“Creative Destruction is the essential fact about Capitalism” J.A. Schumpeter (C.S.D. (1942, p. 83). Capitalism, first and foremost, depends on the amount of Freedom within a Society.
Being a voluntary form of an economic system, in which transactions between parties are only conducted with and by consent and assent, the oppressive coercion by the State must be done away with. Socialism, Fascism, and Communism fail by this measure (and in reality) being that the State is the overarching player in both government and economics, those in charge ALWAYS use their Heavy Hand in trade. We saw what happened with the Soviet Union after just 70 years of complete Control – it withered away because it wasn’t nimble enough to compete.
Create Destruction: I certainly experienced this in my career (as I have said on these pages a number of times). Entering the workforce as a mini-computer engineer (versus the “Big Iron” of IBM and the so-called Seven Dwarfs), the minis were disrupting the mainframe world by being not QUITE as powerful as the Big Iron computers but certainly at much lower price points. People/companies that couldn’t have afforded the IBM and Honeywell machines now could purchase a mini and reap the benefits of computing that earlier was off-limits to them earlier.
Then with the advent of the Intel 8086 and 8088 microprocessors, small businesses and individuals were able to make use of these small computer systems. Certainly puny by Big Iron status, they were still quite a bit less in capability than the minis as well. However, the prices was falling form requiring millions of dollars for Big Iron to a hundred thousand for a mini (or more, to be truthful) to thousands for PCs. And yes, I did forget to put in the “Workstation” marketplace (anyone remember Apollo?)
The PCs destroyed and then re-created the computing marketplace. Most of the Seven Dwarfs passed away. The mini-computer marketplace completely tanked, especially around the MA. Route 128/495 highway rings – and then disappeared. PCs were now a CA “thing” in “Silicon Valley”.
I was unemployed a few times as company after company died – it wasn’t easy as Creative Destruction didn’t care. It was changing the marketplace but I learned to adapt and then thrive. Most others did (and yes, some didn’t).
In the end, that huge dislocation gave rise to a far better computing environment – AND rise to other related industries.
Yes, it ends up to be the Freedom to Innovate – something that the Socialist/Communists couldn’t allow because it REQUIRES Freedom to think and that they couldn’t allow.
And we are all better off for it.
(H/T: Cafe Hayek)
