The last book I read was Joseph Schumpeter’s Capitalism, Social, and Democracy, a book famous for coining the phrase “creative destruction” as a description of the process inherent to capitalism whereby old methods of production and commodities are incessantly obsolesced and replaced–an insight drawn, I believe, from Marx’s talk about capitalism constantly revolutionizing the means of production (compare also Deleuze and Guattari on on de/reterritorialization).A key component of Schumpeter’s argument in this book is that capitalism is sowing the seeds of its own downfall and eventual replacement by socialism through, e.g., the bureacratization of modern business and the increasing importance of managing rather than leading or innovating, both of which contribute to the loss of the capitalist elan, and the concomitant slowing of the pace of innovation.

Schumpeter published this book in 1942 and can hardly be blamed for not having predicted the computer and information “revolutions,” which are tempting to see as concrete refutations of his theory. Arguing the contrary is an article from the IEEE Spectrum (June 2008, though I just came across it today), Singular Simplicity, by Alfred Nordmann.

I’d argue that I have seen less technological progress than my parents did, let alone my grandparents. Born in 1956, I can testify primarily to the development of the information age, fueled by the doubling of computing power every 18 to 24 months, as described by Moore’s Law. The birth-control pill and other reproductive technologies have had an equally profound impact, on the culture if not the economy, but they are not developing at an accelerating speed. Beyond that, I saw men walk on the moon, with little to come of it, and I am surrounded by bio- and nanotechnologies that so far haven’t affected my life at all. Medical research has developed treatments that make a difference in our lives, particularly at the end of them. But despite daily announcements of one breakthrough or another, morbidity and mortality from cancer and stroke continue practically unabated, even in developed countries.

Rather than identifying the social forces that may be responsible for a diminution in the rate of (future or current) technological advancement, Nordmann points the finger at inherent technological limits to, e.g. Moore’s law, or to the sheer amount of mental concentration it would require to drastically improve the speed of human-brain-to-computer communication.

If anyone out there on the intertubes is aware of economists who’ve done solid work exploring Schumpeter’s theses in the fifty or so years since he died, I’d be very interested to know. I see links between Schumpeter’s observation of the fall-off in innovation and the recent charge by some social critics (don’t recall who… perhaps Joseph Stiglitz, perhaps James Galbraith) who question the inflated role of financial instruments in “generating” wealth, as well as the the value of purportedly innovative new financial products.

As amenable as I am to such lines of thinking, I wonder sometimes whether the commonly heard worry about “all this money not being based on anything real” is actually getting at the root of the problem. Money, after all–especially since, but even before the abandonment of the gold standard–has always had something immaterial about it. It is a condensation of social trust, or as Simon Critchley (who I’m fortunate enough to get to study with at the New School for Social Research) wrote recently for the NY Times (Coin of Praise),

Money has a promissory structure, with a strangely circular logic: money promises that the money is good. The acceptance of the promise is the approval of a specific monetary ethos… This ethos, this circular money-promising-that-the-money-is-good, is underwritten by sovereign power. It is worth recalling that gold coins called “sovereigns” were first minted in England under Henry VII in 1489 and production continues to this day. It is essential that we believe in this power, that the sovereign power of the bank inspires belief, that the “Fed has cred,” as it were.