Times are tough all around the world these days. In the U.S., quantitative easing and government spending continue to be sold to the public as the way out of the current economic doldrums. They are abstract and complex financial measures, carried out within the machinery of the bureaucracy, unseeable, as if we are waiting for the Great Oz to float down in his balloon and save us from the Wicked Witch.
Listening to the talking heads on CNBC drone on about the Federal Reserve one morning, I dimly remembered the name Joseph Schumpeter from my college Econ 101 textbook. Schumpeter, an economist in the first half of the 20th century and a rival of John Keynes, wrote that innovation, which Schumpeter famously labeled “creative destruction,” produces economic growth. Capitalism, said Schumpeter in 1942 in Capitalism, Socialism and Democracy, “…incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”