Creative Destruction

May 31, 2008

The concept of "Creative Destruction" is at cross-purposes with everything promoted at Old Roads. Our philosophy at Old Roads is to spotlight and preserve past ways of thinking and seeing the world. We are in the midst of almost unimaginable social and environmental changes that are not only restructuring the face of the earth, but restructuring the way we think and feel. The main agent of this change is global capitalism, and it turns out that a crucial theorist of global capitalism is Joseph Schumpeter (1883-1950).

In his new biography on Schumpeter, Thomas McCraw cites his important economic work Capitalism, Socialism, and Democracy:

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. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. [351-2]

From reading closely the sections concerned with this concept, it is clear that Schumpeter had a fairly limited notion as to how broadly creative destruction should apply. Catholic statements on the nature of capitalism such as Quadragesimo Anno were embraced by him as a path to ease the disturbance of capitalism on social institutions such as the family. But just because Schumpeter conceived of a barrier between economic and social life does not mean that a barrier has actually held. In the conclusion to the biography McCraw notes how widespread the notion of "creative destruction" has become, pointing to the "astronomical" number of hits that come up by Googling the phrase. He writes: "The phrase has also turned up in the titles of books outside of business and economics, including history and literature" (504).

It would even be possible to think of creative destruction as a guiding metaphor for modern American—and increasingly global—life. We could write this in the manner of George Lakoff in his work on the concepts that underlie metaphoric expressions: CREATION COMES BY DESTRUCTION. Understanding this deep background metaphor of modern life will help to make sense of many elements of modern life. The most obvious expression of it is the constant forward march of technology. Our standards for works of the imagination are also influenced by it, as books and works of popular music constantly arrive and get replaced by the next wave of works. Our landscape also reflects this notion as big box stores attempt to erect a building shinier and newer yhan competitors. If we think deeply about the connections between these expressions of modern life we will land on this concept of creative destruction.. which is not a "natural" view of the world, but something that is learned.

The difficulty of arguing with the kind of capitalism advocated by Schumpeter is that it means arguing against the obvious human advancement brought by capitalism. Schumpeter writes about how capitalism "promises a level of satisfaction of economic needs even of the poorest members of society including the aged, unemployed and sick, that would (with a forty hour work week) eliminate anything that could possibly be described as suffering or want" (430-1). And almost anywhere we look in the world people are flocking to urban settings and leaving behind traditional ways of life.

Even cutting down that triumphalist rhetoric by a few notches, it is hard to argue with the notion that people the world over want the goods that capitalism brings. But here is a more pressing question: is this kind of capitalism and the society it constructs able to become established as a sustainable system? Or are we living in what amounts to a giant pyramid scheme? If the latter, then we may someday wish we had been happy living in a traditional economy such as that of medieval Cairo.. and never come across the destructive concept of "creative desctruction."