11 to 7 on the Paradigm Shift

There are great amounts of quality disparagements of business schools in general (intentional or not), and MBA programs in particular. The singular ethos, such as it exists, or lack of concern beyond profiteering for anything involving people, environments, good governance or even public safety opens a very wide field in which quite little is possible other than the growing of predator industries and the election of frauds.

But the hedge-fund guys and girls have largely gotten a pass for a long while now, though that just will not suffice and they refuse to have their lack of acumen for or understanding of the industries they destroy not properly respected for precisely what it is:

To me, this and so many other closings of quality publications leads to a broader question of whether journalistic outlets can even exist under this current age of capitalism. In short, I think the answer is basically no. Journalism can exist in a capitalist system of course, but only when the people who own these outlets have some higher purposes, at least in part, whether it is some belief in the truth or at least a willingness to accept relatively moderate profits instead of instant gold. But we now live in an era of venture capitalist schemes, where rank idiots stumble into massive wealth and believe that they are rich because they are smarter than everyone else. When this happens, as it did in the initial Gilded Age, these morons run roughshod over the world around them.

Just so. The jump comes from a ledge of dangerous combination: You make a great deal of money – however quickly – and also systematically evade any education that would have given you access to some self-awareness that might save you and others something a little more important than two points below prime. The serial misunderstanding of terms will be the subtext of the best work of many future historians and not-a-few extradition treaties. CRaP, for example, is a re-purposed acronym that should be far more useful that it is.

Creative Destruction

Or, what will green mean once it has been destroyed and re-cast again? At the end of this Newsweek article about IBM and how it is “detaching” from the U.S., was this:

This is the new world of global business, one in which the U.S. becomes simply a market among markets, and not even the most interesting one. IBM is one of the multinationals that propelled America to the apex of its power, and it is now emblematic of the process of creative destruction pushing America to a new, less dominant, and less comfortable position.

It’s part global rah-rah, but having heard the term before in nearly the same context – as a seeming euphemism for the kind of havoc that is endemic to business interests in such a way as to insulate them from moralistic concerns about people or planet – it made me wonder how long it had been around and, at the risk of misunderstanding it, whether it could be true in multiple directions. I mean, destruction for gain, if truly amoral, could advance along an Eco axis if that was what where the gain is, Nes Pa?

Creative destruction was originally coined by Joseph Schumpeter (1883-1950) in his Capitalism, Socialism and Democracy. Some choice bits on CD:

Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary. And this evolutionary character of the capitalist process is not merely due to the fact that economic life goes on in a social and natural environment which changes and by its change alters the data of economic action; this fact is important and these changes (wars, revolutions and so on) often condition industrial change, but they are not its prime movers.

These would be new means of production and transportation, new markets, new forms of industrial organization. Sound familiar? Also note that he says capitalism can never be stationary; does this put sustainability out of play? If so, what then?

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. . . .

Ah, essential facts. We quickly revert to protecting that (competition) which does not require guarding, because its forms are designed to go away, or be transformed into something else. Something which may appear unrecognizable, but only because of our tendency toward the above reversion. One more:

But in capitalist reality as distinguished from its textbook picture, it is not that kind of competition (the price variable) which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largest-scale unit of control for instance)–competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.

Now, there could be something very sexy about this, but we’ll have to get over the sad-sack ‘greed is good’ paradigm in which so many have found solace for so long, which has been under seige since the minute after it was created. It’s not merely being sanguine to say it is the nature of the system to destroy itself this way, just a reminder of the very necessary likelihood of possibilities that should be injected into the project. That are indeed its lifeline, if not its blood.