Thanks to everyone for participating in the thread. It's nice to have a more provocative conversation in OT.
That said, as you indicate in the latter comment, old media is currently being rendered into something else. No doubt it will still have a place, but it will be a different place. And how about smaller fish like encyclopedia publishers?
Also, see the current state of the music industry.
I think there's plenty of cases that can be made for new players in markets. Just look at the impact of a eco friendly company like Compendium beating out American Greetings and Hallmark for Card of the Year or The Royalty Network competing with ASCAP and BMI in the business of collecting royalties for songwriters and music publishers.
Well, when the models fail or lose competitively they destroy jobs and capital.
It does but consider that of the companies that made up the Fortune 500 over fifty years ago only 71 remain today. A bad thing? I'd suggest not.
The author of that column talks about how business people like to collaborate with government to maintain the status quo. But not about how business people collaborate with each other for the same purpose. Also there's the problem of M&As making firms so large that they can maintain the status quo on their own for extended periods of time. Nor about how natural barriers to entry can keep a company on top long after it ceases to be efficient.
Can they maintain status quo? Here's a story for you.
In the early 70's Ames Dept. Stores and Wal-Mart were equivalent in size, had strong entrepreneurial founders who guided them and had the exact same business model of rural discount retailing. In fact, Wal Mart copied much of the original model from Ames and Ames copied operating ideas from Wal Mart.
However, Sam Walton turned the company over to an insider whereas Ames brought in an outsider. Ames acquired Zayre (remember them?), which doubled the size of the company in a year. Meanwhile Wal–Mart retained focus on small towns and kept building concentric circles around Arkansas before entering the suburban/urban market. So Ames changed itself overnight into urban retailer and doesn't exist today and Wal–Mart became a monster by managing logistics better than anyone. They created their own success and Ames caused its own death. Di
worseifcation? I think so...
So while I'm a fan of creative destruction, I feel that we don't have enough of it. And not just because of government actions, but also because of government inaction (weak anti-trust laws and enforcement) and factors where the government really isn't an actor at all.
You think? Well it appears Larry Summers had a different view and here's what he said last week about Schumpeter.
http://www.whitehouse.gov/blog/A-Vision-for-Innovation-Growth-and-Quality-Jobs/
I also a number of people who've been layed off and got SBA loans to start their business this year and did it pretty easily.
Cutlass said:
And that results not just in a blandness of businesses, but a blandness of society as a whole. When every town has a Starbucks, a McDonalds, a Dunkin Donuts, etc, etc, etc, than I think that we as a society have really lost something. The growth of mega-businesses is resulting in the homogenization of our lives. So while some things, like television, have been fragmented by the modern economy. Other things, like retail, have lost that. And still others, like joint ventures, have resulted in "competing" companies offering pretty much just the same thing in different packages.
I think the column should be addressing that at least as much as it will, at least as was indicated in that article, focus on business-government collaboration.
I don't see that at all but maybe because I actively look at what the Inc. 5000 privately held companies are doing for new businesses and their ideas. I will always support companies that come up with cool ideas like KimandScott's (Chicago co. that makes awesome microwaveable pretzels with cool treats inside...yum) or Pet United's sites like dog.com and have even bought stuff from Skullcandy for gifts for the younger set.
I think critical theory has already given an answer to such a view. The point is innovation and entrepreneurship occur within a social context. The entrepreneur does not single-handedly create and produce. He does so as a small though perhaps catalytic part of society. The contention, then, rests on the distribution of the fruits of the collective effort. I believe the point Richard Cribb had been making months ago is the fact that these entrepreneurs reap an inordinately large portion of the profits, under the rationale that they are the ones taking the risk. But that is not so. Ordinary people also pay the price for disastrous projects that enterprising people have entered into.
Critical theory according to whose theory? It's actually quite un-Marxian, to say that capitalist enterprise was one and technological progress a second distinct factor in the development of output.
In Walras' general equilibrium analysis of the circular flow in a stationary state, he used the concept as a means to demonstrate how capitalist economies behave if they were deprived of their essential feature innovative activities. Innovative activities are the primary generator of economic change.
Schumpeter said "stationary feudal economy would still be a feudal economy, and a stationary socialist economy would still be a socialist economy, stationary capitalism is a contradiction in terms. ”Without innovations, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion.
Furthermore, people very often forgo immediate consumption for later benefit, and yet these are not necessarily entrepreneurial decisions and are as such not necessarily rewarded with profits, as Marx I believe had pointed out.
They are rewarded with savings and as one who's been a prodigious saver I've been rewarded in many ways including some good and some bad business opportunities. The good have more than outweighed the bad even though I've made more bad decisions than good.
This is all why the cult of entrepreneurship is a myth that is constructed to justify the current distribution of income. I think the entrepreneur might well play an important role in production, but so do the ordinary workers who are disadvantaged by the nature and vicissitudes of the labour market and are hence not entitled to nearly as much compensation. And this is also to say that, whatever the merits of the theory of creative destruction, I don't think it justifies social dislocation - because most of the people who are affected have a vital part to play in the whole picture, even though the entrepreneur mythology hardly deigns to mention them.
Interesting choice of words. The fundamental law of natural order is in direct conflict with the modern progressive socialist principles. History has shown that men are born of dramatically different skillsets. Fact is, some will attain tremendous success and be leaders, others will naturally be subservient and live a much humbler life. So while socialism may be able to imitate capitalist ideas for awhile I think Sweden leading up to the 70's proves it's not enough.
And I'd like to add that I don't believe Schumpeter would have endorsed the crap quoted from The Economist on post #70. If anything we could have said "I warned you" about "anti-business sentiment".
Businessmen as heroes?! That's not Schumpeter, that's Ayn Rand. That magazine, directed at economists, bankers and other assorted parasites, is peddling at readers desperate to justify their bonuses...
Lovely. No, he warned us that's it's not the immizerated who would revolt, but those who have benefited from capitalism's success. The enabled class of bureaucrats, journalists, lawyers, and academics whose social standing gives them the platform to reject and to undermine capitalism so I have no doubts it may occur with this chatterbox class pushing the buttons.
