Tales of the baby dragon
Joseph Schumpeter, in Capitalism, Socialism and Democracy (1942):
[T]he history of the productive apparatus of a typical farm, from the beginnings of the rationalization of crop rotation, plowing and fattening to the mechanized thing of today — linking up with elevators and railroads — is a history of revolutions. So is the history of the productive apparatus of the iron and steel industry from the charcoal furnace to our own type of furnace, or the history of the apparatus of power production from the overshot water wheel to the modern power plant, or the history of transportation from the mailcoach to the airplane. The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation — if I may use that biological term — that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.
Schumpeter called this process “Creative Destruction,” and the name stuck. Amba reminds us that we don’t have a whole lot of control over it:
It’s all very well to approve of it, to cheer it on in principle, but the thing is, you can’t pick and choose what it’s going to destroy.
There’s a fairy-tale quality to it — turning loose the baby dragon, then having to live with the unintended consequences.
One example: governmental intrusions into the marketplace are intended to keep the little fire-breathing toddler under wraps, usually on the pretext of preserving jobs, preferably the jobs of the persons contriving those intrusions in the first place. This may contain the dragon, briefly; but control it? Beyond our pay grade.
To love tradition and also celebrate unfettered capitalism seems like a recipe for heartbreak. You can try to let God rule your moral life and Darwin rule your economic life, but really, how can you separate them? Creative destruction has a mind of its own. It’s driven by appetite and effectiveness, not by sentiment or principle. It’s sort of like a hurricane of Buddhism.
For which, I suggest, we can blame neither Darwin nor God. Everything is subject to change: even the grave is something less than entirely static, as unto dust we return. Perhaps the best we can do is to acknowledge that, yes, here there be dragons, and conduct our business accordingly, knowing that one day there will be a confrontation, and it will be face-to-face.
And U.S. Steel? They’re still around. But on the worldwide market, they’re no longer a force of nature.
McGehee »
17 October 2009 · 8:19 pm
It comes right down, I suppose, to being willing to watch the world burn (metaphorically, of course) just to be able to see what will grow from the ashes.
There is a school of thought that God, when He granted us free will, had much the same motivation: He just wanted to see what would happen.
Adam »
18 October 2009 · 9:00 am
It’s pretty unrelenting. Government regulation imposes costs on things in order to try and reign the process in, but they can’t stop people from then finding innovative ways to get around those costs as well.