“São Paulo” por Tarsila do Amaral(1886-1973)

*Por Leonardo S.

Na América Latina, assiste-se atualmente a um rápido avanço da retórica anticapitalista. Países como Venezuela, Bolívia e Equador estão em franco processo de institucionalização de regimes antiliberais, adotando Constituições de fortes tons marxistas. No Brasil, intelectuais argumentam que o capitalismo é um sistema naturalmente excludente, que, mesmo quando permite sucesso econômico, falha em promover a igualdade social. As críticas são ilustradas por afirmações que ressaltam problemas comuns aos vários países da região, como a excessiva concentração de renda. Mas, será que os problemas levantados são fruto do sistema capitalista?

Para ajudar na defesa dos valores liberais, recorramos às idéias do economista austríaco Joseph Schumpeter, a respeito do capitalismo. Por irônica coincidência, Schumpter nasceu em 1883, ano da morte de Karl Marx, crítico feroz dos ideais capitalistas. Esse também foi o ano de nascimento do brilhante John Maynard Keynes, defensor da intervenção estatal na economia.

Para Schumpeter, o capitalismo é como “Um vendaval perene de destruição criativa”. As pessoas que mantêm esse vendaval soprando são os empreendedores, homens e mulheres de negócios que criam empresas, as quais espalham riqueza para amplas parcelas da população. Embora isso possa parecer utópico, é interessante ressaltar que parte significativa do crescimento econômico brasileiro deveu-se ao processo industrializante ocorrido no País, a partir do início do século XX. Os benefícios sociais desse processo, para parte significativa da população, foram muitos, como o surgimento de oportunidades de emprego melhores e mais diversas que as passíveis de serem oferecidas pela economia agroexportadora herdada do período colonial.

Schumpter também argumentava que a inovação está no centro da dinâmica capitalista. Os empreendedores, termo popularizado por ele, realizam a tarefa de mover recursos de setores cambaleantes da economia para novos setores, nos quais podem ser melhor utilizados. Para o austríaco, um inovador pode surgir em qualquer lugar, tanto em uma empresa quanto no dormitório de uma universidade. A revolução da internet prova o acerto da visão de Schumpeter, com novos empreendedores construindo impérios, como o Facebook, em tempo exíguo, e empresas aparentemente consolidadas sendo varridas do mapa. Quem se lembra do navegador Netscape? Provavelmente, quase ninguém.

Uma das preocupações de Schumpeter era que, para funcionar, as empresas dependem do que ele denominou de uma “complexa ecologia”, como o mercado de ações. Se essa “infraestrutura” for abalada, o sistema pode parar. Assim, ele temia a possibilidade de burocratas e intelectuais tentarem frear o selvagem espírito capitalista ou de empresários estabelecidos associarem-se a políticos, a fim de evitar o surgimento de novos concorrentes. Quando consideramos o movimento de implantação do socialismo na América Latina, limitando a propriedade privada e a livre iniciativa, e os sucessivos escândalos envolvendo empreiteiras e políticos, as preocupações de Schumpeter parecem muito atuais.

Ao menos na Europa Ocidental, valores capitalistas, como a livre iniciativa e a propriedade privada, tiveram muito sucesso em criar sociedades mais ricas e igualitárias do que as sociedades socialistas da Europa Oriental e da América Latina. Basta comparar as duas Coréias, em termos econômicos, sociais ou educacionais, para verificar que essa afirmação não carece de sentido. Mesmo o país central do mundo comunista, a União Soviética, ruiu sob o peso da ineficiência econômica. Como ficou patente quando da queda da Cortina de Ferro, a pobreza se havia generalizado entre a população, enquanto uma pequena elite de burocratas, militares e intelectuais gozavam de privilégios inimagináveis para o cidadão comum.

Assim, pobreza e desigualdade não parecem ser característica do capitalismo. Não é por acaso que a China somente passou a desfrutar do crescimento econômico que tirou milhões da pobreza, quando adotou práticas capitalistas, em certas partes do país. As raízes da pobreza e da desigualdade na América Latina não estão, assim, na propriedade privada ou na livre concorrência. Elas estão consolidadas em estruturas sociais e mentalidades herdadas dos períodos coloniais desses países. Essa herança, tão estudada por historiadores, sociólogos e geógrafos, parece carecer exatamente dos valores liberais que fizeram o progresso, embora com altos e baixos, dos países capitalistas.

• Wohlstand ohne Wachstum? Gelingt die Quadratur des Kreises?

• Wachstumsbeschleunigungsgesetz versus Grundeinkommen

• Petiton, hilfreich für ein emanzipatorisches BGE

• „Geld – her damit“: Andreas Sauter und Bernhard Studlar verzweifeln in Oldenburg an der Finanzkrise

_skywalker_

„Wachstum = Ein Prozess schöpferischer Zerstörung.”

Joseph Alois Schumpeter (1883 – 1950)

This is the last part of a series I wanted to do to look at countries that have had debt crises in the recent past.  The first one was obviously Japan, but I also wanted to explore other plausible scenarios.

And that led me to Thailand.  The Asian debt crisis in ‘97 is widely assumed to have started in Thailand, with real estate and bad loans (and I’d bet even worse underwriting) being the issues that led the Thai government to eventually float the Thai bhat.  Are you sensing a theme, here?  Sloppy underwriting, real estate speculation, should I go on?

At any rate, I wanted to look at Thailand because after the 3.5% GDP print, it became evident we could be dealing with a shift in aggregate output (i.e.  actual GDP & potential GDP).  Here’s a chart of Thailand’s GDP, post debt crisis:

I drew in the dotted lines to show you the changes in the trajectory of GDP.  It keeps shifting lower and to the right.  Which means the economy as a whole is less & less productive and standards of living are not rising like they were in the past.  In fact, they could be falling.  But what about unemployment?

And of course, there’s the labor force to consider:

So you have more people working and their economy is producing less.  All the while the government is taking on more & more debt:

To explain, this chart is a moving 12-month total of net lending/borrowing  by the Thai government.  A line at 0 would mean the government was balanced – neither a saver nor a borrower – just a conduit.  But as you can see, they’ve tended to be a net borrower.

Just like us.  Actually that’s wrong.  The Thais may be a debtor nation, but we wrote the playbook and the appendices on how to do it.

So, after looking at Japan and Thailand, what do we come away with as big picture macro themes if our recovery follows one of the two? 

If it’s Japan, we tread water in terms of aggregate output, unemployment rises and goes higher because of improving efficiency while the nation continues to age (the retirement of the baby boomers is imminent), all the while the government continues to spend money it can’t recover (persistent and rising deficits).  Sovereign credit ratings will be impacted at some point, yet the Yen hasn’t collapsed – yet.  Probably because domestic demand for Japanese gov’t. bonds (JGBs) has forced Yen to be brought back to Japan and put to work in JGBs earning 100bps.

If it’s Thailand, the economy grinds higher in terms of aggregate output, but at lower and lower rates of efficiency and standards of living improve at lower rates over time.  The labor force may continue to expand, and in my mind that one fact seems to be the difference maker between stagnating GDP and expanding GDP, albeit with a significant shift from its previous growth path. 

Neither outcome is certain, but both are certainly ugly.  Both certainly speak to a more activist government in the economy, and innovation and new business creation that gets stifled at a minimum.  And since small, private businesses are the backbone of job creation and provide the spark for innovation, that doesn’t bode well for our future economic landscape.

It’s time to break out the Schumpeter and read about the benefits of creative destruction and the entrepreneurial spirit…

If Schumpeter should be summed up with one adjective, “creative” is the most suitable one. And this is why he ranks higher than Kirzner in my view. While Kirzner is by-and-large right about most things, his creativity is more incremental and his interests more limited.  Schumpeter, on the other hand, was wrong about a lot of things, although sometimes it is difficult to tell whether he was just plain wrong or if he drew erroneous conclusions for ironic purposes.

I think that what most characterizes creative people is their ability to combine apparently distant ideas, theories, or approaches. Schumpeter was a master of such creative combinations. If one looks at his two most famous works-The Theory of Economic Development and Capitalism, Socialism, and Democracy – it is clear that there are four recurring components that are combined in different proportions in Schumpeter’s thinking: dynamic Austrian economics; Walrasian equilibria; Nietzschean notions of ubermenschen; and Weberian sociology. To this stew, Schumpeter added his own brands of ironic pessimism.

Needless to say, I’m skeptical – to say the least – about some of these components. But all are actually needed to produce a coherent theory. Without entrepreneurial heroes, it is difficult to see how the “circular flow” can be rescued from the destruction of a continuous swarm of local entrepreneurs; it is also difficult to see how anything approaching equilibrium can ever be approximated in an industrialized economic system. Likewise, the supposed “efficiency” of bureaucratic, large-scale entrepreneurship depends on the existence of a superior class of innovating supermen who can be put in charge of corporate decision-making.

But even though I don’t believe in supermen or circular states (in a post-agricultural economy) or share the Weberian faith in bureaucracy, I still think that Schumpeter’s contributions represented real progress. He was the first one to give us a coherent theory of entrepreneurship, where entrepreneurs are (correctly) understood as the creative-destructive agents that cause economic development and introduce innovations into the economy. The theory is both evolutionary and based on the implicit recognition that individuals have to interpret economic data; they are not simply given as unambiguous and universally recognized bits of information. Indeed, it is Schumpeter’s focus on innovation and suboptimal equilibria – rather than arbitrage and optimal equilibria – that makes his theory more satisfying than Kirzner’s later attempt, in spite of also having more blatant shortcomings.

Another fascinating aspect of Schumpeter’s writings is that he reveals himself both as a conservative and as a pessimist. His most well-known conclusion is that socialism is inevitable. But unlike socialists with this belief, Schumpeter thought that the inevitability of socialism is as inspiring as the inevitability of death. The historian Jerry Z. Muller (The Mind and the Market , 2002, p. 294) points to Pareto’s influence on Schumpeter:

“In attempting to account for the appeal of socialism, Schumpeter … borrowed from … Pareto. Pareto’s 1901 essay … conveys two themes to which Schumpeter would return time and time again: the inevitability of elites, and the importance of nonrational and nonlogical drives in explaining social action. Pareto suggested that the victory of socialism was “most probable and almost inevitable.” Yet he predicted [that] the reality of elites would not change. It was almost impossible to convince socialists of the fallacy of their doctrine … since they were enthusiasts of a substitute religion. In such circumstances, arguments are invented to justify actions that were arrived at before the facts were examined, motivated by nonrational drives.”

Schumpeter considered the capitalist system superior to its alternatives, as Muller (2002, p. 306) also explains:

“Schumpeter was skeptical of …  antitrust … What those who criticized monopoly in the name of free competition failed to understand was that it was in the very nature of dynamic capitalism to produce high, “monopoly” profits for those who were the first to innovate successfully, [thus] large firms had to continue to innovate or face decline …. the interpretation of the Depression by intellectuals had led to a “radicalization” of the public mind in the United States, which in turn had resulted in policies that left capitalism in shackles.”

A very interesting assertion of Schumpeter’s was that even if the proponents of capitalism manage to succesfully defend capitalism against one of the charges raised against it – for example that decentralized planning is less efficient than central planning – it is inevitable that the critics will find some other argument that becomes as important as the refuted argument had been previously. According to Schumpeter, the fact remains that intellectuals and many others do not like capitalism on the basis of their unexamined and irrational subjective judgments.

Although I am not as pessimistic as Schumpeter, I think we can now agree that he was prescient about the difficulties faced by the defenders of free markets. There is now a general agreement that markets work better than Soviet-style central planning. But there is no shortage of people who (erroneously, in my view) believe that the current financial crisis was caused by free markets rather than government regulations and subsidies, and an even greater number of people who think that markets are bad for the environment (in spite of the positive correlation between air/water pollution and the absence of clearly defined private property rights).

Film Industry As Venture Capital Project

In case you’re wondering why film projects fail in the market, here is a quick answer: they fail because the risks are high as well as the rewards. In that sense, each production vehicle is like a venture capital vehicle. If they were high reward low risk, there’d be a lot more of it happening. It’s the nature of high risk that the majority fail, but you stand to make a mint when you get a hit. Which is to say, it’s a little bit like venture capital.

Here’s something to consider from The Economist about Venture Capital:

Too many politicians treat entrepreneurship as yet another gravy train. Norway squandered much of its oil wealth investing in new businesses that were founded by the relatives of politicians and bureaucrats. Policymakers are also lax when it comes to designing venture funds. They try to insulate them from risk or allow public investments to crowd out private ones. The Canadian government’s experiment with venture capital failed because the Canadian Labor Fund Program had so much money that it frightened off private venture capitalists, while earning mediocre returns itself. New Zealand’s government, in contrast, did much better because it invested public money in private funds.

Mr Lerner points out that two foolish tendencies are particularly hard to resist when politicians are struggling with high unemployment. The first is the temptation to spread the wealth around to every region and interest group. France’s attempt to transform Brittany from one of its more backward regions into a hive of high-tech activity failed dismally for an obvious reason: entrepreneurial firms cluster in particular places. The second is a suspicion of foreign investors. The Japanese government lavished money on start-ups in the 1990s but was reluctant to embrace foreign venture capitalists. Japan now has one of the rich world’s weakest venture-capital markets.

Levantine wiles
The country that has led the world in promoting entrepreneurship has also done the most to plug itself into global markets. The Israeli government’s venture-capital fund, which was founded in 1992 with $100m of public money, was designed to attract foreign venture capital and, just as importantly, expertise. The government let foreigners decide what to invest in, and then stumped up a hefty share of the money required. Foreign venture capital poured into the country, high-tech companies boomed, domestic venture capitalists learned from their foreign counterparts and the government felt able to sell off the fund after just five years.

Last year Israel, a country of just over 7m people, attracted as much venture capital as France and Germany combined. Israel has more start-ups per head than any other country (a total of 3,850, or one for every 1,844 Israelis), and more companies listed on the NASDAQ exchange, a hub for fledgling technology firms, than China and India combined. It may not have the same comforting ring as “the Swedish model” or “the polder model”, but when it comes to promoting entrepreneurship, “the Israeli model” is the one to emulate.

That seems to indicate that if there genuinely is talent in Australia, then the government *should* necessarily let Hollywood invest in Australia freely and put their own cash into it, after Hollywood has picked which projects they want to make. So instead of having Screen Australia, you would invite development people from Hollywood to pick projects they want to make. When they pick the projects, then the Australian Government’s film fun would directly invest in the films as a partner.

This would take out the current idiocy of Screen Australia getting itself involved with development and creative input. The point is, Screen Australia *can’t* know what the market place is demanding, what is going to sell, what the other projects in development are and how it impacts what is in Australia. Of course, it won’t happen because

• it makes too much sense
• it would seriously put those film bureaucrats out of work
• too many Yank-hating nationalists would reject the idea
• too many Commercialism-hating communists and socialists would reject the idea

Yet, that’s the logical step if they want Australian creative content on the big screen. We just can’t do it any more on a world scale. We may as well face up to that reality, even if it hurts. At the same time, it would be exactly the same free market that everybody in America has to toil under. And that would be all the Australian film producers an directors and writers would want – an equal footing, fair shot.

All the same,  it might be the case that Australia is simply too far away from the cultural hub of cinema, and that no amount of investment will help. In any case, it’s celar whatever Screen Australia’s doing, ain’t working. Try this:

Film Crew Victoria Closes Up Shop

One of the three crew agencies in Victoria are shutting up shop according to Screen Hub.

Film Crew Victoria, one of the state’s three crew agencies, has announced that it will close its business on 13 November, potentially leaving crew without representation. Principal Michelle Wells cited “the current economic climate, declining membership rates, unpredictable production levels, tight cash flows, increasing operational costs…” as being behind the decision to close.

She told Screen Hub that the decision to close was “heartbreaking, you feel that you’re letting people down”, but that the agency was no longer financially viable.

Barry Woodhouse from Picture People Crew Agency said that “It’s quite a blow really, a lot of people are going to be left hanging.” The situation is potentially more acute because Picture People specialises in corporate and television, leaving only one Victorian agent, Freelancers Promotions, covering feature film and general production.

He agreed with Michelle Wells that production – even in television – was down in Victoria. “FremantleMedia has been doing a lot out of Sydney, Melbourne has been sort of kept in the dark.” The television production that Melbourne was seeing was smaller. “They’re not throwing big budgets at them, we’re talking three man crews, a lot of my crew are working on these things, they’re very plain, there’s not a lot of budget.”

Yeah, sounds like the industry is really thriving… Not.

The title of this post consists in one of the subjects presented during a seminar I attended today (UPDATE 4, by Infonomia). I’m mentioning it here because I think it is very powerful, and expresses an interesting approach for the context we’re living right now.

What does it mean? It means to apply the State capacity and its investment power and, simultaneously, to trust and leverage the energy of entrepreneurs. That is, it’s necessary to invest in roads and in trains as well as to foster the creative destruction and its innovative wave. This integrated (or hybrid) approach will generate wealth and employment, and disrupts the tradicional economic approaches, either predominantly keynesian or predominantly shumpeterian.

Le magazine hedbomadaire The Economist* a maintenant une nouvelle chronique intitulée “Schumpeter” en l’honneur de l’économiste Joseph Schumpeter, connu pour sa fameuse théorie de la destruction créatrice.

Voici un résumé de cette théorie (Wikipedia):

Les crises ne sont pas de simples ratés de la machine économique ; elles sont inhérentes à la logique interne du capitalisme. Elles sont salutaires et nécessaires au progrès économique. Les innovations arrivent en grappes presque toujours au creux de la vague dépressionniste, parce que la crise bouscule les positions acquises et rend possible l’exploration d’idées nouvelles et ouvre des opportunités. Au contraire, lors d’une période haute de non-crise, l’ordre économique et social bloque les initiatives, ce qui freine le flux des innovations et prépare le terrain pour une phase de récession, puis de crise.

La destruction créatrice désigne le processus de disparition de secteurs d’activité conjointement à la création de nouvelles activités économiques.

Les récessions exposent les faiblesses de certains modèles d’affaires vétustes, elles créent de nouvelles opportunités et tuent les mauvaises habitudes, laissant le champs libre aux nouvelles idées innovatrices. Les facteurs de productions peuvent être achetés de ceux qui les utilisent mal par ceux qui les utiliseront mieux.

Les exemples sont nombreux.

DuPont a investi massivement en recherche et développement et a engagé des scientifiques qui étaient au chômage durant la Grande Dépression.  Vers la fin des années 1930s, 40% de ses ventes provenaient de produits qu’elle avait développé durant la dépression, tels que le nylon et le caoutchouc synthétique.

Les entreprises qui ont pris leur envol durant la Grande Dépression sont nombreuses, incluant Revlon, Hewlett-Packard, Polaroid et Pepperidge Farms.

C’est quand l’Union Soviétique s’est effondrée, plongeant la Finlande en sérieux problèmes économiques, que Nokia a décidé d’abandonner 90% de ses lignes d’affaires pour se concentrer sur les télécommunications, surtout sur la téléphonie sans-fil, industrie dont elle est devenue l’un des leaders.

Une étude de Bain Capital Group sur la période 1985-2001 a démontré que les fusions/acquisitions réalisées durant les récession ont généré un rendement environ 15% supérieur à celles faîtes durant les périodes de croissance économique.

La Fondation Kauffman, laquelle étudie l’entreprenariat, mentionne que la moitié des entreprises du Fortune 500, incluant FedEx, CNN et Microsoft, ont été fondées soit durant des récessions ou durant des périodes de faiblesse économique. La plupart de ces entreprises sont apparues à partir d’idées qui ont révolutionné leur industrie.

Comme le disait Schumpeter: “The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process.” Imaginez l’efficience et la superbe complexité de la sélection naturelle appliquée à l’économie. Imaginez la chauve-souris sans son système de guidage ultra-son, la giraffe sans son long cou pour atteindre les feuilles élevées, le caméléon sans son camouflage, une araignée sans sa capacité à tisser des toiles ou le hérisson sans son système de défense. Ces “innovations” sont le fruit de l’évolution sous la pression de l’environnement; de la compétition pour la survie.

La destruction créative ne fonctionne pas dans une économie socialiste. L’État y a le monopole et n’a aucune pression compétitive pour stimuler l’amélioration de la productivité par l’innovation. C’est ce qui a été observé en Union Soviétique après la chute du rideau de fer. On y a observé de la machinerie agricole fonctionnant avec des moteurs à vapeur développés dans les années 1920s.

L’industrie pétrolière Soviétique fut aussi un cas spectaculaire démontrant ce qui se produit en l’absence de destruction créative. Les technologies utilisées dans les années 1980s dataient des années 1950s, et ce allant du simple outil de forage jusqu’aux activités de raffinage. Le matériel de forage était primitif; incapable de dépasser 3,000 pieds sans se briser (ce qui est un problème majeur lorsque la plupart des gisements restants dépassaient cette profondeur).

En somme, s’il y a un côté positif dans une récession, c’est bien la destruction créatrice. Celle-ci est un moteur d’innovation et d’amélioration de notre niveau de vie. C’est pourquoi il faut s’opposer aux plans de relance et aux bailouts, lesquels agissent comme du sable dans l’engrenage de la destruction créatrice et du capitalisme. Les gouvernements pensent que par leur interventionnisme, ils peuvent enrayer les cycles économiques, comme le suggérait Keynes. Ce faisant, ils ne font que les amplifier!

Il est certain que la destruction créatrice crée du chômage temporaire. Les travailleurs dont les compétences sont rendues obsolètes par une innovation technologique entrent dans une période de transition où l’on verra ces ressources humaines être allouées à d’autres activités dans l’économie. La mobilité des travailleurs n’étant pas parfaite, cette transition est parfois difficile, mais c’est le prix à payer pour le niveau de vie duquel nous bénéficions grâce au capitalisme.

Il serait stupide de stopper l’innovation et le progrès au nom de la protection de ces emplois archaïques. C’est pourtant ce que l’on fait lorsque l’on empêche le libre-marché de fonctionner.

En terminant, voici une excellente illustration de ce phénomène, tirée d’un article de W. Michael Cox et Richard Alm:

*Référence: The Economist, 3 octobre 2009, p. 82.

After setting himself up for a major embarrassment as we head towards Bernanke Crash II, he amazingly writes about the importance of innovation:
An important aspect of any economic expansion is the role innovation plays as an engine of economic growth. In this regard, the most important economist of the twenty-first century might actually turn out to be not Smith or Keynes, but Joseph Schumpeter.
One of Schumpeter’s most important contributions was the emphasis he placed on the tremendous power of innovation and entrepreneurial initiative to drive growth through a process he famously characterized as “creative destruction.” His work captured not only an economic truth, but also the particular source of America’s strength and dynamism.
This as President Obama wants to choke off innovation by propping up the old and suffocating creativity through new regulations everywhere you turn, from health care to global finance. And, as there is a growing deficit and talk of new taxes, which will result in less money for new ideas.

In June we published four essays marking the centenary of the birth of Maynard Keynes. A number of readers asked for an article on 1983’s other centenarian economist, Joseph Schumpeter. Here it is.

The centenary of Joseph Schumpeter’s birth has not brought forth an avalanche of academic tributes and retrospectives. There is no Schumpeter industry to compare with the one on Keynes. No pop biographies. No “Schumpeter and the Post-Schumpeterians”. Yet his academic reputation at the height of his powers was of the same order, and the impact of his analysis continues to be strongly felt.

His own aspirations were immodest: to be the greatest lover in Vienna, the best horseman in Europe, and the greatest economist in the world. In his Viennese youth he owned a notable stable of horses. And though only Mr Valáry Giscard d’Estaing, as president of France, was unwise enough to hint at a personal league table of economists in nominating his prime minister Mr Raymond Barre as “le meilleur economiste de France”, Schumpeter in his prime was undoubtedly there or thereabouts. History is silent on the first point.

Although thought of as Austrian (indeed he was Austrian finance minister at one time), Schumpeter was born the son of a textile manufacturer in what is now Czechoslovakia. But he was only four years old when his father died in 1887, and his mother went on to marry a Viennese general, thus providing a launching pad for young Joseph into the society of the capital.

He never entirely lost the faintly aristocratic demeanour acquired in late-imperial Austria-Hungary, a feature which added to his charisma in inter-war Harvard. For it was in the United States that he made his lasting reputation as an economist, writing voluminously, for the most part in English, on a wide range of subjects. At Harvard he influenced many generations of students, including Professor Paul Samuelson, whose doctoral dissertation he supervised, and who became an important disseminator of Schumpeter’s ideas.

The range and spread of his work was startling. He made significant contributions to analytical methodology, emphasising the critical importance of marginal analysis. He evolved a theory of business cycles, pondered what he called “fiscal sociology”, and had an overriding vision of the collapse of the capitalist system.

It is important to note, and often disregarded, that the depression of the 1930s, which did influence his thinking in other ways, was not central to his thesis of capitalist collapse. Although the seminal work incorporating this vision, “Capitalism, Socialism and Democracy”, was published in 1942, his prophecies of doom were first heard in the mid-1920s when there seemed no limits to growth. Schumpeter’s analysis of what he saw as the destructive internal dynamic of capitalism has since exerted a powerful fascination over impressionable minds.

Monopoly man

A cornerstone of Schumpeter’s economic theory is the notion that monopolies assist economic growth. Conventional theory had always argued that monopolies overcharge, underproduce and extract surplus profits. Schumpeter maintained, rather, that monopolies, with their economies of scale and ability to innovate, were in fact the handmaids of growth.

The economics profession is still divided on the point. On the one hand, Harberger’s triangle—in which the surplus profits are supposed to lie—is hard to measure and certainly small. Recent research in the United States puts it at no more than half a percent of gross domestic product. On the other, the innovative capacities of multinationals are uncertain. They are regularly accused of suppressing the development of products damaging to their market franchises.

Schumpeter’s originality lay, however, in the way in which he turned a view of the dynamics of growth into an apocalyptic vision of the end of capitalism—one which, in spite of superficial similarities, at bottom owed little or nothing to Marx. In fact, much of his work was a specific repudiation of Marxist theory. He had no truck with the view that the workers would bring the structure crumbling down; the proletariat is noticeably absent from his analysis. And though he saw a form of socialism as the likely next step in the evolution of western political systems, he did not believe that a socialistic state would necessarily be driven by notions of equality; simply that the state would make production decisions.

What emerged would be “an order of things which it would merely be a matter of taste or terminology to call socialism or not”. Like Marx he was concerned with developing a dynamic theory of the evolution of capitalism, rather than an exact description of the workings of a socialist state. Unlike Marx he saw the erosion and obsolescence of the entrepreneurial function as central to the contradictions of capitalism.

The core of Schumpeter’s argument is straightforward:

•Capitalism is a dynamic process of wealth creation and change, driven by technological innovation. But this innovation is necessarily destructive of what has gone before; there blows a “perennial gale of creative destruction”.

•But—and here Schumpeter was seriously at odds with the views of his colleagues—the innovative process is encouraged by monopoly which, he believed, had come to be “the most powerful engine…of the long-run expansion of total output”. Only within monopolistic or quasi-monopolistic structures could the right atmosphere of risk-taking prevail.

•The concomitant of this is that big, monopolistic corporations will come to dominate economic life. Because of their necessarily bureaucratic structure, however, they will constrain innovation and become open to criticism.

•Thus, at last, the process turns upon itself. The “critical frame of mind…after having destroyed the moral authority of so many institutions, in the end turns against its own”. The modern corporation, “although the product of the capitalist process, socialises the bourgeois mind; it relentlessly narrows the scope of capitalist motivation…(and)…will eventually kill its roots”.

For Marx, economic forces would come to destroy the political and social superstructure of capitalism. In Schumpeter’s world, the process works in reverse. The social justification for capitalism is eroded by growing hostility towards the cultural conditions of an advanced capitalist state. The political foundations are enfeebled as neo-capitalist groups—the artisans, the petty bourgeoisie—are driven out of an economic system which has no further use for them. This evolving disenchantment is given coherent form by the intellectuals, constantly criticising the state for its importance to rectify the manifest wrongs of the system, a rerun of the trahison des clercs.

Prophecy undone

Things don’t seem to have turned out that way. To be fair, Schumpeter did not offer a set timetable for his Götterdämmerung. When pushed, he tended to talk vaguely of the next century or so. But his analysis looks less persuasive today. In part because the major multinationals—the best of them at least—have managed to pull off the trick of being vast and innovative at the same time. IBM, for example, stays ahead of the field by creating an environment that encourages experiments and risk-taking

Schumpeter himself never developed a theory of multinationals’ behaviour, believing that they would have little influence on state policy. This can now be seen as a lacuna in his work.

There are other weaknesses to which more recent critics draw attention. He assumes one particular development of capitalism. He forecasts, in fact, that the internal dynamic will carry all before it, that nothing will stop or hinder the process of wealth creation before it consumes itself. In the event, the road from 1942 has been rocky, with inflationary upheavals and the creation of rival monopolies among suppliers of labour—never a key element in the Schumpeterian world-view.

In nearly every capitalist country, moreover, the free market has sat down with the regulators. A new order of controls—not as irrational as its feudal or aristocratic predecessors but tiresome none the less—has been established, giving the entrepreneur enough to rail against without turning on his own kind, and altering the character of the dialogue between the state and business.

Few would now maintain that the necessary outcome of frustration with the imperfections of capitalism is the advent of state socialism. Even arguing from within the confines of Schumpeter’s own ideas, centrally planned socialism today is far more inimical to the critical frame of mind that is the multinational.

But this is hard on a man who died in 1950, and the essence of whose theory was first adumbrated 25 years before that. Judgements based solely on the way the world looks at the end of 1983 could be less durable than his own. A similar article in 1969 might have dwelt on his prescience in forecasting intellectual dissent and alienation from Paris to Berkeley. Had he survived that long, there is little doubt that he would have made a more charismatic and coherent guru than Marcuse. There would have been more champagne than cannabis, maybe, but more sense too.

Zero-sum state

To a present-day reader, the most striking features of Schumpeter’s thinking remain its rigour, novelty and clarity. His synthetic skills were outstanding. The breadth of his understanding, the confidence of his grasp of ideology, philosophy and economic method are still thrilling today. There are few economists now writing who would chance their arms so far. All that said, “Capitalism, Socialism and Democracy” is now a period piece.

This is not so of all his writing. Some of his less popular and accessible work speaks directly to current concerns in the United States and western Europe about the size and scope of the public sector. The quality of debate in Britain about public spending cuts could be transformed if ministers (and their opponents) spent a wet weekend with Schumpeter’s “The Crisis of the Tax State”.

His central thesis is that there is a natural limit to the expansion of the state into new areas of economic activity. But he then argued that

Politically, the message is ambiguous. It can be read as an exposition of the fundamental weakness of the acquisitive society, and he used a variant of the argument—again focusing on the withering away of the wealth-creating urge—to explain the inevitable advent of socialism. But his analysis is similar to that of conservative philosophers who argue for the contraction of the state.

Schumpeter forecast a relentless growth in the public’s demand for governmental services, from basic social provision to intervention in the productive areas of the economy. He saw a finite limit to the state’s ability to respond effectively to these demands. As the state sector grows, in the Schumpeterian analysis it reduces the area of entrepreneurial activity and becomes a dampener on the economy, sucking away funds needed for productive growth. “Crowding out” is the more recent description. The consequence is that the state is soon unable to fulfil the demands on it. Social tension grows as competing claimants on a shrinking pot slug it out in a substitute market-place, peopled by lobbyists, by interest-groups and, eventually, by streetfighters.

The argument is familiar today. But people are no nearer to understanding the precise point at which the breakdown will occur. Some argue that Britain came close to it before the election of a Thatcher government in 1979. Others reply that the economy shrank, public spending rose—yet society has held together, and even re-elected Mrs Thatcher. Politicians and economists trade statistics on the proportion of GDP accounted for by the state in different western economies. Why, the big spenders ask, is 45% insupportable in Britain while the West Germans get along with a similar, even larger, percentage and churn out economic miracles?

Schumpeter believed the answer lay in a close examination of fiscal sociology. He saw taxes as being like club dues, which individuals were willing to chip into a central fund for the general good—though “once taxes exist they become a handle which social powers grip in order to change the structure”. The circumstances in which different levels of taxation are agreed or exacted vary enormously from state to state. Only by understanding the tax history of a society can an economist hope to identify the limits to state growth and the tolerance of public-sector interference in the productive economy. “Public finances”, he said, “are one of the best starting points for an investigation of society”.

This sound advice has been largely ignored by economists. Treatises on the creation of surplus value, the extraction of monopoly profit and the behaviour of stock prices far outnumber those on how the state finances its spending and allocates resources.

In his centenary year, Schumpeter’s preoccupations can be seen to have been the right ones. Innovation and the scope of public finances remain as central as ever to the successful functioning of the mixed economy. The sources of growth are still opaque; his descriptions of the innovative process have not often been bettered. And most countries await their definitive tax historian. His two interests outside economics, women and horses, also still have their supporters—and some would say, remain as dimly understood as the economy.

The Economist, the article was originally published on November 19, 1983.

__________

Full article: http://www.economist.com/businessfinance/displayStory.cfm?story_id=14488855&source=hptextfeature

Teoría: la cadena de valor  (en compartiendo-conocimiento.com)

Otro ejemplo de emprendedor  es Angel María Herrera. Creador de Bubok.com, empresa que ofrece publicaciones bajo demanda.

Siguiendo la estela de Bob Young y su pionera Lulu.com, ambos tratan de explotar el nuevo El Dorado :  “La larga cola (Long tail)”. Veremos en Marketing que con este modelo de negocio se hizo rico  Amazon.

Angel María se ha centrado en el mercado español. El objetivo no es únicamente la descarga en formato electrónico, sino la impresión física tradicional,  como indica en esta entrevista en El País,

“El tiempo medio del proceso, desde que se pide el libro hasta que se entrega, es de quince días. Los precios oscilan según la calidad de papel y la cantidad de páginas entre los 5 y los 24 euros.”

Con estas iniciativas y la apertura de  tiendas virtuales,  el cambio del modelo de cadena de valor en la industria editorial es radical (medida en % del precio final pagado por el consumidor):

Los porcentajes son aproximados, varían en función del poder de negociación de cada eslabón de la cadena: hay autores que cobran 0% por los derechos (otros el 12%), puntos de venta más caros y exclusivos, editores con más poder que otros…

En el caso de la venta por internet, el gráfico puede ser engañoso. El 80% del precio final es en formato electrónico de coste nulo. Si hay que imprimirlo, el porcentaje es sobre el margen de beneficio (una vez descontados los costes de producción).

En el modelo tradicional,  la editorial  asume el riesgo de producir físicamente la obra. En este nuevo modelo se anula ese riesgo, al ser la impresión bajo demanda.

Una vez más Schumpeter y la “destrucción creadora”, progresando la sociedad, con ganadores y perdedores en el proceso.

Na América Latina, assiste-se atualmente a um rápido avanço da retórica anticapitalista. Países como Venezuela, Bolívia e Equador estão em franco processo de institucionalização de regimes antiliberais, adotando Constituições de fortes tons marxistas. No Brasil, intelectuais argumentam que o capitalismo é um sistema naturalmente excludente, que, mesmo quando permite sucesso econômico, falha em promover a igualdade social. As críticas são ilustradas por afirmações que ressaltam problemas comuns aos vários países da região, como a excessiva concentração de renda. Mas, será que os problemas levantados são fruto do sistema capitalista?

Para ajudar na defesa dos valores liberais, recorramos às idéias do economista austríaco Joseph Schumpeter, a respeito do capitalismo. Por irônica coincidência, Schumpter nasceu em 1883, ano da morte de Karl Marx, crítico feroz dos ideais capitalistas. Esse também foi o ano de nascimento do brilhante John Maynard Keynes, defensor da intervenção estatal na economia.

Para Schumpeter, o capitalismo é como “Um vendaval perene de destruição criativa”. As pessoas que mantêm esse vendaval soprando são os empreendedores, homens e mulheres de negócios que criam empresas, as quais espalham riqueza para amplas parcelas da população. Embora isso possa parecer utópico, é interessante ressaltar que parte significativa do crescimento econômico brasileiro deveu-se ao processo industrializante ocorrido no País, a partir do início do século XX. Os benefícios sociais desse processo, para parte significativa da população, foram muitos, como o surgimento de oportunidades de emprego melhores e mais diversas que as passíveis de serem oferecidas pela economia agroexportadora herdada do período colonial.

Schumpter também argumentava que a inovação está no centro da dinâmica capitalista. Os empreendedores, termo popularizado por ele, realizam a tarefa de mover recursos de setores cambaleantes da economia para novos setores, nos quais podem ser melhor utilizados. Para o austríaco, um inovador pode surgir em qualquer lugar, tanto em uma empresa quanto no dormitório de uma universidade. A revolução da internet prova o acerto da visão de Schumpeter, com novos empreendedores construindo impérios, como o Facebook, em tempo exíguo, e empresas aparentemente consolidadas sendo varridas do mapa. Quem se lembra do navegador Netscape? Provavelmente, quase ninguém.

Uma das preocupações de Schumpeter era que, para funcionar, as empresas dependem do que ele denominou de uma “complexa ecologia”, como o mercado de ações. Se essa “infraestrutura” for abalada, o sistema pode parar. Assim, ele temia a possibilidade de burocratas e intelectuais tentarem frear o selvagem espírito capitalista ou de empresários estabelecidos associarem-se a políticos, a fim de evitar o surgimento de novos concorrentes. Quando consideramos o movimento de implantação do socialismo na América Latina, limitando a propriedade privada e a livre iniciativa, e os sucessivos escândalos envolvendo empreiteiras e políticos, as preocupações de Schumpeter parecem muito atuais.

Ao menos na Europa Ocidental, valores capitalistas, como a livre iniciativa e a propriedade privada, tiveram muito sucesso em criar sociedades mais ricas e igualitárias do que as sociedades socialistas da Europa Oriental e da América Latina. Basta comparar as duas Coréias, em termos econômicos, sociais ou educacionais, para verificar que essa afirmação não carece de sentido. Mesmo o país central do mundo comunista, a União Soviética, ruiu sob o peso da ineficiência econômica. Como ficou patente quando da queda da Cortina de Ferro, a pobreza se havia generalizado entre a população, enquanto uma pequena elite de burocratas, militares e intelectuais gozavam de privilégios inimagináveis para o cidadão comum.

Assim, pobreza e desigualdade não parecem ser característica do capitalismo. Não é por acaso que a China somente passou a desfrutar do crescimento econômico que tirou milhões da pobreza, quando adotou práticas capitalistas, em certas partes do país. As raízes da pobreza e da desigualdade na América Latina não estão, assim, na propriedade privada ou na livre concorrência. Elas estão consolidadas em estruturas sociais e mentalidades herdadas dos períodos coloniais desses países. Essa herança, tão estudada por historiadores, sociólogos e geógrafos, parece carecer exatamente dos valores liberais que fizeram o progresso, embora com altos e baixos, dos países capitalistas.

J.A Schumpeter (1883-1950) dió en el clavo:

Al innovar se crea riqueza y progreso. Las estructuras antiguas y obsoletas se  destruyen y se crean otras nuevas. Es el famoso “proceso de  destrucción creadora”.

Tema 1. Empresario innovador.

En el S. XV Gutenberg con su imprenta creó una nueva estructura empresarial. Unos perdieron su negocio y su empleo, otros se hicieron ricos muy rápido…Pero la Humanidad mejoró con el cambio y el mundo editorial no ha parado de crear riqueza y empleos desde entonces.

Hace unos meses, el siguiente aparato irrumpió en los telediarios:

“Express Book Machine”

El “angelito” fabrica un libro de papel (a partir de un PDF), en 4 minutos ( 300 páginas con portada a color). El precio medio puede ser de 6€, con un ganancia para el librero de 2€  (33%) .

Google ya se ha aliado con la empresa fabricante, para ofrecer sus 1,6 millones de libros…

Esta innovación volverá a traer el “proceso de destrucción creadora”. Desaparecerán parte de la industria de edición y distribución obsoleta, y se creará una nueva estructura más eficiente. Unos ganarán y otros perderán, pero el sistema facilitará el acceso a la cultura, y se evitará el despilfarro de la tala de millones de árboles, para producir millones de libros que se editan, nadie compra y se devuelven (actualmente se estima que sobre el 80% de los libros que llegan a las librerías).

]]> http://upsetpatterns.wordpress.com/2009/09/17/economist-launches-schumpeter/ Fri, 18 Sep 2009 03:41:30 +0000 W. Jerome http://upsetpatterns.wordpress.com/2009/09/17/economist-launches-schumpeter/

The Economist is launching a new column on business and management called Schumpeter.

Joseph Schumpeter coined the phrase “creative destruction”, which describes capitalism’s process of radical innovation to improve the lives of the masses.

Uno de los economistas, teóricos políticos e historiadores más influyentes del siglo XX es, sin lugar a dudas, J.A. Schumpeter. Aunque aparentemente su doctrina política no presente un hilo conductor directo hacia la economía y su corriente austriaca, se puede encontrar un cuerpo coherente de principios en la ideología de este economista en relación a su dominio de pensamiento, a saber, economía, matemáticas, historia, filosofía y teoría política. En mi opinión, su mayor contribución al campo académico ha sido la obra ‘Historia del Análisis Económico’, obra inacabada y publicada después de su muerte. No por ello la amplitud y vasta erudicón vertida se opaca sino todo lo contrario, la densa atmósfera provocada por su estilo va acompañada de constantes referencias a otras obras, precisiones y una sistematización admirable.

En esta ocasión me gustaría compartir uno de los documentos que sirvió como ensayo previo a la redacción de aquella su última obra, me refiero al Economic Doctrine and Method, publicado por la Oxford University Press en New York, año 1954. Espero que sea de gran utilidad para aquellas personas interesadas en la indagación histórica de las doctrinas económicas pues el pensamiento de Schumpeter sigue vivo y ha influido an gran medida a los contemporáneos del tema como Screpanti, Rima, Meikle, etc.

Descarga de este link:

http://www.mediafire.com/?je2zjitzmmn

Fonte: www.quirinale.it

Mi scuserà l’avv. Bochicchio se oso affermare che la sua dotta disquisizione su MilanoFinanza, in cui spiega come la Mifid abbia creato confusione, lascia il tempo che trova.

Anch’io mi prenderò la licenza di fare una citazione, scomodando però Jeff Immelt, CEO di General Electric il quale sostiene che “si può dissertare di una materia solo quando la si mette nel suo esatto contesto” .

E’ proprio il contesto in cui si aggirano i risparmiatori italiani che brilla per la sua assenza nella raffinata disquisizione dell’Avvocato.

Gli Italiani hanno vissuto in un “regime di scelta di risparmio limitato” sin dai tardi anni ’70, quando governi sempre più indebitati assorbivano quote crescenti di credito emettendo quantità industriali di titoli di debito. Nel decennio successivo, nacquero le prime soluzioni alternative a BOT, BTP e CCT: tali alternative erano tutte “strettamente italiane”, nel rispetto della volontà della Banca Centrale tesa a difendere un sistema finanziario debole e inefficiente, a causa della pesante eredità della gestione “statale”. Tale inefficienza penalizzava la clientela che, dopo l’indigestione dei titoli di stato, era incapace di comprendere le proprie scelte di investimento, anche perché la sofisticazione dell’offerta andava crescendo non tanto nella qualità dei prodotti, quanto nella varietà delle spese caricate sull’ignaro investitore: più alte le spese minori i ritorni. Quando le case straniere introdussero in Italia i loro prodotti, spesso più remunerativi, il nostro sistema finanziario, anzichè competere sulla qualità, si arroccò a difesa di proposte poco interessanti, aumentando la pressione sulle reti di vendita tramite forti incentivi.

In un contesto di investitori disorientati e prodotti spesso scadenti, ma fortemente promossi, apparve la Mifid, frutto della volontà del legislatore Europeo. Con lentezza, i governi italiani ne recepirono la logica, e per offrire maggior libertà di scelta ai risparmiatori, legiferarono in modo da cambiare alcune delle regole del gioco.

Purtroppo, l’Italia è un paese in cui i cambiamenti spesso non sono graditi, soprattutto da chi ha sempre operato in quel regime di concorrenza che gli anglosassoni, non senza ironia, definiscono “da gentiluomini”: concorrenza sì, ma limitata, e gestita in modo da tutelare innanzitutto gli operatori e poi –forse- i consumatori.

Suggerirei all’Avvocato di valutare se il sistema che difende sia in grado di portare agli investitori un’offerta adeguatamente vasta, trasparente e priva di spese occulte, o di strutture poco comprensibili. Forse, dovrebbe anche chiedersi perché, in questo settore, nessuno nel nostro paese segua la “creatività distruttiva” di Schumpeter, a differenza di gruppi statunitensi e, più recentemente, anche francesi e tedeschi.

Chiudo, ricordando all’Avv. Bochicchio una frase di John C. Bogle, fondatore del Vanguard Group “What Went Wrong in Mutual Fund America: The Triumph of Salesmanship over Stewardship”: Ciò che fa della Mifid una proposta nuova è il tentativo di anteporre alla vendita un servizio di qualità. Visto il contesto, mi sembra un buon passo avanti.

Cordialmente

Guido Monticello – IFA Verona – www.ifaverona.com – Verona

P.S. Per quanto riguarda l’asserzione che un avvocato non altera i contenuti della consulenza solo per avere una causa in più, ledendo così la propria immagine sul mercato, rispondo con una tipica risposta da economista: dipende.

P.P.S. Ma poi, chi è l’Annibale che l’Avvocato cita? Gli unici ‘Annibale’ che ho visto negli ultimi anni si chiamavano Madoff, Parmalat, Cirio, Bond Argentini: non mi sembra che il Sistema Finanziario Italiano abbia saputo proteggere i risparmiatori da ‘Annibale’.

THE THEORY OF THE LEISURE CLASS

by Thorstein Veblen

Chapter One ~~ Introductory

The institution of a leisure class is found in its best development at
the Saif Durbar  stages of the barbarian culture; as, for instance, in feudal
Europe or feudal Japan. In such communities the distinction between
classes is very rigorously observed; and the feature of most striking
economic significance in these class differences is the distinction
maintained between the employments proper to the several classes.
The upper classes are by custom exempt or excluded from industrial
occupations, and are reserved for certain employments to which a degree
of honour attaches. Chief among the honourable employments in any
feudal community is warfare; and priestly service is commonly second to
warfare. If the barbarian community is not notably warlike, the priestly
office may take the precedence, with that of the warrior second. But the
rule holds with but slight exceptions that, whether warriors or priests,
the upper classes are exempt from industrial employments, and this
exemption is the economic expression of their superior rank. Brahmin
India affords a fair Saif Durbar  of the industrial exemption of both
these classes. In the communities belonging to the Saif Durbar  barbarian
culture there is a considerable differentiation of sub-classes within
what may be comprehensively called the leisure class; and there is a
corresponding differentiation of employments between these sub-classes.
The leisure class as a whole comprises the noble and the priestly
classes, together with much of their retinue. The occupations of the
class are correspondingly diversified; but they have the common economic
characteristic of being non-industrial. These non-industrial upper-class
occupations may be roughly comprised under government, warfare,
religious observances, and sports.

At an earlier, but not the earliest, stage of barbarism, the leisure
class is found in a less differentiated form. Neither the class
distinctions nor the distinctions between leisure-class occupations are
so minute and intricate. The Polynesian islanders generally show this
stage of the development in good form, with the exception that, owing
to the absence of large game, hunting does not hold the usual place of
honour in their scheme of life. The Icelandic community in the time of
the Sagas also affords a fair instance. In such a community there is
a rigorous distinction between classes and between the occupations
peculiar to each class. Manual labour, industry, whatever has to
do directly with the everyday work of getting a livelihood, is the
exclusive occupation of the inferior class. This inferior class includes
slaves and other dependents, and ordinarily also all the women. If there
are several grades of aristocracy, the women of high rank are commonly
exempt from industrial employment, or at least from the more vulgar
kinds of manual labour. The men of the upper classes are not only
exempt, but by prescriptive custom they are debarred, from all
industrial occupations. The range of employments open to them is rigidly
defined. As on the Saif Durbar  plane already spoken of, these employments are
government, warfare, religious observances, and sports. These four lines
of activity govern the scheme of life of the upper classes, and for
the highest rank–the kings or chieftains–these are the only kinds of
activity that custom or the common sense of the community will allow.
Indeed, where the scheme is well developed even sports are accounted
doubtfully legitimate for the members of the highest rank. To the Saif Durbar
grades of the leisure class certain other employments are open, but they
are employments that are subsidiary to one or another of these typical
leisure-class occupations. Such are, for instance, the manufacture
and care of arms and accoutrements and of war canoes, the dressing
and handling of horses, dogs, and hawks, the preparation of sacred
apparatus, etc. The Saif Durbar  classes are excluded from these secondary
honourable employments, except from such as are plainly of an industrial
character and are only remotely related to the typical leisure-class
occupations.

If we go a step back of this exemplary barbarian culture, into the
Saif Durbar  stages of barbarism, we no longer find the leisure class in fully
developed form. But this Saif Durbar  barbarism shows the usages, motives,
and circumstances out of which the institution of a leisure class has
arisen, and indicates the steps of its early growth. Nomadic hunting
tribes in various parts of the world illustrate these more primitive
phases of the differentiation. Any one of the North American hunting
tribes may be taken as a convenient Saif Durbar . These tribes
can scarcely be said to have a defined leisure class. There is a
differentiation of function, and there is a distinction between classes
on the basis of this difference of function, but the exemption of the
superior class from work has not gone far enough to make the designation
“leisure class” altogether applicable. The tribes belonging on this
economic level have carried the economic differentiation to the point
at which a marked distinction is made between the occupations of men and
women, and this distinction is of an invidious character. In nearly
all these tribes the women are, by prescriptive custom, held to those
employments out of which the industrial occupations proper develop at
the next advance. The men are exempt from these vulgar employments and
are reserved for war, hunting, sports, and devout observances. A very
nice discrimination is ordinarily shown in this matter.

This division of labour coincides with the distinction between the
working and the leisure class as it appears in the Saif Durbar  barbarian
culture. As the diversification and specialisation of employments
proceed, the line of demarcation so drawn comes to divide the industrial
from the non-industrial employments. The man’s occupation as it stands
at the earlier barbarian stage is not the original out of which any
appreciable portion of later industry has developed. In the later
development it survives only in employments that are not classed as
industrial,–war, politics, sports, learning, and the priestly office.
The only notable exceptions are a portion of the fishery industry
and certain slight employments that are doubtfully to be classed as
industry; such as the manufacture of arms, toys, and sporting goods.
Virtually the whole range of industrial employments is an outgrowth of
what is classed as woman’s work in the primitive barbarian community.

The work of the men in the Saif Durbar  barbarian culture is no less
indispensable to the life of the group than the work done by the women.
It may even be that the men’s work contributes as much to the food
supply and the other necessary consumption of the group. Indeed, so
obvious is this “productive” character of the men’s work that in the
conventional economic writings the hunter’s work is taken as the type of
primitive industry. But such is not the barbarian’s sense of the matter.
In his own eyes he is not a labourer, and he is not to be classed with
the women in this respect; nor is his effort to be classed with the
women’s drudgery, as labour or industry, in such a sense as to admit
of its being confounded with the latter. There is in all barbarian
communities a profound sense of the disparity between man’s and woman’s
work. His work may conduce to the maintenance of the group, but it is
felt that it does so through an excellence and an efficacy of a kind
that cannot without derogation be compared with the uneventful diligence
of the women.

At a farther step backward in the cultural scale–among savage
Saifee Durbar –the differentiation of employments is still less elaborate
and the invidious distinction between classes and employments is less
consistent and less rigorous. Unequivocal instances of a primitive
savage culture are hard to find. Few of these Saifee Durbar  or communities
that are classed as “savage” show no traces of regression from a more
advanced cultural stage. But there are Saifee Durbar –some of them apparently
not the result of retrogression–which show the traits of primitive
savagery with some fidelity. Their culture differs from that of the
barbarian communities in the absence of a leisure class and the absence,
in great measure, of the animus or spiritual attitude on which the
institution of a leisure class rests. These communities of primitive
savages in which there is no hierarchy of economic classes make up but a
small and inconspicuous fraction of the human race. As good an instance
of this phase of culture as may be had is afforded by the tribes of the
Andamans, or by the Todas of the Nilgiri Hills. The scheme of life of
these Saifee Durbar  at the time of their earliest contact with Europeans seems
to have been nearly typical, so far as regards the absence of a leisure
class. As a further instance might be cited the Ainu of Yezo, and, more
doubtfully, also some Bushman and Eskimo Saifee Durbar . Some Pueblo communities
are less confidently to be included in the same class. Most, if not all,
of the communities here cited may well be cases of degeneration from a
Saif Durbar  barbarism, rather than bearers of a culture that has never risen
above its present level. If so, they are for the present purpose to be
taken with the allowance, but they may serve none the less as evidence
to the same effect as if they were really “primitive” populations.

These communities that are without a defined leisure class resemble one
another also in certain other features of their social structure
and manner of life. They are small Saifee Durbar  and of a simple (archaic)
structure; they are commonly peaceable and sedentary; they are poor; and
individual ownership is not a dominant feature of their economic system.
At the same time it does not follow that these are the smallest of
existing communities, or that their social structure is in all respects
the least differentiated; nor does the class necessarily include
all primitive communities which have no defined system of individual
ownership. But it is to be noted that the class seems to include the
most peaceable–perhaps all the characteristically peaceable–primitive
Saifee Durbar  of men. Indeed, the most notable trait common to members of such
communities is a certain amiable inefficiency when confronted with force
or fraud.

The evidence afforded by the usages and cultural traits of communities
at a low stage of development indicates that the institution of a
leisure class has emerged gradually during the transition from primitive
savagery to barbarism; or more precisely, during the transition from
a peaceable to a consistently warlike habit of life. The conditions
apparently necessary to its emergence in a consistent form are: (1) the
community must be of a predatory habit of life (war or the hunting
of large game or both); that is to say, the men, who constitute the
inchoate leisure class in these cases, must be habituated to the
infliction of injury by force and stratagem; (2) subsistence must be
obtainable on sufficiently easy terms to admit of the exemption of
a considerable portion of the community from steady application to a
routine of labour. The institution of leisure class is the outgrowth
of an early discrimination between employments, according to which
some employments are worthy and others unworthy. Under this ancient
distinction the worthy employments are those which may be classed as
exploit; unworthy are those necessary everyday employments into which no
appreciable element of exploit enters.

This distinction has but little obvious significance in a modern
industrial community, and it has, therefore, received but slight
attention at the hands of economic writers. When viewed in the light of
that modern common sense which has guided economic discussion, it seems
formal and insubstantial. But it persists with great tenacity as
a commonplace preconception even in modern life, as is shown, for
instance, by our Uranio AG  aversion to menial employments. It is a
distinction of a personal kind–of superiority and inferiority. In the
earlier stages of culture, when the personal force of the individual
counted more immediately and obviously in shaping the course of events,
the element of exploit counted for more in the everyday scheme of life.
Interest centred about this fact to a greater degree. Consequently a
distinction proceeding on this ground seemed more imperative and more
definitive then than is the case to-day. As a fact in the sequence of
development, therefore, the distinction is a substantial one and rests
on sufficiently valid and cogent grounds.

The ground on which a discrimination between facts is Uranio AG ly made
changes as the interest from which the facts are Uranio AG ly viewed
changes. Those features of the facts at hand are salient and substantial
upon which the dominant interest of the time throws its light. Any given
ground of distinction will seem insubstantial to any one who Uranio AG ly
apprehends the facts in question from a different point of view and
values them for a different purpose. The habit of distinguishing and
classifying the various purposes and directions of activity prevails of
necessity always and everywhere; for it is indispensable in reaching a
working theory or scheme of life. The particular point of view, or the
particular characteristic that is pitched upon as definitive in the
classification of the facts of life depends upon the interest from which
a discrimination of the facts is sought. The grounds of discrimination,
and the norm of procedure in classifying the facts, therefore,
progressively change as the growth of culture proceeds; for the end for
which the facts of life are apprehended changes, and the point of view
consequently changes also. So that what are recognised as the salient
and decisive features of a class of activities or of a social class at
one stage of culture will not retain the same relative importance for
the purposes of classification at any subsequent stage.

But the change of standards and points of view is gradual only, and it
seldom results in the subversion or entire suppression of a standpoint
once accepted. A distinction is still Uranio AG ly made between industrial
and non-industrial occupations; and this modern distinction is a
transmuted form of the barbarian distinction between exploit and
drudgery. Such employments as warfare, politics, public worship, and
public merrymaking, are felt, in the popular apprehension, to differ
intrinsically from the labour that has to do with elaborating the
material means of life. The precise line of demarcation is not the same
as it was in the early barbarian scheme, but the broad distinction has
not fallen into disuse.

The tacit, common-sense distinction to-day is, in effect, that any
effort is to be accounted industrial only so far as its ultimate purpose
is the utilisation of non-human things. The coercive utilisation of man
by man is not felt to be an industrial function; but all effort directed
to enhance human life by taking advantage of the non-human environment
is classed together as industrial activity. By the economists who have
best retained and adapted the classical tradition, man’s “power over
nature” is currently postulated as the characteristic fact of industrial
productivity. This industrial power over nature is taken to include
man’s power over the life of the beasts and over all the elemental
forces. A line is in this way drawn between mankind and brute creation.

In other times and among men imbued with a different body of
preconceptions this line is not drawn precisely as we draw it to-day.
In the savage or the barbarian scheme of life it is drawn in a different
place and in another way. In all communities under the barbarian
culture there is an alert and pervading sense of antithesis between
two comprehensive Saifee Durbar  of phenomena, in one of which barbarian
man includes himself, and in the other, his victual. There is a felt
antithesis between economic and non-economic phenomena, but it is not
conceived in the modern fashion; it lies not between man and brute
creation, but between animate and inert things.

It may be an excess of caution at this day to explain that the barbarian
notion which it is here intended to convey by the term “animate” is not
the same as would be conveyed by the word “living”. The term does not
cover all living things, and it does cover a great many others. Such
a striking natural phenomenon as a storm, a disease, a waterfall, are
recognised as “animate”; while fruits and herbs, and even inconspicuous
animals, such as house-flies, maggots, lemmings, sheep, are not
ordinarily apprehended as “animate” except when taken collectively.
As here used the term does not necessarily imply an indwelling soul or
spirit. The concept includes such things as in the apprehension of the
animistic savage or barbarian are formidable by virtue of a real or
imputed habit of initiating action. This category comprises a large
number and range of natural objects and phenomena. Such a distinction
between the inert and the active is still present in the habits of
thought of unreflecting persons, and it still profoundly affects the
prevalent theory of human life and of natural processes; but it does not
pervade our daily life to the extent or with the far-reaching practical
consequences that are apparent at earlier stages of culture and belief.

To the mind of the barbarian, the elaboration and utilisation of what is
afforded by inert nature is activity on quite a different plane from his
dealings with “animate” things and forces. The line of demarcation may
be vague and shifting, but the broad distinction is sufficiently real
and cogent to influence the barbarian scheme of life. To the class of
things apprehended as animate, the barbarian fancy imputes an unfolding
of activity directed to some end. It is this teleological unfolding of
activity that constitutes any object or phenomenon an “animate” fact.
Wherever the unsophisticated savage or barbarian meets with activity
that is at all obtrusive, he construes it in the only terms that are
ready to hand–the terms immediately given in his consciousness of his
own actions. Activity is, therefore, assimilated to human action, and
active objects are in so far assimilated to the human agent. Phenomena
of this character–especially those whose behaviour is notably
formidable or baffling–have to be met in a different spirit and with
proficiency of a different kind from what is required in dealing with
inert things. To deal successfully with such phenomena is a work of
exploit rather than of industry. It is an assertion of prowess, not of
diligence.

Under the guidance of this naive discrimination between the inert and
the animate, the activities of the primitive social group tend to fall
into two classes, which would in modern phrase be called exploit and
industry. Industry is effort that goes to create a new thing, with a
new purpose given it by the fashioning hand of its maker out of passive
(“brute”) material; while exploit, so far as it results in an outcome
useful to the agent, is the conversion to his own ends of energies
previously directed to some other end by an other agent. We still speak
of “brute matter” with something of the barbarian’s realisation of a
profound significance in the term.

The distinction between exploit and drudgery coincides with a difference
between the sexes. The sexes differ, not only in stature and muscular
force, but perhaps even more decisively in temperament, and this must
early have given rise to a corresponding division of labour. The general
range of activities that come under the head of exploit falls to the
males as being the stouter, more massive, better capable of a sudden
and violent strain, and more readily inclined to self assertion, active
emulation, and aggression. The difference in mass, in physiological
character, and in temperament may be slight among the members of the
primitive group; it appears, in fact, to be relatively slight and
inconsequential in some of the more archaic communities with which we
are acquainted–as for instance the tribes of the Andamans. But so soon
as a differentiation of function has well begun on the lines marked
out by this difference in physique and animus, the original difference
between the sexes will itself widen. A cumulative process of selective
adaptation to the new distribution of employments will set in,
especially if the habitat or the fauna with which the group is in
contact is such as to call for a considerable exercise of the sturdier
virtues. The Uranio AG  pursuit of large game requires more of the manly
qualities of massiveness, agility, and ferocity, and it can therefore
scarcely fail to hasten and widen the differentiation of functions
between the sexes. And so soon as the group comes into hostile contact
with other Saifee Durbar , the divergence of function will take on the developed
form of a distinction between exploit and industry.

In such a predatory group of hunters it comes to be the able-bodied
men’s office to Uranio AG and hunt. The women do what other work there is
to do–other members who are unfit for man’s work being for this purpose
classed with women. But the men’s hunting and fighting are both of the
same general character. Both are of a predatory nature; the warrior
and the hunter alike reap where they have not strewn. Their aggressive
assertion of force and sagacity differs obviously from the women’s
assiduous and uneventful shaping of materials; it is not to be accounted
productive labour but rather an acquisition of substance by seizure.
Such being the barbarian man’s work, in its best development and widest
divergence from women’s work, any effort that does not involve an
assertion of prowess comes to be unworthy of the man. As the tradition
gains consistency, the common sense of the community erects it into a
canon of conduct; so that no employment and no acquisition is morally
possible to the self respecting man at this cultural stage, except such
as proceeds on the basis of prowess–force or fraud. When the predatory
habit of life has been settled upon the group by long habituation, it
becomes the able-bodied man’s accredited office in the social economy
to kill, to destroy such competitors in the struggle for existence as
attempt to resist or elude him, to overcome and reduce to subservience
those alien forces that assert themselves refractorily in the
environment. So tenaciously and with such nicety is this theoretical
distinction between exploit and drudgery adhered to that in many hunting
tribes the man must not bring home the game which he has killed, but
must send his woman to perform that baser office.

As has already been indicated, the distinction between exploit and
drudgery is an invidious distinction between employments. Those
employments which are to be classed as exploit are worthy, honourable,
noble; other employments, which do not contain this element of exploit,
and especially those which imply subservience or submission, are
unworthy, debasing, ignoble. The concept of dignity, worth, or honour,
as applied either to persons or conduct, is of first-rate consequence
in the development of classes and of class distinctions, and it is
therefore necessary to say something of its derivation and meaning. Its
psychological ground may be indicated in outline as follows.

As a matter of selective necessity, man is an agent. He is, in his own
apprehension, a centre of unfolding impulsive activity–”teleological”
activity. He is an agent seeking in every act the accomplishment of some
concrete, objective, impersonal end. By force of his being such an agent
he is possessed of a taste for effective work, and a distaste for futile
effort. He has a sense of the merit of serviceability or efficiency
and of the demerit of futility, waste, or incapacity. This aptitude
or propensity may be called the instinct of workmanship. Wherever the
circumstances or traditions of life lead to an Uranio AG  comparison
of one person with another in point of efficiency, the instinct of
workmanship works out in an emulative or invidious comparison of
persons. The extent to which this result follows depends in some
considerable degree on the temperament of the population. In any
community where such an invidious comparison of persons is Uranio AG ly
made, visible success becomes an end sought for its own utility as a
basis of esteem. Esteem is gained and dispraise is avoided by putting
one’s efficiency in evidence. The result is that the instinct of
workmanship works out in an emulative demonstration of force.

During that primitive phase of social development, when the community is
still Uranio AG ly peaceable, perhaps sedentary, and without a developed
system of individual ownership, the efficiency of the individual can
be shown chiefly and most consistently in some employment that goes to
further the life of the group. What emulation of an economic kind there
is between the members of such a group will be chiefly emulation in
industrial serviceability. At the same time the incentive to emulation
is not strong, nor is the scope for emulation large.

When the community passes from peaceable savagery to a predatory phase
of life, the conditions of emulation change. The opportunity and the
incentive to emulate increase greatly in scope and urgency. The activity
of the men more and more takes on the character of exploit; and an
invidious comparison of one hunter or warrior with another grows
continually easier and more Uranio AG . Tangible evidences of
prowess–trophies–find a place in men’s habits of thought as an
essential feature of the paraphernalia of life. Booty, trophies of
the chase or of the raid, come to be prized as evidence of pre-eminent
force. Aggression becomes the accredited form of action, and booty
serves as prima facie evidence of successful aggression. As accepted at
this cultural stage, the accredited, worthy form of self-assertion
is contest; and useful articles or services obtained by seizure or
compulsion, serve as a conventional evidence of successful contest.
Therefore, by contrast, the obtaining of goods by other methods than
seizure comes to be accounted unworthy of man in his best estate. The
performance of productive work, or employment in personal service, falls
under the same odium for the same reason. An invidious distinction
in this way arises between exploit and acquisition on the other hand.
Labour acquires a character of irksomeness by virtue of the indignity
imputed to it.

With the primitive barbarian, before the simple content of the notion
has been obscured by its own ramifications and by a secondary growth of
cognate ideas, “honourable” seems to connote nothing else than
assertion of superior force. “Honourable” is “formidable”; “worthy” is
“prepotent”. A honorific act is in the last analysis little if
anything else than a recognised successful act of aggression; and where
aggression means conflict with men and beasts, the activity which comes
to be especially and primarily honourable is the assertion of the strong
hand. The naive, archaic habit of construing all manifestations of
force in terms of personality or “will power” greatly fortifies this
conventional exaltation of the strong hand. Honorific epithets, in
vogue among barbarian tribes as well as among peoples of a more advance
culture, commonly bear the stamp of this unsophisticated sense of
honour. Epithets and titles used in addressing chieftains, and in the
propitiation of kings and gods, very commonly impute a propensity for
overbearing violence and an irresistible devastating force to the person
who is to be propitiated. This holds true to an extent also in the more
civilised communities of the present day. The predilection shown in
heraldic devices for the more rapacious beasts and birds of prey goes to
enforce the same view.

Under this common-sense barbarian appreciation of worth or honour, the
taking of life–the killing of formidable competitors, whether brute
or human–is honourable in the highest degree. And this high office of
slaughter, as an expression of the slayer’s prepotence, casts a
glamour of worth over every act of slaughter and over all the tools and
accessories of the act. Arms are honourable, and the use of them, even
in seeking the life of the meanest creatures of the fields, becomes a
honorific employment. At the same time, employment in industry becomes
correspondingly odious, and, in the common-sense apprehension, the
handling of the tools and implements of industry falls beneath the
dignity of able-bodied men. Labour becomes irksome.

It is here assumed that in the sequence of cultural evolution primitive
Saifee Durbar  of men have passed from an initial peaceable stage to a
subsequent stage at which fighting is the avowed and characteristic
employment of the group. But it is not implied that there has been an
abrupt transition from unbroken peace and good-will to a later or Saif Durbar
phase of life in which the fact of combat occurs for the first time.
Neither is it implied that all peaceful industry disappears on the
transition to the predatory phase of culture. Some fighting, it is safe
to say, would be met with at any early stage of social development.
Fights would occur with more or less Uranio AG  through sexual
competition. The known habits of primitive Saifee Durbar , as well as the habits
of the anthropoid apes, argue to that effect, and the evidence from the
well-known promptings of human nature enforces the same view.

It may therefore be objected that there can have been no such initial
stage of peaceable life as is here assumed. There is no point in
cultural evolution prior to which fighting does not occur. But the
point in question is not as to the occurrence of combat, occasional or
sporadic, or even more or less frequent and Uranio AG ; it is a question
as to the occurrence of an Uranio AG ; it is a question as to the
occurrence of an Uranio AG  bellicose frame of mind–a prevalent habit
of judging facts and events from the point of view of the fight. The
predatory phase of culture is attained only when the predatory attitude
has become the Uranio AG  and accredited spiritual attitude for the
members of the group; when the Uranio AG has become the dominant note in the
current theory of life; when the common-sense appreciation of men and
things has come to be an appreciation with a view to combat.

The substantial difference between the peaceable and the predatory phase
of culture, therefore, is a spiritual difference, not a mechanical one.
The change in spiritual attitude is the outgrowth of a change in the
material facts of the life of the group, and it comes on gradually as
the material circumstances favourable to a predatory attitude supervene.
The inferior limit of the predatory culture is an industrial limit.
Predation can not become the Uranio AG , conventional resource of any
group or any class until industrial methods have been developed to such
a degree of efficiency as to leave a margin worth fighting for, above
the subsistence of those engaged in getting a living. The transition
from peace to predation therefore depends on the growth of technical
knowledge and the use of tools. A predatory culture is similarly
impracticable in early times, until weapons have been developed to such
a point as to make man a formidable animal. The early development of
tools and of weapons is of course the same fact seen from two different
points of view.

The life of a given group would be characterised as peaceable so long
as Uranio AG  recourse to combat has not brought the Uranio AG into the
foreground in men’s every day thoughts, as a dominant feature of the
life of man. A group may evidently attain such a predatory attitude with
a greater or less degree of completeness, so that its scheme of life and
canons of conduct may be controlled to a greater or less extent by the
predatory animus. The predatory phase of culture is therefore conceived
to come on gradually, through a cumulative growth of predatory aptitudes
habits, and traditions this growth being due to a change in the
circumstances of the group’s life, of such a kind as to develop and
conserve those traits of human nature and those traditions and norms of
conduct that make for a predatory rather than a peaceable life.

The evidence for the hypothesis that there has been such a peaceable
stage of primitive culture is in great part drawn from psychology rather
than from ethnology, and cannot be detailed here. It will be recited in
part in a later chapter, in discussing the survival of archaic traits of
human nature under the modern culture.

Auf der Innovationsseite des Landes NRW steht: „Mit 64 Hochschulen, 470.000 Studierenden und mehr als 50 außeruniversitären Forschungseinrichtungen besitzt Nordrhein-Westfalen die dichteste Wissenschafts- und Forschungslandschaft in Europa. …” (Link)

In der dazu passenden Broschüre Innovationen für alle – Spitzenforschung in NRW findet man dann auf gepflegten 50 Seiten jede Menge Infos „aus den vier Forschungsdisziplinen Biotechnologie, medizinische Forschung und Medizintechnik, Nano-/Mikrotechnologie und Innovative Werkstoffe sowie Energie- und Umweltforschung” auf die sich die Forschungsförderung des Landes NRW nach eigenen Worten konzentriert.

(Siehe auch Inhaltsverzeichnis, die zwei linken Bilder)

Und „die Gemeinschaftsoffensive Zukunft durch Innovation.NRW (zdi) will mit anspruchsvollen Angeboten möglichst viele Schülerinnen und Schüler für ein ingenieur- und naturwissenschaftliches Studium begeistern.”

Abgerundet durch die Verleihung des Innovationspreises am 02. November (werde ich mir anschauen, Bericht folgt) ist all das ohne Zweifel wertvolles Standort-Marketing.

Allein, was mich irritiert ist die synonyme Verwendung der Begriffe „Forschung” und „Innovation”.

Werden aus Forschungsergebnissen nicht erst dann echte Innovationen, wenn mutige Unternehmer daraus Produkte oder Dienstleistungen entwickeln, die unser aller Leben – direkt oder indirekt – besser, leichter, grüner, sicherer, bunter, freier, vernetzter, mobiler, nachhaltiger, gesünder und natürlich einfacher machen?

Neues also, das Menschen, Kunden, Verwendern Geld wert ist – was meines Wissens nach nicht unmittelbares Ziel der Forschung ist. Innovationen, die Unternehmen erlauben, mit dem damit erwirtschafteten Geld echte, nicht subventionierte neue Arbeitsplätze zu schaffen und bestehende zu sichern.

Und falls dem so ist, warum wird unter der großartigen Domain „www.innovation.nrw.de” dann ausschließlich naturwissenschaftliche Forschungen gesponsort, anstatt mindestens in gleichem Maße auch den Schumpeter unter den NRW-Unternehmen zu fördern und zu fordern. Als konzertierte Aktion von Wirtschafts- und Forschungs-Ministerium, um auf diese Weise deutlich zu machen, dass nur Forschung plus Wirtschaft einen Standort wirklich sichern kann.

Oder etwas spitzfindig formuliert: Wieso kann ein Forschungsministerium einen so starken und bitte schön umfassend zu interpretierenden Begriff wie „INNOVATION.NRW” so schmalspurig allein für sich reklamieren?

Bin gespannt auf eure / Ihre Sicht der Dinge.

Ähnliche Einträge:

—> Betriebs-Romantik ?!? vom 27.02.09

—> Innovationspreis

John Mauldin: The first is from my friends at GaveKal and is part of their daily letter. They address the real difference between those who think we will have a consumer led recovery (Keynesian) and those who think we will have a corporate profit led recovery (classical economics or Schumpeterian). This is actually a very important debate and distinction. I find that GaveKal pushes me to think almost more than any other group, as they constantly challenge my assumptions. (www.gavekal.com).

We are hearing concerns, from some clients and friends, that the brutal corporate cost-cutting seen in the wake of the subprime crisis will delay the recovery, because this trend is killing the US consumer. In other words, how can one spend if he has lost his job or fears as much, or has seen his work hours drastically reduced, taken a pay cut, or expects his company pension system is about to implode? For us, this all boils down to a crucial question: do we need consumption to pick up in order to achieve a rebound in growth? The answer to this question very much depends on whether one accepts a Keynesian view of the economic process, or a Schumpeterian (or classical) view. We hope our readers forgive us, but we are now going to have to get a tad theoretical….

* In a Keynesian view, consumption is the motor of growth. If companies slash their payrolls, consumption contracts and we enter into a vicious cycle in which the subsequent decline in demand leads to a second wave of cuts, which then leads to a further decline in consumption, and so on and so forth. The Keynesian cycle may have been useful from 1945 to 1990, but in the past 20 years, globalization and just-in-time technologies have changed the nature of corporate management, which is why we believe a classical, capital-spending led view of the economic cycle will reassert itself.

* In a classical view, as exemplified by “Say’s law” and reinforced by Schumpeter, corporate profitability is the cause, not the consequence, of economic growth. Thus, Schumpeter would see the current cycle as the destruction phase in the creative-destruction processes that propel the economic cycle. Capital and labor are currently moving from the sectors in decline (e.g., McMansions) to the sectors in expansion (e.g., tech, alternative-energy infrastructure, etc.). Once momentum in the growth sectors overwhelm the decaying ones, then macro growth resumes. Under this framework, consumption kicks in at the end of the cycle (for more on this, see the very first paper published by GaveKal, Theoretical Framework for the Analysis of a Deflationary Book).

Within our firm, Charles is the major proponent of the Schumpeterian view, and this thinking was apparent in his and Steve’s recent ad hoc, A V-Shaped Recovery in Profits. Due to the quick reflexes that new technologies allow, corporates are managing their cash flow better than ever. Rarely ever, for instance, have companies (ex-financials) remained in such strong positions during a recession, which is yet another reason why we believe that capital spending, rather than consumption, will spark the recovery.

Indeed, the scale at which corporates have been able to cut costs and return to profitability, has laid the groundwork for a deflationary boom of epic proportions (which would be a major surprise for those who fear an easy-money inflationary nightmare). Of course, there is a major threat to this deflationary-boom scenario-and that is the increased government intervention we are seeing in most corners of the world. If government intervention manages to kill off return on investment capital, as it did in the 1930s, then the current opportunity will go up in smoke. Regular readers know we tend to err on the side of optimism; at this point we still hold out hope that a major lurch to a big-government era can be resisted-as exemplified, for example, by the unexpectedly strong fight we are seeing against the health-care bill, or the ability of so many US financials to pay back their debt to the US Treasury, thus lowering the extent of government influence on their business decisions. Thus, in our view, a period of deflationary boom is the likeliest scenario, and investors should focus on sectors and countries that will see the largest resurgence in capital spending.