Market's reliance on "creative destruction" is another way of saying "progress" and "everybody getting richer."

Atari goes bust. Netscape tanks. The Newton wouldn't sell. Is it such a bad thing? Deidre McCloskey explores the upside of free-market competition in her review of Capitalism in America, by Alan Greenspan and Adrian Woolridge, in the Claremont Review of Books.

Yet Greenspan and Wooldridge pull their beards wisely over "those left behind" by capitalism. The "perennial gale of creative destruction," they write, "thus encounters a perennnial gale of political opposition." Yes, as is evident in populist promises to bring back West Virginia coalmining and Hungarian agriculture. But it is progress that is the problem, not capitalism. Ifr we want the poor to be better off, we want progress, and therefore "destruction." An ideal central planner would do exactly the same things--e.g., by way of closing West Virginial coal mines or driving Hungarian farmers out of business--that an ideal market "capitalism" would do. If an activity is unprofitable it should be destroyed, to make way for creation and human progress.

The problem is that many believe that capitalism is a new phenomenom, and therefore that markets and bankers should be blamed for the disturbances of progress. But it ain't so. Homo erectus accumulated Acheulean hand axes by the hundreds in each campsite, the Romans accumulated their roads, the Chinese their wall. Nor is finance or capital markets or specialization new. The ancient Athenians borrowed from banks,the ancient Romans and Chinese elaborately specialized, and English peasants in the 13th century traded land with each other with alacrity.

What matters for progress--never mind capitalism--is encouragement to innovation. The Great Enrichment after 1800 was unique, lan enrichment of the poorest among us, not by 100% or even 200%, but in places like Japan and Finland by fully %3,000 and even by 1,500% in theAMerican colonies already in the 18th Century.

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