People often confuse creative destruction with societal collapse.

> People often confuse creative destruction with societal collapse.

If you're in the buggy whip biz when it fails, its destruction is a form of societal collapse.

Remember - a recession is when your neighbor loses his job. A depression is when you lose your job.

People fight to keep their "phony, baloney jobs" because said jobs are their jobs - the phony, baloney is external to them.

I'm not sure what you're getting at exactly, but I would suggest that such people need to brush up on their definitions. Creative destruction is when an obsolete industry or practice is allowed to fail. Some people lose jobs, and find other ones later. It hurts.

Societal collapse is when we all starve to death because we are all critically dependent on modern industrial agriculture. It kills.

There's a difference. Preventing creative destruction is choosing to avoid pain now with death not-too-far-from-now. I am not being metaphorical. The article cites examples where just that happened; all those collapses were accompanied by carrying-capacity reductions, which is a rather dry technical way of saying "lots of people died".

A society full of people who don't get this distinction is a rather scary prospect, but alas, more people now than ever before get this and it's still probably nowhere near enough.

(Questions about whether our society is facing just such an inflection point right now left as an exercise for the reader, as well as what "pain-avoidance" measures are currently floating around that might qualify.)

Really, I though creative destruction would be something more like, letting GM fall apart, so that several new companies could buy the pieces, cheap, and creatively make new and innovative automobiles.

Yes. That's actually an important observation about the process; just because a billion-dollar-practice (called "GM") has keeled over dead doesn't mean that the economy automatically takes a billion-dollar hit. First, the billion dollar value clearly wasn't there in the first place (and acting as if it is is dangerous to the economy; the current economic crisis in a nutshell is "bad valuations"), and second, assets remain in existence that can be reused by more effective entities.

But people are hurt, jobs are lost (even if only temporarily and ideally with more recovered in the end), and there's still displacement that occurs. It's just that it's vital to understand that the alternative is far, far worse.

IMHO, if there is a safety net allowing failures (condition to creation/experiments), I call it creative destruction. Otherwise, it's a question of threshold: will the system collapse or not.

Edit: of course, those are not totally orthogonal notions, and those can be quite interleaved at different levels. (e.g. a company collapses, but it's employees aren't supposed to be left dying under a bridge and can integrate/create another one)

In the book Fat And Mean, (http://www.amazon.com/FAT-MEAN-Corporate-Managerial-Downsizi...) David Gordon essentially argues that corporate downsizing often involves survival of the most bureaucratically adept rather than the most productive. Overtime, more complexity and less productivity result.

You could apply this reasoning in the rest of the article also...

There's a danger of letting the perfect becoming the enemy of the good when you start to analyze capitalism. There's a lot of "Capitalism has a problem -> Capitalism isn't perfect -> In theory, social structure X doesn't have that problem -> Social structure X is better!" that goes on, but there's two obvious problems with that: Theorizing about most commonly debated social structures is mostly unnecessary now as somebody has tried it and odds are pretty decent social structure X does in fact have that problem in practice, and of course you can't slam the question of which system is better down to just one attribute.

I bring this all up to make the specific point that while it is absolutely true that a bureaucratically adept person can game the system in a capitalistic society/company, I don't know of a single alternative social structure where a bureaucratically adept person has less power. Excepting maybe anarchism (not advocating, just pointing it out). Bureaucratic-adeptness is rewarded roughly in proportion to the centralization of authority. Most people's solution to the problem seems to involve more centralized authority, which seems actively inimical to solving this problem.

Yes, the article is correct - self-perpetuating bureaucracy is constant in human-civilization. What distinguishes capitalism from other forms of civilization is the ability to substitute creative destruction for bureaucratic sclerosis and collapse - some of the time, if you're lucky...

When a company is downsized to 0 employees it doesn't matter who were the most "bureaucratically adept" and were the last to turn out the lights.

It's "creative destruction", not "creative downsizing".

Creative destruction is the theory of evolution applied to economics.

It will always be in the interest of some to hinder the pace of change; however inevitable it may be. Side note: Who Moved My Cheese? is a great parable on dealing with change and I recommend it often.