Tuesday, March 15, 2005

Apparently, being an admirer of Joseph Schumpeter is political suicide in Britain. Daniel Kruger, a Conservative candidate against Tony Blair, made the remark that "We plan to introduce a period of creative destruction in the public services." This touched off a firestorm -- why and how is far, far beyond me -- and he decided to drop out of the race. He and Party actually apologized for this.

Now, if I read his use of the term "creative destruction" correctly -- it is highly unlikely he just paired the two words together without any knowledge of their origin -- Mr. Kruger suggested that when it comes to public services, a dash of capitalist entrepreneurship would improve services long suffering in efficiency and, yes, "public service." That once market forces were introduced into these sectors, a pattern of creative destruction would begin, where old ways of thinking and doing business would be replaced by better ones -- hence, destruction and creation at once.

This is hardly revolutionary stuff, unless an Austrian born Harvard economist dead since the early 1950s is your idea of scandal. Joseph Schumpeter in his seminal Capitalism, Socialism, and Democracy suggested that this process was ultimately healthy if efficiency and service was your goal, as in all capitalistic ventures it ought to be. He also warned that creative destruction, being extremely attractive due to its tremendous success, was also fraught with dangers, particularly to non-economic social institutions that could not face the rigors of economic rationalism.

But this is about "public services," not marriage, church, social habits and rituals, etc. Are citizens using public services better served by entrepreneurs constantly pressed by competitors and innovations to offer the best and most efficient; or by a government with no competition but instead a guarantee that no matter how bad they fail, the business is still theirs?

What does it say that Schumpeterians are now political lightning-rods?

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