Schumpeter, the State, and Funding Economic Evolution

In Schumpeter's Capitalism, Socialism and Democracy, we are presented with a vindication of sorts for certain forms of "anticompetitive behavior."  Unless firms can leverage their market power (e.g., to set rather than to accept prices) to extract profits, they will not be able to make the kind of investments necessary to bring about meaningful economic evolution.  Ultimately, it is not the "micro" level price-competition that yields the technological innovation that keeps the economy growing (and therefore improving everyone's living conditions), but rather the monopolistic/oligopolistic buying up of patents, bundling, etc. that funds things like trains, electricity, and the internet.

In the end, then, this kind of behavior is not, for Shumpeter, "social waste," but absolutely necessary for capitalism to work as we want it to.  To make us all better off, at least materially speaking.

Setting aside for the moment that "social waste" can be fairly attributed to situations where capitalists (and their employees) are spending their blood, sweat and tears working tirelessly, endlessly, and desperately -- to prepare for the day the next Facebook, Apple, or whatever comes along to put everyone out of business -- even in conditions of perfect competition and economic equilibria...

And setting aside for the moment that (as Schumpeter recognizes but then dismisses) firms can seek funding from sources other than retained earnings (bank loans, bonds, equity markets, for example)

And also setting aside the fact that I don't know of any evidence that firms couldn't save the requisite funds to invest in new technology if they were forced to do business on more competitive terms....

And further setting aside for the moment that supply-side economics is not exactly uncontested (see, e.g., Keynesianism, or Apple's stock buy-back and dividend programs)

A new paper from EPI points out that it is the government, using tax dollars, and not price-setting business enterprise, that often creates the kind of transformative technology that triggers growth.

So, I suppose I shouldn't cry over the judgment against Apple for fixing the prices of eBooks.

And maybe we don't need companies like Apple to Fund the Future.