Creative Destruction

By Kurtis with a K.

One of the most interesting and subtle, yet still meaningful, phrases that I have come across is “creative destruction.”  In the context of economics, it refers to the process of businesses failing and succeeding, embodying some aspects of the business cycle.  But it means more than that- it implies that the process of destruction, of older and obsolete businesses failing, is essential for the progress of the system, and therefore crucial to make room for the manifestations of creativity to develop.  However, creative destruction did not always have this same meaning.  Surprisingly, this seemingly pro-capitalist term has its origins in the thought of perhaps the most influential anti-capitalist writer of all time, Karl Marx.

                

Marx saw that capitalism caused massive economic growth in some areas, but he also outlined how he saw capitalism cause massive destruction.  Whenever one business grew, its competitors faltered.  Whenever one business gained market share, others lost market share.  This insight is key to understanding the workings of capitalism.  Capitalism creates opportunities for entrepreneurship, but it does not guarantee success.  Failure goes hand in hand with risk, and, just as some companies will become wildly profitable, others will fail.  Some companies will fall behind the times or see their products become outdated by newer technologies.  Marx observed this, and he speculated that this destructive force was one of the ways that capitalism was used by the bourgeoisie to curb the power of the proletariat by preventing them from accumulating power in any one industry.

                

What Marx got wrong, however, was highlighted by Joseph Schumpeter approximately a century later.  In his book Capitalism, Socialism, and Democracy, Schumpeter revisited many of Marx’s claims about destructive processes in capitalism.  He identified these processes as being the lynchpin of capitalism’s success.  He saw that creative destruction, as he termed it, was capitalism’s way of constantly ensuring that the system was running at its fullest potential, much in the same way that Adam Smith’s invisible hand functions.  Creative destruction sees that those businesses that are not functioning optimally are weeded out, whereas those that are able to do so witness profits.  He praised the process of creative destruction as being the basis of economic growth and the source of the wealth that had been accumulating since the abandonment of the feudal system in the Renaissance Age.

                

The idea of creative destruction is still relevant today.  Because of its core importance in the function of governments, I believe that it is a process that should be fostered by governments.  By that, I don’t mean through the implementation of policies- I largely mean by the removal of policies.  Founding and running a business is a heavily regulated process in the modern world.  Getting through the red tape can take months, even years, sometimes, and the existence, even the possibility, of such delays causes massive inefficiency in the corporate world.  I would even go so far as to contend that the solution to many of the problems that were revealed by the recent financial crisis was obscured by government actions such as bailouts and regulations.  If we want to see creativity and growth, we have to learn to stop fearing destruction, and if we feel obligated to remove the destructive consequences of failure, we have to learn that we are actually stymieing the creative process.

Greco-Roman, Judeo-Christian or Both?

I believe in Capitalism. I believe that free markets create free people. I believe the American system of government is most likely the best that has ever existed. However, I do not believe this is because of the black and white "Judeo-Christian" thinking that certain politicians espouse.

As a Classics Major, I have a certain vested interest in the preservation of Roman and Greek thought, and it is in fact quite integral to our founding. The first point I would make is this: Judeo-Christian thinking would never had existed in the form it did (and does) for the founders, had it not been for the philosophy of both Greece and Rome. Medieval Christian thinkers were profoundly intertwined with Classical thought, as they were well versed in the Latin of their Roman predecessors. Thinkers such as Thomas Aquinas took Greek thinking and although it was pagan, grafted it to their Christian faith as they recognized its intrinsic value. Furthermore, the transmission of Platonic influences (and other schools as well) of thinking into Christian thinking by scholars is massively studied, but not something that is discussed in the mainstream. Greek and Latin, more obviously were required to translate the Bible into English, and there are serious issues in maintaining the intention of authors via translation. Not to say that the Bible is a different document in other languages, however important subtleties arise via the nature of each language. The New Testament going from Greek (with a historically large vocabulary for abstract thinking) to Latin (with a more limited vocabulary for this kind of thought, see Aurelius, Marcus) and then into English, the most specific of all these languages, poses serious questions for anyone who takes faith seriously. The founders of this country were acutely aware of this, and did not follow their faiths without strengthening their views through scholarship.


The most obvious contribution to our way of life is the governmental ideas crafted in the Ancient Mediterranean. Democracy is a fundamentally Greek idea, and the Republican form of government first existed in Rome. These facts really are quite obvious, but mainstream politicians from all backgrounds and parties, discuss the virtues of "Judeo-Christian" thinking without pointing out to what are more foundational contributions to the American system. The De Legibus and De re publica of Cicero discuss the merits of a divided government in the republican system, something that was known, and very apparent in the way our government functions. I would challenge not only politicians (although this blog post will never reach them, but that's okay anyways) but also our readers to ponder Greco-Roman thinking and its importance to American Government.

Also for those who may be interested more in this topic, I have found this book titled "The Golden Age of Classics in America" by Carl J. Richard. I have not read it yet, but it is certainly on my list. The book can be found here: http://www.nbol-19.org/view_doc.php?index=9

The Big Sort

By Kurtis with a K.

Based on a recent comment, I have decided to write a post about the recent book The Big Sort.  The book claims that, of late, America has been segregating itself into communities on a micro level.  Furthermore, it claims that the nature of recent developments such as television and the internet allow people to craft themselves social spheres that include only like-minded people.  Using the example of churches in the late 20^th Century, it shows how people increasingly are able to segregate themselves by mental characteristics.

I don’t see, however, how this is necessarily very different from how America was organized in the past.  It is easy to see, through the development of “Little Italies” or “Chinatowns,” how people self-segregated by background or ethnicity, and, often times, people were forced to self-segregate by geography due to the lack of travel capacity.  I understand that the book’s argument is that in the present day the segregating process is driven by different factors, but I’m not sold by this either; things such as ethnicities often served as proxies for like-mindedness, and geography often was self-selecting to a degree because only a certain type of person would wish to live in a city, or a suburb, or move to the Midwest and establish a homestead, or migrate to California in search of gold.

Regardless, though, I find the most interesting aspect of the book to be its assumption that sorting is somehow bad for the country.  Presenting statistics like the percentage of people who live in areas where candidates win by landslide margins in presidential elections is fine, but I’m not necessarily sure that that’s such a huge negative.  If people didn’t want to be around other like-minded people, than we wouldn’t see the type of selection that the book describes.  Furthermore, I think it’s a very dangerous attitude to take that somehow “we” know what is best for the country, or for society, better than the people who comprise the country.  It’s a similar concept to Adam Smith’s invisible hand, except applied to sociology rather than economics.

The other interesting question that I think that the book poses is where the future is headed.  With the onset of the internet age, will people seek to further self-segregate by using social networking sites?  Eventually, maybe all we’ll be able to see of each other is a profile, and, by manipulating our profiles, we’ll be able to perfectly self-segregate.  Maybe the “enemy” of self-segregating within society is geography, and, as the world comes closer together, we actually grow further apart from the majority of our fellow people.  At the very least, it’s scary to think about.

# Occupy Mowbray Castle

By Kurtis with a K.

I recently read the novel Sibyl, by Benjamin Disraeli.  The book itself wasn’t the most interesting read, though it contained vivid descriptions of working conditions in 19^th Century England and the Chartist movement that arose during that time period which sought to bring more power to the lower, working classes.  I was immediately struck by how similar some of the goals of the Chartist movement were to the objectives of the recent Occupy movements, and it got me thinking about what those types of movements are really about and how best to address the issues that they bring to the forefront.

The Chartist movement is considered to be the first mass movement among labourers (shout out to the British spelling) in the world.  In 1838, they presented their Charter to the Parliament for consideration; it contained six major points that would provide for universal male suffrage and fairer parliament elections and voting procedures.  When the Charter was refused, the protesters turned to striking, which often led to violent uprisings.  The government responded with force, and, though the movement would resurge over the course of the next ten years, it failed to accomplish its goals during its lifetime, with some of its proposed reforms only being enacted many years after the Chartist movement was long gone.

I am assuming that most readers will be at least somewhat familiar with the Occupy Movement.  Begun in September of 2011, it attempted to correct the problems of corporate influence over the government and of banking institutions causing financial crises through their dealings.  It quickly spread to many cities across the U.S. and the world, seeing people camp out in tents for weeks, sometimes for months, protesting the power held by what they perceive as “the 1%,” or the richest, most powerful fraction of the population.

While it may seem at first as if the goals of the two movements are radically different, I would contest that they are actually quite similar.  Both movements argued for increased power for the people and increased transparency within the governmental process.  In addition, they both bemoaned the power of a small, upper class of people- in one case, “the 1%,” in the other case, the aristocracy.  Also, both movements gained momentum as they spread nationwide, or globally, among a decent number of people.  The outcomes of the two movements also appear to be similar; both of them did not realize the goals that they wished for at the time of their existence.  Whether the Occupy movement will prove to be ahead of the times in that some of its proposed reforms will eventually adopted, or whether it will be classified as merely an ideological offshoot, is yet to be seen.

Returning to Sibyl, I expected the theme of the novel to be strongly pro-Chartist with its heartrending depictions of the conditions of the lower classes.  However, when the Chartists finally assemble a striking force, they are manipulated by their leaders, who are motivated by purely selfish reasons, into storming (or occupying) Mowbray Castle, where they engage in pillaging and looting, culminating in a battle with troops.  So what did they actually accomplish?  Is this what happens when power is given to the people?  Similarly, the Occupy movement suggests a similar dilemma- Does their ideal world really consist of living in tents?  Reports of chaos, crime, trash dumping, and even rape were prevalent from the Occupy camps across the world.  Clearly, like Chartism, Sibyl would seem to suggest that the Occupy movement cannot be the ultimate answer.

However, that doesn’t mean that the questions that the movements pose aren’t relevant.  I think that that point, more than anything else, was the theme of Sibyl- an overarching question, a problem, rather than an explanation or a solution.  And, I think that that is also the key takeaway of the Occupy movement.  Does this country need increased transparency in its banking and political systems?  Quite possibly.  Is income inequality the most important economic issue facing our generation?  I would argue not.  Do the social classes in this country feel out of touch?  Probably, but I’m not sure that this is any more true than fifty or one hundred years ago.  Is the best vehicle for change within the framework of the system, or is a mandatory first step a reconsideration of that framework?  I think that the combination of democracy and capitalism in America have worked pretty well.  But those are only my answers to those questions.  I would ask you to think about yours.

Morals and Money

We seem to be at a critical crossroads in this country. As the merits of market capitalism are tested against the growing power of state run economies such as China, and as the struggle of the average American continues to increase, the role of the ultra wealthy has been called into question. What moral obligations do the rich in this country have? If there exists any, is it the role of the private citizen or that of the government to see these fulfilled? These questions are nearly impossible to answer without igniting what is arguably one of the more contentious debates in recent memory. While the title and my introductory explanation of this blog suggest that Latin Literature will play a key part (and it will) in my discussions, I found an example too good to pass up in my English class this semester.

             

To better understand this moral divide, and for some consolation in knowing that we are not the first to have such a debate, we will take a brief look at the role of wealth and excess in the Medieval English work Piers Plowman by William Langland. Perhaps one of the most confusing pieces of medieval literature to scholars, Piers Plowman touches on some heavy societal issues including the role of merchants and prosperity. Characters within the work are represented by abstract concepts such as ‘Envy’, ‘Gluttony’ and the knight ‘Conscience’. Most central to the work however is the maid “Mede” which is a Middle English term for either “wage, reward, or the profit motive”. I think the very definition itself is telling to the struggle William Langland’s world had with money. The profit motive is a very ambiguous term, whereas a wage is clearly a beneficial concept. Is the profit motive a good or bad thing or can it be both? Does wealth inevitably lead to corruption? The author at one point describes a person who will do anything for money, as he says “for silver is sweet”. The Knight Conscience talks of how Mede leads people to “lose their lives and their lands both”. However, Langland feels that money and prosperity are a practical means for a quality of life, and later describes how wealthy merchants should profit as much as possible in order to “have hospitals built with it (profit)” “build bridges that have broken down, send scholars to school or set them to a craft”.

            

I suppose I would draw this to a close in saying that the values and morals in question during the 14^th century reflect that of the current day. Wealth and prosperity would seem to incur some responsibility along with them. Within the American system however, we face a critical debate on where that responsibility should lie, and what role our own Constitution should have in this process. There is no doubt that labor, trade, and commerce employ and create opportunity for all those involved, and the prosperity of few can translate into the uplifting of many. However it is also true that this same prosperity can lead to decisions that have far reaching ramifications and can leave many with nothing. How do we deal with this as a country, and what other literary sources exist that explore this same problem? I look forward to hearing back.

 By Kurtis with a K.

This year, I had only one New Year’s Resolution.  It wasn’t the New Year’s Resolution of the obese person who vows to give up chocolates or of someone on their fifth glass of wine who vows to give up drinking; it was the resolution of a man with an idea- I wanted to start blogging.  Maybe I wanted to write because I felt like I had something relevant to say (though that’s probably not true); maybe I wanted to write because I was slightly inebriated (pumpkin juice plus rum is an amazing drink, if you ever get the chance); maybe I just wanted to write for the sake of writing.  Either way, I knew that I had an idea, and it was an idea that I didn’t want to give up on.

            

Like my fellow Curtis, I believe that much insight can be gained by looking to the past.  I don’t mean history, necessarily; it can be literature, philosophy, science, mythology, even the memes of the Medieval Period that serve as sources of inspiration.  What I think is important is to think about the world around us, and to think about how we think about the world around us (hopefully that makes sense).  Too many people go through life without pausing for a minute to contemplate the phenomena they experience.  I don’t think that it’s an easy task to try to understand the world, and I don’t think that it’s one that any of us will ever fully accomplish, but I also believe that there is no reason why we should not try to do so.

             

To me, the term “Classics” will take on a more liberal meaning.  I will try to look at the modern era through many different lenses, some of which will begin by talking about historical figures or novels.  Hopefully, I will be able to draw a not too tenuous connection between those stories and the happenings and issues of today’s age.  That’s where “Capitalism” comes in- having studied a reasonable amount of economics, I will also attempt to connect those issues to some of the key principles of economics, making them easier to understand than when they are laid out by supposed professionals on television.  It is a sad truth that many of capitalism’s most ardent critics- and many of its most fervent supporters- do not have the slightest grasp on its inner workings.  This leads to ill-formulated arguments and vacuous debates in which meaninglessness becomes the norm, something which I wish to combat.

            

But, most of all, I want to write about things that are interesting to me, and interesting to all who happen across this blog.  I don’t want to present opinions and viewpoints which could be read about anywhere else, and I want this to challenge the thinking of many.  I welcome any feedback, as well as any ideas for pieces.  I look forward to this undertaking!

I have started this blog after frequently finding myself thinking about big issues pertaining to the two subjects in the title of this blog, and having no outlet to discuss these things. It is my hope that this turns into a conversation with any readers I may acquire and is partly directed by their interest. I think that the Latin language in particular and more obviously Capitalism, are subjects greatly relevant to the average American and issues that often times are not understood as well as they should be.

Latin was known by a great deal of the founders, and classical thinking of authors such as Cicero played a very real and practical influence on how the American government was crafted. Known to everyone, Latin appears on our money and all of our state mottos have been thought up in this language. I find it somewhat disturbing then that this language and its history are so overlooked now, at all levels of education. There is in fact a book written (I do not have its name on hand) about a period of time when a very high percentage of Americans recognized how important antiquity was to them. I think that's pretty sweet, and if this blog even makes a few people think about this in a meaningful way, it will have achieved its goal.

Capitalism, though not a perfect system by any means, is the one in which all of us participate on a daily basis, and I think its a pretty good one at that. I find that too often a lot of younger people do not really have a basic understanding of how this system works, mainly because they have never been forced to think about it. Financial responsibility isn't really something taught at the high school or university level (unless you are in B school) and I feel as though it should be. If many people in general had a better understanding of how market capitalism should work, I think they would be more empowered to make better decisions in various aspects of their life.

To be clear however, this blog is not an endorsement of any political ideology, and many intelligent people have ideas on how best to operate this system in which we live. The intent of this half of the blog is to more discuss the system of capitalism itself, and perhaps talk about investing as well, rather than to endorse specific political candidates, as that leads to hard feelings a lot of the time. That is not my goal. I know that it is inevitable to discuss economics and not associate ideas with names, and I understand that, I however do not want to be seen as partisan in anyway and make a lot of people mad.

I look forward to hearing back from all of you.