Creative Destruction Archives

The New Realities Part V: Sovereignty, Anarchy, and Creative Destruction

If you are someone who enjoys chicanery, volatility, and a world without rules, the needle on your happy meter will remain pegged for the foreseeable future. The world Daniel Suarez creates in his techno-thriller Daemon and its sequel Freedom seems to be more real than fantasy as unexplained flash crashes and debt-induced contagions threaten to destroy our many efforts to construct durable institutions to suppress endemic anarchy in the international system. Suarez may prove to be as prescient as his predecessor of Americano angst, Tom Clancy. Alas, anarchy appears to be gaining the upper hand—as Machiavelli’s adherents would argue it always has. Our stubborn invocation of sovereignty ensures it. Our rapacious leaders in both D.C. and Wall Street exploit it. It is simply antithetical for humans to stick much more than a toe into the Rubicon’s waters of civil transformation before withdrawing; there are few Caesars among us.

However, while we wring our hands over the effects of market mayhem and cringe at the timidity of our political leaders who wilt under kliegs supplied by hyper-partisan (so-called) news bureaus, we can also find solace in the uncertainty and upheaval that allows creative destruction to do its thing: to purge the system of bad ideas and incompetent leaders. Anarchy amps our turpitude but it also makes room for reinvention—for new ideas and leaders to take the stage. Many (relative) innocents will be hurt, but we must embrace this Darwinian moment and adapt our own behaviors and expectations to new realities. We must avert our eyes from headlines crafted by Chicken Little hacks and dig deeper into human activity. When we do, we realize that we are one major ah ha! away from an explosion of innovation. For example, last week’s announcement of the proof-of-concept of synthetically driven cell production means creative destruction is underway. Next-gen Edison’s remain busy while entitled malcontents who capture headlines hurl stones in Athens’ public square.

Moreover, predictions based on watersheds, contagions, and dominoes are seldom, if ever, realized. More often, they are used to perpetrate a political slight of hand, like we must fight in Vietnam to stop the contagion of communism; or, if we establish a democracy in Iraq it will produce liberal domino effects throughout the Mid-east. Or the latest: if Greece goes under the global financial system will collapse. The reality is that factors that produce effects in one place at a point in time seldom propagate. Variability of both factors and outcomes is much more probable. And, we humans have a distinct advantage. As Matt Ridley points out in The Rational Optimist, humans have mastered the practice of exchange and specialization allowing wealth and intelligence to metastasize across our global civilization.[1] This means most of us will be okay—as we always have been—notwithstanding enduring the hue, cry, and anger of fear-mongering politicos, displaced non-adapters, and bigoted extremists.

Social order is changing, forced by crises, real or perceived. Sovereignty will become a personal claim, not just a claim of state. Anarchy will prevail both inter, and intra state. Eventually, new structures will emerge based on new norms and narratives. Myths will be written anew. Collective action based on intelligent exchange and specialization will prevail. A new ‘normal’ will be revealed. This dialectic phase will end and a higher truth will emerge, just as it has throughout the history of humankind.

[1] Matt Ridley, The Rational Optimist: How Prosperity Evolves (Harper Collins, 2010).

Celebrating Crisis

White Windsor collars on crisp colored shirts, banded by Hermes cravats and striped suspenders, offered the mousse-laden coif of Gordon Gekko an air of elite credibility as he unabashedly granted greed the seal of morality twenty years ago, “Greed is good!” Today, while the sequel to Wall Street is in production, our sense of what is good is changing, at least on Main Street. The rest of the world is learning—slowly and painfully—that crisis is good too, even as the mantra of greed continues its reign of primacy in the shadow of Trinity Church in downtown New York. As Goldman Sachs conjures a new bubble-market to inflate and exploit, crisis brings hope in the most unlikely places.

In the Lower Ninth Ward in New Orleans, which was demolished and left as rubble by the many government agencies who swore to rebuild it, crisis offers a vacuum of opportunity. Wayne Curtis reports (The Atlantic, November 2009) “New Orleans is seeing an unexpected boom in architectural experimentation.” In the Lower Ninth the new dream homes are also green. Simple, yet high design is combined with solar power to make the electric meter “run backwards” and building materials are reclaimed from the destruction of Hurricane Katrina. If the Corp of Engineers does their job re-building the levy (for real this time), what had become a cesspool in the Lower Ninth Ward will be one of the most advanced new neighborhoods in America.

Then there’s the case of ‘biochar.’ While Al Gore promotes environmental apocalypse (justified by his own Hobbesian view of brutish man) and is challenged by less vocal but brilliant scientists like Princeton’s Dr. Freeman Dyson, the nearly unknown Danny Day is busy solving the problem beyond the hue and cry of politicized climate change. Mr. Day is founder and president of Eprida (www.eprida.com). Eprida applies old technologies first used by indigenous tribes in the Amazon Basin to convert biomass to build “sustainable food and energy production.” Biological charcoal (‘biochar’) is made from organic waste that keeps harmful carbons ‘locked-in’ providing a new form of highly effective organic fertilizer and storage of harmful carbon for many millennia. Clean up the air while increasing crop yields—a two-for-one piece of creative elegance.

Finally, while our elected leaders wrestle with their temperamental paramours in the health insurance and pharmaceutical industry, Dr. Jay Parkinson is executing his own healthcare reform by renegotiating the relationship between patient and healthcare provider. At hellohealth.com, the patient manages his or her healthcare where they can find a physician, schedule an appointment, handle simple visits online, and manage their prescriptions and medical records. HelloHealth utilizes a combination of health savings accounts and catastrophic insurance to provide coverage, while reducing the enormous waste of time and paper associated with most patient/physician interactions. Many of the appointments are completed online using instant messaging with the patient’s records in front of the physician as digital files. The only thing missing are all the tattered back-issues of People magazine in the waiting room full of wheezing patients.

If these three cases suggest anything it is that crisis may indeed be as good, or better, than Gekko’s greed. Americans have an uncanny capacity to experiment, innovate, and prevail. Maybe, just maybe, this crisis will prove really, really good.