Creative Reconstruction

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6 Responses

  1. A.J. Sutter says:

    Sorry, I don’t buy this argument. For one thing, it regards “creative destruction” as categorically good, without any nuance. Sometimes it is simply destruction. Without getting into the particulars of the Borders situation, about which I’m ignorant, what are we to make of the decline of news organizations or independent booksellers under market pressures? Are we to blame them for failing to “innovate”? What about the qualitative losses occasioned by the disappearance of certain “inefficient” businesses?

    It’s worth reflecting on where “creative destruction” comes from. Just as “creative reconstruction” isn’t Michelle’s phrase, “creative destruction” (in German, “schöpferische Zerstörung) isn’t exactly Schumpeter’s, either. Its source is the last page of a 1913 book called “Krieg und Kapitalismus” (“War and Capitalism”), written by his teacher, Werner Sombart. The context was the destruction of European forests because of the use of wood for building battleships. As Sombart says, “Wiederum aber steigt aus der Zerstörung neuer schöpferischer Geist empor” (“Once again, out of destruction a new creative spirit rose up,”) and the Prussian navy made ships out of iron. Today we might well find this glorification of the destruction of forests for the sake of a war machine to be grotesque. Maybe in the future we’ll feel the same about the sort of capitalism this post is so willing to accept.

  2. Michelle Harner says:

    A.J.:

    Thank you for the comment and for the additional information. Your comment is very informative. I take your points; I think they are fair and I did not mean to suggest a full embrace of the creative destruction theory. I think that, like most theories, it does hold some truth, but as you note, one certainly needs to appreciate the nuances.

    My main concern with business failures—whether we cast them as creative reconstruction, creative destruction or just destruction—is the reluctance to change or acknowledge financial or operational difficulties on the part of some (certainly not all) distressed companies. The stigma associated with failure or being a victim of creative destruction seems to paralyze some or at least prevent them from taking actions in a timely manner that could preserve and perhaps enhance their platforms. I continue to search for a phrase or theory that would motivate such action.

    Best regards, Michelle.

  3. Michelle,

    I see your point about the desire to help firms avoid collective self-deception, denial, rigid thinking, and so forth so as to learn to adapt to and creatively confront unavodiable or inevitable economic conditions (something along the lines of the adage that ‘necessity is the mother of invention’), but perhaps you could change your link for “creative destruction” to one more accurate regarding the genesis of the idea and the person first credited with its usage, as A.J. rightly points out. The Wikipedia entry,* for example, is very good on this score, noting how the IDEA begins in the works of Marx and Engels, thus although Marx himself did not use the exact term, he first described the processes labeled and described by Sombart, “whom Engels described as the only German professor who understood Marx’s Capital.” Schumpeter’s view of capitalism is, as Meghnad Desai notes, a dialectical one in which “the good and bad are intextricably intertwined. You cannot have innovations and growth if you protect old technologies and restrict enterprises for fear of losses.” The Wiki entry has an apt quotation from the Marxist social geographer David Harvey: ‘While Marx clearly admired capitalism’s creativity he [...] strongly emphasised its self-destructiveness. The Schumpeterians have all along gloried in capitalism’s endless creativity while treating the destructiveness as mostly a matter of the normal costs of doing business.”

    * http://en.wikipedia.org/wiki/Creative_destruction

  4. Michelle Harner says:

    Patrick: Good suggestion. I agree that the link you provide does a better job of explaining the nuances of, and different approaches to, the theory, and I have changed the link. Thank you for the comment. Best regards, Michelle.

  5. A.J. Sutter says:

    Patrick, according to some accounts the origin isn’t Marx, but rather more up your alley as a comparative religions scholar: the Shiva myth from Hinduisim. One line of influence went from J.G. Herder (who’s credited with introducing Hindu myths into German philosophy) -> Goethe (Herder’s patron) -> Sombart. Another went from Herder -> orientalist Friedrich Majer (Herder’s student) -> Schopenhauer -> Nietzsche -> Sombart. See Reinert, Hugo & Erik S. Reinert, “Creative Destruction in Economics: Nietzsche, Sombart, Schumpeter,” in Backhaus, Jürgen and Wolfgang Drechsler (eds.): Friedrich Nietzsche 1844-2000: Economy and Society (New York: Springer Science+Business Media 2006) 55-85.

  6. Thanks A.J.

    The Shiva myth was also mentioned in the Wiki entry. I suspect there may be a confluence of ideas at work here, so: Marx + Indic myth + ? …. And the reference you provided sure looks interesting!