Am I Right?

How to live ethically

Creative Destruction

Nothing works as thoroughly or relentlessly as capitalism does

Newt Gingrich's attack on Mitt Romney's role as a businessman is understandable but strange coming from a fellow Republican. All the Republicans vie to lead the country make to prosperity by the promotion of unfettered, deregulated, pure capitalism.

Romney, a billionaire plus, defends his actions at Bain as having created 100,000 jobs. Baloney, says Gingrich. Romney is a corporate raider. The Wall Street Journal writes that more than 20% of the firms Bain invested in went bankrupt within eight years and some of those
that stayed in business engaged in severe downsizing.

How does Romney defend himself? On the stump he rhetorically deflects the arguments, but he is straightforward in his book No Apology. There he explains what he does (and what capitalism does so well) as creative destruction.

Romney didn't create the term. He borrowed it from free market economists, who took it from mid-twentieth century economist Joseph Schumpeter. Schumpeter himself got it from Karl Marx. While the emphasis in meaning has shaded over the years, the basic metaphor is correct: Capitalism unleashed uproots the old economic with creative approaches.

Find a Therapist

Search for a mental health professional near you.

Nothing works as thoroughly or relentlessly as capitalism does. Daily our lives are faced with novel ways of doing different tasks, with new products that even science fiction writers have a hard time predicting.

Innovation is the way of capitalism. It ploughs under what stands in its way. This is all to the good if the extent of the destruction is the replacement of one product with another (the TV for the radio).

Capitalism also turns over the social order and here is where the Republicans today are tripping over themselves. You cannot support both unleashed capitalism and a stable social order. Along with new products come new ways of doing things; along with new ways of doing things come new ideas.

Capitalism isn't a conservative process (conserving what we have). Romney is right: it is creative destruction.

In the wake of this creative destruction is the long trail of people whose lives have been unturned, overturned, gone under and marginalized. While in the long run it may be that many more will prosper than suffer, that doesn't help those who live not in the long run but today. Nor does it help everyone. It may create more good than harm but harm there will be.

And that's where compassion, concern, social justice and ethics play a role. Those hurt by the destruction can't be neglected. Those who prosper and a system that touts its virtue by its success cannot be blind to the destruction that it also causes.

Maturity and morality requires taking responsibility for your actions. You can't take the good and forget about the bad (although there are strong psychological reasons why we do this). There are also strong psychological reasons why we insist on a sense of fairness.

So while Romney is right that he was acting like a proper capitalist,he is wrong in neglecting to point to the role that society has in helping those who have been in the way of the destruction he helped bring about.

Arthur Dobrin, D.S.W., teaches applied ethics at Hofstra University. He is the author, coauthor, and editor of more than twenty books.

more...

Subscribe to Am I Right?

Current Issue

Let It Go!

It can take a radical reboot to get past old hurts and injustices.