure led him to reify, to hypostati e the historical ob!ect of his studies into the scientific categories or forms that he presumed to adopt for that study 7 ignoring thereby Niet sche's famous warning against systemati ers5 &ssentially, #eber mis!interpreted "5% Niet sche's 4mwertung "trans!valuation of all values% to mean that all values are interpretations of reality, and that therefore it is possible for the scientific observer of a given historical reality to select a hermeneutic code of interpretation "the ideal types% linking rationally the means available to its actors with the pro!2ected ends that they may envisage. Oet, as Niet sche would have promptly reminded #eber, this framework of analysis "&ntwurf%, this phenomenalism and relativism starts from the pre0supposition that such a rational code of interpretation is both possible and applicable 7 which Niet sche would vehemently deny on the ground that it is the very possibility and applicability of this rational code itself to a given historical reality 7 its effectuality ! that needs to be interpreted and explained as the mathesis universalis "9eibni %, as the rationalization of the world that is based on human needs, on the system of needs and wants5 6n Niet sche's own words, /t is our needs that interpret the world0 our instincts and their impulses for and against, "*phorism 1E., &ille zur (acht%. #eber's Neo!3antian hypostati ation not only of his sociology but above all of the scientific fields of knowledge to which he sought to apply it 7 from economics, to law, to music 7 is induced fatefully from this inability to com0prehend Niet sche's 4mwertung, his thoroughgoing De0struktion "-eidegger% of #estern metaphysics and science and the related criti(ue of #estern ultur and 2ivilisation. 6t should come as no surprise, then, that it remains suspended, as we noted earlier, between the Dezisionismus

of charisma derived from the individualist relativism and the Neo!3antian formalism of the ideal types necessitated by #eber's need to ground this hermeneutic relativism on logico0mathematical 7 hence, rational and systematic, scientific ! bases. #hat #eber fails to com!prehend above all else is precisely the historical character of the metaphysical foundations of logico!mathematical rationality whose political origins Niet sche had made all but evident. * brilliant illustration of these points is provided by Norberto 4obbio who, in reviewing 3elsen's attack on #eber's theory of the $tate and sociology of law in ;8ax #eber e -ans 3elsen' "p.DC%, concedes that #eber's Neo!3antian or $immelian ;formalism' enticed him to his detriment into the 3elsenian ;Norms', but that at the same time #eber's positivism was premised on the fact that capitalism represents a historically specific intensification of this ;positivi ation' of the 2uridical norm, in line with its exasperation of the $ationalisierung "p.DD% 7 which would be theoretically a far more consistent and Niet schean position for #eber to take. 1ommenting on 2elsen,s
re(uirement that +co*action, be added to the definition of +legal norm, $the famous Grundnorm& so as to e(uiparate the concepts of +3ight, with +4aw, and therefore also with that of +State,, 5obbio goes on to reason $at p'67& that Weber,s notion of +apparatus, $bureaucracy& must be added to 2elsen,s +co*action, for this e(uiparation of 3ight, 4aw and State to ha e any historical effectuality% 5obbio then comes uncannily close $at p'68& to the central thesis of this study on the meaning of $ationalisierung, which we have enucleated in our %ietzschebuch

and will illustrate more incisively in +arts Two and Three of this study on #eber. 6n a nutshell, 4obbio perceives without actually comprehending that the notion of Right or 9aw or the $tate re(uires the existence of appropriate PinstitutionsP that Pen!forceP these abstract concepts and that indeed both enforcement and its re.uisite State apparatus are part and parcel of the conceptual content of the categories of $ight" Law and State, The (uestion that needs to be answered is how political enforcement can Pcrystalli eP or PcongealP into abstract concepts and how abstract concepts Pdis!solveP themselves into political institutions. This is what Niet sche attempted by challenging the scientificity of #estern science from the dawn of the bourgeois era, by exposing the immanent materiality of its scientific categories and laws 7 whilst all others, including 8arx, did not. Separately, by discussing elsen5s claim that his !urisprudence is intended to apply both to capitalist and to socialist States, 4obbio helps us highlight the link that we are about to trace in the following sections, dealing with the claim on the part of %eoclassical Theory to apply e.ually to both capitalist and socialist 6economies5, between Neo!3antism and Neoclassical &conomics5 BBBBBBBBBBBBBBB $chumpeter is a contemporary of #eber, but he is also the heir of 8ach. Through #eber he is linked to Niet sche, but he is already too much under the spell of 8achism fully to comprehend the significance of Niet scheLs radical criti(ue of bourgeois society through the tracing of the completion "-eidegger's Vollendung% of #estern metaphysics into science. $chumpeter looks at capitalism through the PscientificP prism of 8achian

empiricism. The task of the PscientistP is not to look PbeyondP or PbehindP mere phenomena, it is not to discover substances or values behind events ",eschehen%, but rather to find the simplest mathematical Pcon!nectionP between themJ it is to describe reality, not to e9plain it) indeed, description that is mathematically regular is or amounts to explanation. The task of science is to describe phenomena in the simplest and most PpredictableP manner) simple7 sigillum veri "simplicity is the seal of truth%. "* discussion of Niet sche's vehement criti(ue of the ontological assumptions behind 8achian and Newtonian science is in our %ietzschebuch.% Iust as 8enger's theory of marginal utility does not in(uire about the value of utility, its substance, its .uidditas, relegating these matters to the realm of metaphysics, but relies instead on the observable behavior of individuals to formali e mathematically an *ristotelian logic of human economic action, so 8ach's philosophy of science does not (uestion the empirical validity of Newtonian physics, its ability to predict real events by con!necting them by means of mathematical e(uations) what it (uestions is instead the cosmology of the Newtonian system, its reliance on absolute frames of reference to explain the cosmos, the uni0 verse or reality "the res, the thing!iness of the 3antian thing!in!itself, the noumenon that pro!duces the empirical phenomena% that are dis!covered as the laws of nature. That is why $chumpeter never goes beyond the simple PobservationP and PanalysisP "literally, retrospective dissection% of the empirical behaviour of capitalist institutions and adopts uncritically the 8achian presuppositions of his :iennese academic training)
According to this conception the purely economic plays only a passive role in development. Aure economic laws describe a particular behavior of economic agents, whose goal is to reach a static e1uilibrium and to re'establish such a state after each disturbance. 0ure economic laws are similar to the laws of mechanics which tell us how bodies with mass behave under the influence of any e+ternal 1forces1 but which do not describe the nature of those 1forces1. t shows [B5)] how the economy responds to changes in those conditions coming from the outside. #herefore, in such a conception, pure economics almost by definition excludes the phenomenon of a 1development of the economy from within1. "t is the conception that there is an independent element in technical and organi2ational progress which carries its law of development in itself and mainly rests on the progress of our #nowledge. $&chumpeter, ch.5, #heorie(

6n the Theorie der wirtschaftlichen 1ntwicklung, $chumpeter seeks to enucleate scientifically the mechanism of transformation that can account for the phenomenon of a ;development of the economy from within', that can elevate the capitalist economy from one level or 8ravitationszentrum "centre of gravity% to another 7 from one e(ui!librium to another. ,ranted that there is a system of forces that at any given time allow the economic system to operate and function, it may then be possible to define for that given moment in time an e(uilibrium state that does not explain why

the economic system is in e(uilibrium but that may yet allow us to identify those forces that, when altered, caeteris paribus, determine a corresponding alteration in other forces affecting the system. *n e(ui!librium is therefore a balance of forces whose nature we do not know but around which the economic system tends to gravitate. &(ui!librium is literally a ,leich!gewicht, an e(ual weight, a balance of forces around which the economy gravitates) hence, for $chumpeter, economic e(uilibrium is not an eternally fixed mathematical identity, as it is for #alras, but rather a 8ravitations0zentrum, a centre of gravity around which an economic system revolves but one from which this system may well move or diverge, in a direction that completely upsets and trans0forms the balance of forces and even the nature of the forces that determined the previous state of e(uilibrium, the previous centre of gravity5
Cnlike the waves of the ocean, the waves of the economy do not return to the same level. #hey always tend to swing like a pendulum around a certain level, but the level itself is not always the same. t is not "ust the observable facts that change. -he e+planatory pattern i.e. the ideal type changes as well. Det us grant that the first problem of economics wasE how, based on its entire circumstances of life, does a population reach a particular level of the economyF #hen [B99] the second problem is the followingE how does an economy make the transition from one level'which itself was viewed as the final point and point of e1uilibrium'to another levelF #his 1uestion takes us to the very essence of economic development [wirtschaftliche Entwicklung]. $&chumpeter, TwE, ch.5, ppB9+'9(

4ut by insisting on the existence of a scientifically ascertainable centre of gravity for the capitalist economy and of its e(ually scientific mechanism of transformation, $chumpeter ends up oscillating between two untenable antinomic positions) ! on one hand, the scientific hypothesis of the tendency of the economic system toward e(uilibrium "hence the notion of centre of gravity% or circular flow "3reislauf%J and on the other hand the historical e7perience of the proneness of the economy to grow and develop, to change from one *ideal type+ to another 7 an experience that is both empirical as well as necessary for the simple reason that an economy is and must be sub2ect to historical transformation, but a transformation that is nevertheless impossible to formalize as a mechanism5 &(uilibrium is either static or it is not an e(ui!librium at all5 @or the system to change, it must be sub2ect to forces that are not the mathematical or mechanical ones of e(uilibrium. 6n short, dynamic e(uilibrium is a contradiction in terms5 $chumpeter himself rightfully contends as much)
t follows from the entire outline of our line of reasoning that there is no such thing as a dynamic e1uilibrium. Gevelopment, in its deepest character, constitutes a disturbance of the existing static e1uilibrium and shows no tendency at all to strive again for that or any other state of e1uilibrium. Gevelopment has a tendency to move out of e1uilibrium. #his is 1uite different from what we could call organic development2 it leads to 1uite different pathways that lead somewhere else. f the economy does reach a new state of e1uilibrium then this is achieved not by the motive forces of development, but rather by a reaction against it. /ther forces bring development to an end, and by so doing create the first precondition for regaining a new e1uilibrium.

Actually, what happens first is that when a new development begins, there is again a new disturbance in the e1uilibrium of the economy. -hus development and e'uilibrium in the sense that we have given these terms are therefore opposites the one e+cludes the other. Heither is the static economy being characteri.ed by a static e1uilibrium, nor is the dynamic economy characteri.ed by a dynamic e1uilibrium2 an e1uilibrium can only exist at all in the one sense mentioned before. #he e1uilibrium of the economy is essentially a static one.I):

*nd not only is the e(uilibrium of the economyH essentially a static one, but it is also above all a stagnant one5 Oet we know that one of the vital features of capitalist industry is 7 precisely 7 its ability to grow, to develop. 6t follows therefore that there must be some internal feature of capitalism that forces it to trans0cresce and that therefore constitutes its differentia specifica. Grthodox economic theory, both <lassical and Neoclassical, treats the forces of development as essentially e7ogenous to the capitalist system of production)
t is the conception that there is an independent element in technical and organi.ational progress, which carries its law of development in itself and mainly rests on the progress of our knowledge, $&chumpeter, ibid.(

-ere $chumpeter sei es on the reali ation that in point of fact there can be no such independent element in technical and organizational progress and that both of these must be treated as part and parcel of the social relations of production, and not be attributed to an independent element, a purely mechanical and adventitious factor 7 independent of what #eber styles capitalist economic action. 6t comes as no surprise, then, that because $chumpeter takes the economy and economics as ob2ects or phenomena of scientific analysis that are separate and distinct from the rest of social reality, including those *technical and organizational+ forces "5%, he must then necessarily isolate them from the *trans0formation mechanism+ of the capitalist economy, #hen $chumpeter looks for a Ptrans!formation mechanismP ":eranderungsmechanismus% to explain the Pmeta!morphosisP of capitalist industry ! its Pdevelopment, evolution and growthP "&ntwicklung% 7 he can find it only in a sub!ective" voluntary factor, something that closely resembles #eber's own thesis of the spirit of capitalism "der 8eist des 3apitalismus% expounded in the 1thik published in ./01, that is, only seven years before the publication of $chumpeter's path!breaking Theorie5 @ollowing #eber's lead, $chumpeter finds the carrier "Trager% of the transformation mechanism, the driver of capitalist 1ntwicklung, "the expressions have a curious -egelian!8arxist ring% in the Pentrepreneurial spiritP "?nternehmer!geist% without noticing the contra0diction between 9mechanism9 and 9spirit9, -is search immediately contra!dicts itself 7 because the factors of development, the forces that trans!form the economy, that buffet it from crisis to crisis and therefore elevate or lower it from level to level can (uite evidently not themselves constitute a trans!formation mechanism5 * mechanism will always be static because whatever factors cause it to develop must be endogenous and therefore, by definition, re!conducible to the e7isting definition of the system, *n endogenous or internal mechanism of trans! formation would always be re!definable in terms of those e(ui!librium conditions that $chumpeter's theory was supposed to confute and discard5 There can be no freedom in

a system of economic analysis or science. There can be no trans!formation in a mechanism! no internally!generated scientifically measurable development or growth from one e(uilibrium to another. *nd that is the exact reason why $chumpeter is unable to com!prehend in his theory the real subsumption of the technical and organi ational processes, which he erroneously relegates to the Statik or exogenous components of the mechanism, within the social relations of capitalism itself, within the Dynamik of the system of needs and wants "#eber's iron cage% that drives or pro!pels the modern industrial work or the lifeless machine of capitalist industry "the $immelian @orm% which in turn is guided by the capitalistic rational conduct of business 7 the living machine "$immel's $oul%. Gne can almost feel the agony of $chumpeter's theoretical contortions as he grapples and fumbles with these complex conceptual matters)
[B:J] Kconomic development is not an organic entity that forms a whole2 it rather consists of relatively separate partial developments that follow one upon the other. -ere we build on what has been said in the chapter on crises. Accordingly, development of the economy occurs in a wavelike fashion. Kach of these waves has a life of its own. ,ith this we really get closer to reality. n particular, we win a clearer insight into that peculiar "umble of conditioning and freedom, which economic life shows us. #he static circular flow and the static phenomena of adaptation are dominated by a logic of things, while it is completely irrelevant for the general problem of freedom of will, nevertheless in practice ' with fixed given social relationships ' it leaves as good as no maneuvering room for individual freedom of will. #his can be demonstrated and yet it was always a point of criticism, since the creative work of the individual was so obviously visible. ,e know now that the latter observation is correct. Let, this observation does not contradict the theorems of statics. ,e can precisely describe the place and function of this work. 3f course in development the logic of things is not missing. and !ust as one cannot demonstrate with the static conception the case for philosophical determinism one cannot maintain the case against it with the dynamic conception. But despite this we have shown that an element is present in the economy which cannot be e+plained by ob!ective conditions and we have put it in a precise relationship to those ob!ective conditions.60 $#heorie, ch.5(

4y identifying a sub!ective factor as the historical carrier "Trager% of the meta0 morphosis of the capitalist economic system, of the trans!crescence of capitalist industry 7 the entrepreneurial spirit and the process of innovation "6nnovationspro ess% that it unleashes sub2ectively "5% on the scientifically and mathematically definable static e.uilibrium of the capitalist economy to move it from one centre of gravity to another, to transport it like a wave from one ocean level to another !, $chumpeter is also validating and sharpening #eber's original thesis in the 1thik of the religious ascetic origins of capitalism in the entrepreneurial spirit.

4ut the reason for $chumpeter's agonising ambi!valence and ambiguity over the dualism of freedom and necessity and his ac.uiescence in his own theoretical answer to it can be found once again in &rnst 8achLs philosophy of science. The Pempirical observationP of entrepreneurs in capitalist industry and their empirical connection to the provision of PfinanceP by PcapitalistsP is all that counts) both factors can be reconciled as parts of one mechanismP for the trans!formation of capitalist industry through PinnovationP and Pcreative destructionP. :ust as in marginalist theory the a7iomatic assumption of utility "a metaphysical notion at best, by 8enger's own admission, an inscrutable *ristotelian entelechy% does not and cannot e7plain the determination of market prices, and yet the mere proof of a simple mathematical connection between individual prices and the a7iomatically assumed marginal utilities of individuals is sufficient to prove the mathematical e7istence of an economic e(uilibrium and to found the new science of Neoclassical &conomics, so now $chumpeter concludes that the empirical derivation by the PentrepreneurP of a PprofitP from his Pinnovative leadershipP, from his PenterpriseP, combined with the existence of a pool of financial capital made available by capitalists is sufficient to establish the e7istence of a 8echanismus that trans!forms the capitalist economy. 6ndeed, the 4nternehmer08ewinn "the entrepreneurial profit% is the only PprofitP that is worthy of the name for him. *ll other PprofitsP, as the subtitle to the Theorie loudly suggests, are simply PinterestP or rents charged by PcapitalistsP for advancing their Pworking capitalP to the entrepreneur. 6n other words, $chumpeter never even attempts to locate the source of PprofitsP beyond the mere Pinnovation processP of the entrepreneur, beyond the PrewardP for his PenterpriseP. $chumpeter does not look at the PmotiveP behind the activity of the entrepreneur except to allude to a vague Niet schean Pwill to con(uerP, to the simple Ppleasure of successP. *gain, this failure is largely due to the fact that, unlike #eber, $chumpeter does not see the $ationalisierung as a political process but simply as a Pscientific developmentP, as the supersession of the &nlightenment notion of PprogressP, understood in a teleological or moral sense, and its replacement with the strictly empirical scientific principles of the &conomics applicable to human organisation and industry. Put differently" Schumpeter interprets 9profits9 as a function of and reward for the 9entrepreneurial spirit9' ;et he does not even suspect that it may be 9profitability9 that makes the 9entrepreneurial spirit9 a matter of life or death for every 9capitalist9" whether an *entrepreneur+ or not, BBBBBBBBB The timeless mathematical *scientific+ description of the capitalist economy clashes irremediably here with the living e7perience of its e7istence, This is a leitmotiv of the period that will preoccupy #ilhelmine culture from Niet sche to -usserl, 9ukacs and -eidegger 7 that is to say, the Neo!3antian dualism of knowledge and experience, of living spirit and ob2ective process or machine, between $oul and @orms, and between @orms and content. #eber himself will mock the evident contra!diction between the scientific proof of capitalist collapse proffered in The <ommunist (anifesto

with its prophecy of the inevitable advent of human socialist freedom 7 applying thus the Niet schean demolition of #estern metaphysical transcendentalism and sub2ectivity, of the #reiheit that #eber's initial formulation of the $ationalisierung in the 1thik and in $oscher und nies had failed fully to comprehend but that 7 what is one of our central theses in this piece 7 he will begin to tackle seriously with the articulation of the interaction between the +olitical and the &conomics in the triptych of ./.D to ././ formed by Parlament und $egierung and the two 8unich lectures, in the lecture on ;Qer $o ialismus' delivered in Iune ./.E, and then finally with the Vorbermerkungen written in ./C0. The profound, almost absurd in0comprehension of this vital reality 7 the overwhelming, conditioning necessity of the system of wants and needs and the social antagonism of the capitalist wage relation ! on the part of $chumpeter, he himself exhibits in this blunt statement in the Theorie)
#he leader personality7 never happens as a response to present or revealed needs. #he issue is always to obtrude the new, which until recently had been mocked or re"ected or had "ust remained unnoticed. "ts acceptance is always a case of compulsion being e+ercised on a reluctant mass which is not really interested in the new, and often does not even know [+B+] what it is all about7. ,hat we want to show now becomes obvious. -he development of wants which we observe in reality is a conse'uential creation of the economic development that has already been present. "t is not its motor. -he fact that the human economy has remained constant over centuries heavily weighs in favor of our argument. 7. #he amplification of needs is a conse1uence and symptom of development. nsofar as truly new needs and desires exist they will not have a practical effect on the economy, 7new needs and desires as such mean nothing. But even then if there were an original cause in the development of needs and desires this would still re'uire creativity and energetic activity in order to create anything new of importance7

6t is at this fateful 2uncture that #eber takes his distance from $chumpeter, even as he obviously stands on the shoulders of the *ustrian's evolutionary problematic. @or whilst he accepts that the economy can never be in e(uilibrium, #eber correctly re2ects the proposition that in any case science could ever explain rationally the trans!crescence of the economic system, its &ntwicklung. #eber re2ects dismissively $chumpeter's thesis that it is the entrepreneur with his creativity and energetic activity who is solely or even chiefly responsible for the meta!morphosis of the system and that *new needs and desires as such mean nothing+, To the Niet schean #eber, this proposition would smack unacceptably of the 2e2une sub2ectivism and emanationism of the ,erman -istorical $chool's Historismus 7 of the -egelian +rovidence "#eis!heit% and of the idolatry of %reiheit, the freedom of the will whose dialectical reconciliation in ,erman 6dealism leads to the freedom from the will of the Demokratisierung and its $ocialist utopia, that triumph of the =ndividualitat against which Niet sche had devoted much of his critical genius with devastating effect5 6t is this =ndividualitat, the personality of the entrepreneur that #eber could never entertain approvingly.

(The concept of :freedom' in ,erman -dealism is canvassed $ith supreme mastery from the vie$point of the negatives Denken by Heidegger in his Schellings Essence of uman !reedom -t is interesting to advert here to the incomprehension of !eber's entire theoretical orientation on the part of those critics 3 of all persuasions 3 $ho $ave his concept of %charisma& as conclusive evidence of a :voluntaristic strea0' or :sub8ectivism' in !eber's methodology# and the even greater incomprehension of those epigones $ho ma0e %charisma& the central concept in !eber's entire sociology; Ho$ever much these "uite erroneous vie$s may be 8ustified on the basis of the static typology contained in the Ethik and in !eber's later classificatory efforts# it is very $ide of the mar0 $hen it comes to his incisive reformulation of the "roblematik of capitalism in his later $ritings There is no %charismatic voluntarism& in this methodological stance# no :5aesarism'; There is only a coherent application of *iet)schean immanentist %ontology of thought& to the phenomenology of the social $orld *or is there any :irrationalism' in the post7*iet)schean %<e7stru0tion& [Heidegger's term] of the philosophia perennis and scientism of the #ufklarung and its ,erman -dealist apotheosis ( Not only does Weber reali"e with unmatchable acuity that the creative entrepreneur is not responsible for the phenomenon of capitalist de elopment and the concomitant crises that it ineluctably inflicts on the economic system0 but also and abo e all else he sees that the entrepreneur is responsible instead in a Niet"schean sense diametrically opposed to the one suggested by Schumpeter% @or the entrepreneur can be merely the carrier of a trans!formation of the economy that must originate endogenously from its very foundations, from its ground 7 that is to say, from its #ants and +rovisions, from its system of needs and wants. 4ut not as a mechanism of transformation such as $chumpeter had sought on the mistaken assumption that wants are static5 Gn the contrary, it is the conflict inherent and intrinsic to the ery notion of want and of self*interest that creates the ob-ecti e con*ditions and circum*stances that allow the emergence of the entrepreneurial spirit, of his Will to .ower at the very crest of this surging wave of conflict that transports with itself the entrepreneur and the rest of the capitalist economy and society% The nature of the matter, the essence of capitalism and of the &conomics, must consist then in the historically novel and specific manner in which capitalism organi es this conflict5 This signifies the end of +olitical &conomy not only as the market0based mirage entertained by %eoclassical Theory of a *rigorous science of 1conomics+ devoid of political conflict, but also as the utopia embraced by liberalism and socialism of a *free public sphere of Politics+ devoid of economic antagonism' The personality that truly counts, the =ndividualitat that drives the system, the machine 7 the motor of the mechanism of transformation that $chumpeter was so desperately seeking ! is emphatically not the entrepreneur with his creative

individuality causing the inertia of the system of needs and wants ! the rentier capitalist, finance capital, trustified capitalism, the passive consumer ! to change through the =nnovationsprozess facilitated by the mechanism of capitalist financial institutions. * million times No5 )he real motor, the true spirit of capitalism $howe er
soul*less it may ha e become now& is e9actly and precisely that conflict inherent to the system of needs and wants, to the iron cage, that capitalism has freed, has unleashed, has ented and released by institutionali"ing &ureaucratically the rational organi"ation of free la&or% The most effective way to organi e a society is to utili e its labor, intended

as labor force or labor power, in a manner that responds rationally to the politically free specification of their conflicting needs and wants by the workers through the market mechanism "filter, osmosis, synthesis% so that these may be provided for most efficiently. 6n regard to this point, #eber can detect now another ma2or fallacy or oversight in $chumpeter's limited and flawed analysis in the fact that the entrepreneur may well be the material functional carrier of trans!formations to the structure and orientation of enterprise, but that these trans!formations occasion profound shocks and crises that cannot be limited or confined to the economy alone, and that therefore re.uire a form of mediation and governance ) of political responsibility5 ! that is absolutely inaccessible to the *entrepreneur+ or indeed even to the *bureaucracy+, 6n fact, it is not merely the entrepreneurial function that loses its autonomy, its individuality under the iron law of sociali ation, but it is also that scientific research that becomes increasingly subsumed to the political needs and wants of the system rather than be dictated by the narrow needs of industry or the exogeneity of pure research. 6n other words, there may well be no scientifically ascertainable mechanism of development for the simple reason that scientific activity itself "5% has lost its autonomy from that rational organi ation of free labor that is capitalist enterprise. This is the more so, the freer that free labor becomes 7 precisely by reason of its Demokratisierung and the constitution of the proletariat as a class "5% with its own socialist democratic political parties that defies and prongs the state bureaucracy out of its inertia, out of its myopic search for scientific e(uilibrium5 6t is no accident that the sub!title to Parlament und $egierung refers specifically to the binary interplay, the antithetical dualism between +arteienwesen "the nature of parties or party system% and 4eamtentum "bureaucracy%5 To be sure, $chumpeter himself had foreshadowed this problem during his discussion of his problematic in the (uotations we selected above)
n other words, there is no true economic development, no development emanating from the economy itself, but only development that conforms to one pattern of imagination or does not conform to it. Let, in any event economic development brings about e+traeconomic effects in the social realm that have further repercussions within the economy. #his kind of development expresses itself everywhere in national life. $&chumpeter, ibidem(

4ut in pointing to the personality and leadership of the entrepreneur, even within the confines of the =nnovations0prozess, as the differentia specifica of capitalism, $chumpeter neglected these essential e7traeconomic effects of modern capitalist industry and society that #eber is already theori ing from the standpoint of political sociology and

that 3eynes will start to dress up in economic garb after the +aris <onference of ././) 7 "a% the ineluctable presence of conflict in the relationship between market effective demand "or wants% and its provision through development and growthJ "b% the problematic of bureaucratic!technical and scientific!technological capitalist organi ation of this irreducible and irrepressible conflictJ and then "c% the articulation of the forms of political organi ation able to mediate the inevitable dis!e(uilibria and crises that development inevitably engenders so as to govern these effectively. This is the gigantic task that #eber would now tackle with his overall program or &ntwurf of Parlamentarisierung for the effective $egierung of a re0constructed ,ermany "neu0 geordneten Qeutschland%. BBBBBBBBBB