Today is the 133 birthday of the late Austrian-born economist, Joseph A. Schumpeter. A Finance Minister of Austria and later Harvard professor, Schumpeter coined the term “creative destruction” in explaining how capitalism delivers progress:
The opening up of new markets, foreign or domestic, and the organizational development from the craft shop 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.
Although a messy process, creative destruction was, according to Schumpeter, often necessary for innovation. As Joseph Klesney noted in an Acton Commentary in 2001:
In celebrating technology, Schumpeter inherently (if not directly) recognized the creative expression of man. Christian social ethicists, however, acknowledge that the free economy is more than the development of goods and services. They look at economics in terms of what Ludwig von Mises called human action.
All human action has the capacity for moral significance. This is also true in the world of economics; certain economic conditions produce an abundance of goods and services, and moral people attempt to determine whether these arrangements respect the human dignity and God-given rights of those involved.