Economic Crisis 2008: What happened to Creative Destruction of Free Market Capitalism?
We all understand that the free market encourages people towards industry and innovation. When individuals are allowed to gain substantial profit for taking substantial risks, they will provide superior services and goods to those who are willing to pay for them. Free market capitalism has tremendously outperformed command economies like East Germany, North Korea or the USSR. Capitalism has proven itself to be the current most effective method for creating wealth. We also understand that regulation and government is necessary to maintain the integrity and stability of markets. Even George Soros admits that if regulation and oversight didn’t exist that the markets would fail to exist.
The beauty of Capitalism is the fact that it wreaks creative destruction on industries that are inefficient and outdated. If a company does not produce enough profit compared to its competitors it will go bankrupt. The faster it goes bankrupt, the more quickly its resources can be reallocated. This competition and destruction is termed ‘Creative Destruction’ and it helps our economies from stagnating.
I think we all know this and understand this concept. But why has this been forgotten in this current "Economic Crisis"? Why isn’t anyone talking about Creative Destruction as an opportunity? Isn’t it the corner stone of our system? Shouldn’t we be rejoicing and be happy that the dead branches are being trimmed from the tree? Won’t the economy be stronger once all the badly run companies go bankrupt? Won’t this situation teach us how to reorganize our regulations?
Is there anyone who understands capitalism and is happy about this creative destruction?
Jim Rogers said that we are more communist than the communist Chinese. I can’t stand watching the news in the USA. Its like people don’t even know the system they live in. What is your opinion on Free Market Capitalism and the principal of Creative Destruction?