The Problems with Economic Liberalism

"Not all Destruction is Creative," read the title to a mixed media entry at an exhibition I attended seven or eight years ago as an art student in Savannah, GA. Without having studied economics, the title to this work nonetheless struck me as a intriguing concept.

The term "Creative Destruction" was coined in 1941 by Austrian economist Joseph Schumpeter. It is intended to describe the means by which free-market economies prosper by challenging the status quo. If the established, ongoing concerns within a market refuse to innovate, they will be displaced by those that will in the form of Creative Destruction. It is an economic principle that we, as Americans, have often celebrated. Ironically, it compliments our theories of democracy and freedom and is one of the reasons we are successful as a nation.

One can argue that human beings are, by nature, entrepreneurial. In theory, democracy and the free market system, instead of repressing the desire to succeed, encourage it in such a way that the needs of the individual shall ultimately work to the benefit of all; freedom, safety, upward mobility, the pursuit of happiness, and so many of the things we enjoy in America. Liberty is a broad concept that can encompass our beliefs about personal freedom, and our freedom to compete in economic markets.

With regard to economic liberalism, however, the notion that unmitigated greed and avarice can be channeled constructively into a democratic, free-market system, is a flawed theory. It chafes at our collective morals, and is something that we should discard.

Free market policies, taken to the extreme, create exploitative dilemmas that leave our nation worse off. While some continue to blame the current economic slump on our refusal to more liberally apply free-market principals, it's obvious that overindulgence in economic liberalism, which began as a cure for the economic woes of the 1970's, has run amok, and we face the arduous task of restoring confidence in our financial markets and the competitiveness of our economy.

While it is tempting to liken the current recession simply to a troubling phase in economic weather that will eventually pass, America should take heed; a comprehensive solution, of the kind we all would like, will not happen in such a simple way. We can expect continuing "let-downs" in the performance of the economy until our broader economic and competitive strategies undergo reform. Change will ultimately be the result of commitment, hard work and a willingness to think constructively. It will challenge our abilities to create solutions, to resolve dilemmas, to think collectively and to resist the flawed notion that compulsive greed may have a place within free markets, or any successful economy. Generations to come will appreciate our willingness to face these challenges instead of simply passing them on.