Built to Be Eclipsed

Partially the "built to last" bit (and my deep philosophical problems therewith) is on my mind because I'm immersed in a biography of Joseph Schumpeter. (Prophet of Innovation: Joseph Schumpeter and Creative Destruction, by Thomas McCraw.) For decades Schumpeter played, to his chagrin while alive, second fiddle to JM Keynes. In a penetrating review of the book, the noted economist Robert Solow convincingly argues that the first violinist now has rather clearly turned out to have been Schumpeter.

In short, Schumpeter, in a long life devoted to one idea, squarely and contentiously placed the entrepreneur way ahead of the pack when it comes to the engine of economic growth: "Without innovation, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion. The atmosphere of industrial revolutions—of 'progress'—is the only one in which capitalism can survive." (Note the plural of revolution—i.e., "revolutions.")

This was radical stuff in 1911, when Schumpeter's Theory of Economic Development arrived—and remains so today. We can work like hell to get the money supply "right" and to salvage the Mercks and GMs, but make no mistake that our future depends on the occasional but consistent provision of Googles and Genentechs and a string of future Googles or Genentechs bubbling in Palo Alto or Cambridge or another of those precious couple of dozen zipcodes which drive our future economic—and thence political—power.

Schumpeter also believed in "my world" (and Peter Drucker's!!!)—which also set him way apart from economists past and present alike. As Solow says, "He was explicit that, while technological innovation was in the long run the most important function of the entrepreneur, organizational innovation in governance, finance and management was comparable in significance." Thus the advantage that accrued to, say, Dell's supply chain organizational-management approach (abetted, indeed, by new technology) is as decisive to progress (at the moment—which is the point!) as is Amgen's latest FDA-approved compound.

All hail the entrepreneur, in search of what Schumpeter in economist-ese calls "temporary monopoly profits," and the revolutions-creative destruction said entrepreneur repeatedly leaves in his wake ... until that moment when he in turn is relegated to the scrapheap.

The king is dead.
God save the king.