Schumpeter’s capitalism: Revolution by evolution

Economist Joseph A. Schumpeter was mentioned in a couple of Nevada Appeal columns a week ago, prompting a reader to remark it all might have gone over readers’ heads.

Schumpeter, an Austrian and the Austrian Finance Minister in 1919, often is lumped in with the Austrian school of economics. He actually was in the Historical school, according to some sources, but this stuff about schools is like stuff about political parties. Nothing wrong with categorizing, but it seldom amounts to precision in the realm of subjective analysis.

“I think you and Ron are going over a lot of heads,” wrote Rich Dunn in an email after this scrivener and Ron Knecht separately mentioned Schumpeter. Perhaps Dunn is right, but exploring vistas makes sense to me.

Dunn’s missive got me thinking. He might be right, so more on this top 20th century economist could prove beneficial. It sent me researching because the kernel cited in this last week’s column here lauded entrepreneurs — risk takers in business — and it was about “creative destruction” in commerce. Schumpeter coined that term, but two words won’t cover it all.

To his credit, Dunn in a subsequent email agreed creative destruction is how things work in many ways, presumably including commerce. “It’s how nature works,” he said. “The asteroid takes out the dinosaurs, yet here we are waiting for the next asteroid to take us out.”

Asteroids and living beings aside, it wasn’t that long ago we saw creative destruction work like a wrecking ball in Nevada’s construction industry, with fallout everywhere. Included were banks. Coming from Nebraska in March of 2008, this writer remembers well when Mutual of Omaha Bank took over First National Bank of Nevada, based in Reno, and First Heritage Bank, N.A., Newport Beach, Calif., in July of that year.

The 28 institutions involved were shut down by the Comptroller of the Currency and Federal Deposit Insurance Corp., becoming branches of the Omaha banking institution. Since then, the former First National bank branch in Carson City at 1101 N. Carson St., sports a Mutual of Omaha Bank sign. As such, it underwent a complete facelift and renovation by Shaheen Beauchamp Builders LLC of Carson City.

As Schumpeter, who died in 1950, said more than 58 years before Carson City got a Mutual of Omaha branch at a key intersection: “As a matter of fact capitalist economy is not and cannot be stationary. Nor is it merely expanding in a steady manner. It is incessantly being revolutionized from within by new enterprise.”

John Barrette covers Carson City government and business. He can be reached at jbarrette@nevadaappeal.com.