Thursday, March 22, 2012

George Will on Creative Destruction

Wikipedia

Cross-posted at the Left Coast Rebel

From Will's excellent Washington Post column today on creative destruction:
Creative destruction continues in the digital age. After 244 years — it began publication five years before the 1773 Boston Tea Party — the Encyclopaedia Britannica will henceforth be available only in digital form as it tries to catch up to reference Web sites such as Google and Wikipedia. Another digital casualty forgot it was selling the preservation of memories, a.k.a. “Kodak moments,” not film.

America now is divided between those who find this social churning unnerving and those who find it exhilarating. What Virginia Postrel postulated in 1998 in “The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise and Progress” — the best book for rescuing the country from a ruinous itch for tidiness — is even more true now. Today’s primary political and cultural conflict is, Postrel says, between people, mislabeled “progressives,” who crave social stasis, and those, paradoxically called conservatives, who welcome the perpetual churning of society by dynamism. tasists see Borders succumb to e-books (and Amazon) and lament the passing of familiar things. Dynamists say: Relax, reading is thriving. In 2001, the iPod appeared, and soon stores such as Tower Records disappeared. Who misses them?

Theodore Roosevelt, America’s first progressive president, thought it was government’s duty to “look ahead and plan out the right kind of civilization.” TR looked ahead and saw a “timber famine” caused by railroads’ ravenous appetites for crossties that rotted. He did not foresee creosote, which preserves crossties. Imagine all the things government planners cannot anticipate when, in their defining hubris, they try to impose their static dream of the “right kind” of future.

Read The Rest.

Will is correct in that progressive tend to reject -- and even viscerally hate and/or loathe -- the dynamism of so-called creative destruction. But unfortunately that doesn't necessarily mean conservatives understand the true brilliance of laissez faire capitalism; they are just less hostile to its tenets...

But just what is creative destruction, you ask?

Investopedia:

Creative destruction occurs when something new kills something older. A great example of this is personal computers. The industry, led by Microsoft and Intel, destroyed many mainframe computer companies, but in doing so, entrepreneurs created one of the most important inventions of this century.

Schumpeter goes so far as to say that the "process of creative destruction is the essential fact about capitalism."

Why is it unknown?
A-ha! That's why progressives hate the concept of creative destruction: for the dynamism of free markets (and the symbiosis of rationally self-interested individuals that fuel the brilliance of free markets to work,) something "newer" needs to "kill" something "older."

Like any other area where individual folks are left alone to pursue happiness, it is chaotic and in many cases not "fair" because someone eventually ends up with "more" than someone else!

This quote from Matt Ridley, author of The Rational Optimist, strikes a note on the creative destruction topic (hat-tip Adam Smith Institute):

A Bronze Age empire stagnated for much the same reason that a nationalized industry stagnates: monopoly rewards caution and discourages experiment, the income is gradually captured by the interests of the producers at the expense of the interests of the consumers, and so on. The list of innovations achieved by the pharaohs is as thin as the list of innovations achieved by British Rail or the US Postal Service.

FURTHER READING: At the Ayn Rand Institute, "Capitalism: The Unknown Ideal":

Readers of Atlas Shrugged are struck by the moral fire of Ayn Rand’s defense of business and capitalism. She does not regard capitalism as an amoral or immoral means to some “common good”—as do most of its defenders—but as a profoundly moral social system. It is, she wrote, “the only system geared to the life of a rational being.”

In Capitalism: The Unknown Ideal, which Ayn Rand called “a nonfiction footnote to Atlas Shrugged,” she and others explain the social system that she held has “never been properly understood and defended—and whose very existence has been denied.” That system is laissez-faire capitalism: a social system in which the government is exclusively devoted to the protection of individual rights, including property rights, and therefore in which there exists absolutely no government intervention in the economy.

Capitalism is not a treatise on the economics of capitalism, but a collection of essays on the philosophy of capitalism: the basic truths and principles that make capitalism the only moral and practical social system—the only system consistent with man’s nature and the requirements of his life—the only one that enables each individual to reach his full, glorious potential.

1 comment:

  1. Can you say "video store"? I see the few remaining Blockbusters selling down to the fixtures and think back to when the chain video stores were putting all the mom and pop video stores out of business. The clock was ticking even then.

    ReplyDelete

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