Creative Destruction

Our current financial crisis is painfully demonstrating countries may be separate geopolitical entities but national borders drawn on a map fail to protect that which is interconnected and interdependent. However, the lesson that these big, complicated, reactionary, abstract “things” called “markets” effect the lives (and future) of nearly everyone, save the hinterland nomadic or truly socially isolated communities such as some monastic models, still needs to be grasped by many.

Schumpeter’s “perennial gale of creative destruction” echoes loudly, to discordant rhythms. We watch the status quo destroyed and brains become overwhelmed by the variables that make up the freshly created. Blame and fault assigned and dodged as class hatred surfaces. Class hatred that assumes it’s only a problem for greedy free-market capitalists and corrupt CEOs.

The city that pays my son’s wages relies on tax receipts to pay them. Those tax receipts will suffer a measurable contraction due to what all assume will be a recession of some significance. The state retirement fund that pays my husband’s retirement has lost a great deal of its value with the sell-off on Wall Street.

A dollar spent (or lost) can never be spent (or held) again; instead, we have to replace it with a newly earned dollar. When we purchase our tank of gasoline we can never again spend those same dollars. The money used (and freshly minted) by governments around the world to stem the financial crisis will not be available to fund other needs, some of which are critical needs that directly affect the day-to-day lives of average citizens and residents, and some of which assist those who exist within already very precarious conditions.

Governmental and non-governmental aid programs will contract along with the recessionary global economy, program contractions occurring as needs expand. The two billion people around the world who live in poverty will likely see more added to their ranks. Of course, affects will be greater or lesser dependent on region but effects will still occur.

Public health programs in developing countries are under pressure from the World Bank to switch to market-based providers. ¹ I found myself wondering if the World Bank’s promise to “help” with new loans to prop up economies will come with yet further demands to reform [read that close down] public health programs in the countries seeking those promised loans.

When it comes to infectious diseases, just like the world’s economy, borders drawn on a map mean nothing. The health of the residents of Mexican or Hong Kong slums can have a direct and deadly effect on my own in today’s interconnected world. A lesson we should have well learned with SARS arrival on North American soil.

The financial crisis is not just a crisis for free-market capitalists or greedy CEOs, it affects nearly everyone, and it places us all at greater risk, risk that extends beyond our wallets, 401-Ks, and stock portfolios. Real risks even if we choose not to acknowledge them. Risks that won’t go away even if we choose to wrap this crisis up in socioeconomic anger.

Schumpeter’s “creative destruction” presupposes something creative to replace what is destroyed. It also presupposes something better. That’s a lot of presupposing, but we find ourselves with little or no choice. We have to do far better with far less, whether we are successful will be determined at some future date, and that presupposes we even try.

SZ