London, Creative Destruction, and the USA
I watched videos of the recent rioting in London the other day, and two words sprang to mind: Joseph Schumpeter. And I wondered who, in North America, will throw the first brick. These thoughts filled me with dread, exhilaration and hope.
Schumpeter was an Austrian economist active in the first part of the twentieth century, when intellectuals argued about such things a superstructures, ideology and whether communism would overtake capitalism. Those were the days when everyone but Samuel Becket, Albert Camus and a few other nicotine-stained souls believed in human progress and destiny. A better world was just around the corner. All intellectuals argued about was how to bring it about.
We know better now. Today despair is fashionable. Some are honest about it, and retreat to the privacy of silent accommodation with fate. Others pretend to have answers and prattle, both left and right, about what’s wrong with the other guy. Almost no one pretends to have the answers, and those who do are quickly exposed for having ordinary human failings. We debate endlessly the sex lives of celebrities and politicians as though it mattered a whit who does what to whom in the dead of a rich man’s night. We live in an era of cheap and easy cynicism.
Schumpeter’s classic, Socialism, Capitalism and Democracy, introduced me and thousands of other readers to the term "creative destruction." It was the power of entrepreneurs to unleash new products, new markets and new things on the world. Economic change meant destroying the old in favor of the new. Destruction, far from being a bad thing, was the cost of change. Change was inevitable.
What last century’s intellectuals had in common was a belief in the primacy of the material world. Products mattered. Markets distributed those products. Control of the means of production meant control of the world. Let’s built a better world, somehow, by means of creative destruction. Pick your poison: a free market or a command economy.
We’re now well into the 21st century and we’re learning a hard truth. Markets don’t reach everyone. Economic growth is not a given. People starve, and markets don’t respond. Economies grow, but fail to distribute wealth to all. The rich get richer. Political parties appeal to narrow constituencies but ignore the reality that many folks are so disconnected from the society at large that the fulminations of left and right are so much noise. In the United States and Western Europe, the middle class disappears. Social mobility is becoming a sick joke.
So we get riots in London, and soon, I suspect, in the United States.
The riots in London started in Tottenham. The police stopped a man. There was shooting. The man was killed. Angry community members took to the streets. Soon there was looting, arson and the police were on the run. People living in the shadows took center stage and engaged in acts of destruction. They were entrepreneurs without products to sell, only the rage that comes of being treated as so much surplus population. The riots quickly spread.
So why not creative destruction by those whom markets fail? Let the plutocrats dicker over the tax code, and let politicos prattle about it all. The streets know the truth. People are angry, disaffected and increasingly alienated. Unemployment numbers would be far higher in this country if the statistics included those who have simply given up hope.
The New York Times recently carried a front-page story about luxury spending. Mercedes Benz sold more cars this past July than in any July for the past five years. The rich can’t buy enough $800 shoes. The other America, that tiny sliver that controls most of the wealth in this country, is doing quite well. I read that story and thought of the economic woe I see among my clientele. I wondered why no brick through the window of a Fifth Avenue salon? What have dispossessed to lose?
And then London erupted. People whom the market failed acted. Yes, it was with violence, but when words fail and politics becomes an insiders’ game, what are those on the outside to do? I say a brick can well be a means of catching the attention of well-healed. When politics fails, violence, even chaos, is a means of being heard. It always has been.
So I wonder, as I write this: when and where will the first brick be tossed in the United States? At a bank window? Into the showroom of a purveyor of luxury goods? Through the windshield of a police cruiser? The brick is coming, mind you. It’s been baked in the dry heat of hard times. It merely awaits an arm strong enough to throw it. Not all change comes top-down from the producers of wealth. Sometimes the bottom rises up to swallow those on top. We’ve watched an Arab Spring. What will come in this the Winter of our discontent?
Reprinted courtesy of the Connecticut Law Tribune.