Peak Creative Destruction

Joseph Schumpeter

In the world today, creation is destruction and destruction is creation.
This has been brought about by philosophers and economists and scientists, and has been handed down to the rest of us.

Markets no longer act like they did in 1955; markets are active growth/destroy machines now, wherein speculation - which used to provide a chaos in the movement of money smallish in comparison to the rest of the market - now dominates the marketspace.
This is reflected in the present day, where markets giddily swayed and zoomed up and down even before corporate earnings were presented...
corporate earnings are a smaller component of market movements.

Schumpeter stated that capitalism was a process of Creative Destruction, which was used to study innovation in the economy: steam locomotive manufacturing companies are destroyed and diesel engines made by GM take over.

However, the notion was derived from Marx's critique, and Marx wrote:

... And how does the bourgeoisie get over these crises? On the one hand by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented...

We have reached Peak Creative Destruction almost, and that is when creation and destruction merge into the Future Nausea we have created.

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How To Live In The New World

 

Tianducheng Seen Beyond A Farmer's Hut

One really must put one's mind to how to live in the new world of about 2017, when the debacles of Climate Change, World Banking failures, collapse of the War on Terror, and a general lack of vision and will of leadership will have left us to pick up the pieces.

I think photos like those of Tianducheng, China, will be published in the future, when historians try to figure out what went so horribly wrong in the world of 1945-2045.

According to reports, Tianducheng is essentially a ghost town, and is a symbol of the billions of dollars spent for no productive purposes, for no goals which would enrich human lives.
Now that the Chinese Central Government has asked all localities to submit full reports on their indebtedness, it makes one pause and wonder at the world of modern capitalism.

 

Where Are The People?

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The Coming Change

I believe the world of Capitalism as we know it is dying. I do not mean Capitalism is dying, for Capitalism is a concept which can put on a coat of many colors; all ideas changes and evolve. I mean Capitalism as we know it, the Exploitation Capitalism which is divorced from Community and Morality is dying.

What does that mean? Briefly, any form of Capitalism which creates a disaster comparable to the fiscal crisis starting in 2008 in the USA, followed soon thereafter by Europe, is a Capitalism that recognizes no network of bonds and commitments to a community, a community being an extended group that possesses a common moral logic.

Look at Reuter's this morning:

There Is No Sovereign Debt Crisis In Europe
http://blogs.reuters.com/macroscope/2013/05/15/there-is-no-sovereign-debt-crisis-in-europe/

Evidence that Europe’s austerity policies are not working was in ample supply this morning. The euro zone as a whole is now in its longest recession since the start of monetary union. France has succumbed to the region’s retrenchment. Italy’s GDP slump is now the lengthiest on record. And Greece, still in depression, shrank another 5.3 percent in the first quarter.

To understand why this is happening, Brown University professor Mark Blyth says it is necessary to forget everything you think you know about the euro zone crisis. The monetary union’s troubles are not, as often depicted, the result of runaway spending by bloated, profligate states that are finally being forced to pay the piper. Instead, argues Blyth, it is merely a sequel to the U.S. financial meltdown that started, like its American counterpart, with dangerously-indebted risk-taking on the part of a super-sized banking sector...

In other words, revisit the sources of the hit-and-run and see again that it was the recklessness of Exploitative Capitalism that caused the accident. Yet, to amend this, many are saying that not only should the common people pay once for the banks, but they should pay twice, thrice, and four times and more for the folly of the financial and political elites!

In a new book entitled “Austerity: The history of a dangerous idea,” Blythe writes that sovereign budgets have come under strain primarily because taxpayers of various nations have been forced to shoulder the burden of failed banking systems.

The way austerity is being represented by both politicians and the media – as the payback for something called the ‘sovereign debt crisis,’ supposedly brought on by states that apparently ‘spent too much’ – is a quite fundamental misrepresentation of the facts. These problems, including the crisis in the bond markets, started with the banks and will end with the banks. The current mess is not a sovereign debt crisis generated by excessive spending for anyone except the Greeks. For everyone else, the problem is the banks that sovereigns have to take responsibility for, especially in the euro zone. That we call it a ‘sovereign debt crisis’ suggests a very interesting politics of ’bait and switch’ at play.

So why all the misunderstanding? Why has the crisis become conflated with a government debt problem in the public imagination? According to Blythe, this is a convenient way for Wall Street to again saddle the state with massive banking sector losses.

The cost of bailing, recapitalizing, and otherwise saving the global banking system has been, depending on how you count it, between 3 and 13 trillion dollars. Most of that ended up on the balance sheets of governments as they absorb the costs of the bust, which is why we mistakenly call this a sovereign debt crisis when in fact it is a transmuted and well-camouflaged banking crisis.

We are witnessing the birth pains of the Capitalism of the future, but the old first-born Capitalism will fight the arrival of a new heir on the scene.

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Capitalism

Reading about Romney and Bain Capital, which bought companies on the verge of bankruptcy, gutted them and created leaner, meaner companies, some of whom showed a profit.

People seem to think "lean and mean" is part of the definition of Capitalism. It is not. It may be a type of effort that creates efficient companies in a Capitalistic system, but that is as far as one can go with it. The bloated and inefficient companies on the verge of bankruptcy were also in a Capitalist system.

To choose Romney is not to choose Capitalism; it is to choose an ethos.
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AT&T and T-Mobile

I have a T-Mobile phone and have had one for 8 years. When my original went belly up, I took over my daughter's; she had graduated to a Blackberry, but I was satisfied with the old phone. Of course, her display had a teddy bear on it, which I have not yet figured out how to change, but so what?

My wife has AT&T.

Comparison? T-Mobile is vastly superior. I have always had a pay as you go plan, and it has worked well to keep me from gobbling up minutes (I only talk at length with a few people, like my Arabic teacher, and you can tell she must have a heck of a plan, because she will just talk and talk...). My minutes are good for a year, and that is better than AT&T would ever dream. I think AT&T  has minutes good for 90 days.

If the merger goes through, T-Mobile will be changed adversely; AT&T will not be changed for the better. It is the nature of American Capitalism 2011 that a blending of Profit and Customer Service is like mixing oil and water.

Keep T-Mobile mobile!
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