|
Capitalism, then, is
by nature a form or method of economic change and not only
never is but never can be stationary. And this evolutionary
character of the capitalist process is not merely due to the
fact that economic life goes on in a social and natural environment
which changes and by its change alters the data of economic
action; this fact is important and these changes (wars, revolutions
and so on) often condition industrial change, but they are
not its prime movers. Nor is this evolutionary
character due to a quasi-automatic increase in population
and capital or to the vagaries of monetary systems, of which
exactly the same thing holds true. The
fundamental impulse that sets and keeps the capitalist engine
in motion comes from the new consumers, goods, the new methods
of production or transportation, the new markets, the new
forms of industrial organization that capitalist enterprise
creates.
As we have seen in the preceding chapter, the
contents of the laborer's budget, say from 1760 to 1940, did
not simply grow on unchanging lines but they underwent a process
of qualitative change. Similarly,
the history of the productive apparatus of a typical farm,
from the beginnings of the rationalization of crop rotation,
plowing and fattening to the mechanized thing of today–linking
up with elevators and railroads–is a history of revolutions.
So is the history of the productive apparatus of the iron
and steel industry from the charcoal furnace to our own type
of furnace, or the history of the apparatus of power production
from the overshot water wheel to the modern power plant, or
the history of transportation from the mailcoach to the airplane.
The opening up of new markets, foreign or
domestic, and the organizational development from the craft
shop and factory to such concerns as U.S. Steel illustrate
the same process of industrial mutation–if
I may use that biological term–that
incessantly revolutionizes the economic structure from
within, incessantly destroying the old one, incessantly
creating a new one. This process of Creative Destruction is
the essential fact about capitalism. It is what capitalism
consists in and what every capitalist concern has got to live
in. . . .
Every piece of business strategy acquires its
true significance only against the background of that process
and within the situation created by it. It must be seen in
its role in the perennial gale of
creative destruction; it cannot be understood irrespective
of it or, in fact, on the hypothesis that there is a perennial
lull. . . .
The first thing to go is the traditional conception
of the modus operandi of competition. Economists are
at long last emerging from the stage in which price competition
was all they saw. As soon as quality competition and sales
effort are admitted into the sacred precincts of theory, the
price variable is ousted from its dominant position. However,
it is still competition within a rigid pattern of invariant
conditions, methods of production and forms of industrial
organization in particular, that practically monopolizes attention.
But in capitalist reality as distinguished
from its textbook picture, it is not that kind of competition
which counts but the competition from the new commodity, the
new technology, the new source of supply, the new type of
organization (the largest-scale unit of control for instance)–competition
which commands a decisive cost or quality advantage and which
strikes not at the margins of the profits and the outputs
of the existing firms but at their foundations and their very
lives. This kind of competition is as much more effective
than the other as a bombardment is in comparison with forcing
a door, and so much more important that it becomes a matter
of comparative indifference whether competition in the ordinary
sense functions more or less promptly; the powerful lever
that in the long run expands output and brings down prices
is in any case made of other stuff.
It is hardly necessary to
point out that competition of the kind we now have in mind
acts not only when in being but also when it is merely an
ever-present threat. It disciplines before it attacks. The
businessman feels himself to be in a competitive situation
even if he is alone in his field or if, though not alone,
he holds a position such that investigating government experts
fail to see any effective competition between him and any
other firms in the same or a neighboring field and in consequence
conclude that his talk, under examination, about his competitive
sorrows is all make-believe. In many cases, though not in
all, this will in the long run enforce behavior very similar
to the perfectly competitive pattern.
(pp. 82-85)
|
|
