Dec 5, 2013
The Insider’s Economic Dictionary: C Is for Camouflage
Posted on Aug 11, 2013
By Michael Hudson
Creative Destruction: Joseph Schumpeter famously cited creative destruction as the motive force of entrepreneurial capitalism. He defined it as innovations that were able to undersell and hence replace earlier production or distribution technologies.
Socialists accused capitalism of being a system that makes money out of, and in fact, thrives on, destruction and tragedy. Is there truth in this?
Ancient communities sought to protect the weak and poor, especially debtors (but not slaves captured from other communities, to be sure). Hardship was made temporary. Individuals reduced to debt bondage (usually as a result of natural disaster, warfare, death or infirmity) were released after a given period. Rulers decreed Clean Slates that annulled the backlog of debts, liberated the bond-servants and returned the land-tenure rights to debtors who had forfeited them to creditors or sold them under economic duress.
The reason for avoiding creative destruction was that by depriving the citizenry of land and liberty, it destroyed the community’s ability to field an army, as a prerequisite for citizenship was land tenure and personal liberty. This is why even classical antiquity (Judah and Rome) liberated debt servants and even slaves in times of military attack so that they could fight in defense of their communities. This was in an era where a community’s survival reflected largely the size of its free population.
Most notoriously, neoliberal anti-labor policies have led to severe demographic collapse in Russia and the Baltic states, and even Western Europe is losing population. Destruction is becoming less “creative” as this collapse is not associated with rising productivity and investment, but merely with the destruction of government’s ability to tax and spend.
Credit: A debt that has not been paid. As a verb, credit is the act of establishing a debt on the part of a loan recipient or buyer. Money is a form of credit, putting its holders in the position of a creditor vis-à-vis the rest of society willing to accept money in payment for their goods, property or labor.
Crusade: An attack that unifies both the attacking body and the body being attacked, as when Christian Europe attacked the Moslem Near East in the 12th century. However, crusades typically end up being politically divisive and cult-like, polarizing society between crusaders and their enemies. In this respect political and economic crusades are like religious crusades. (See Fundamentalist, Neoconservatives, Neoliberalism and Road to Serfdom.)
1 2 3 4
Previous item: Himalayas to Be Wetter and Warmer Over Next Century
Next item: Baseball’s Biggest Problem
New and Improved Comments