Wednesday, September 21, 2011

The relevant problem is how it creates and destroys them

From 2007 Bust: How Could They Not Have Known? by Alex J. Pollock.
Some commentators long for the financial stability of the post-World War II United States. Unfortunately for those longings, the 20 years after that horrifically destructive war was a unique and unsustainable period of international economic and financial dominance by the U.S. Its anomalous character means it cannot form our model for stability. Indeed, economic reality is never lasting stability, but constant adjustment and transition.

In considering the financial adventures of the past, present or future, in America, Europe or elsewhere, we cannot too often re-read that profound dictum of Joseph Schumpeter:

"The problem usually being visualized is how capitalism administers existing structures, whereas the relevant problem is how it creates and destroys them."

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