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It is likely a gross abuse of Schumpeter to imply that he would advocate turning up the dial on 'creative destruction' during a banking crisis. His view would more likely be that necessary steps should be taken and that the resolution of bad banks should take place when the situation had stabilized. He was one of the major influences Perry Mehrling cited for his own development and Perry would certainly never take such a view. The problem comes when sociopathic neo-liberals seize on his work to justify more looting.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Oct 31st, 2014 at 03:34:46 PM EST
[ Parent ]
I only know Schumpeters Ideas from secondary sources. However, I recently found that he was cited in the German Wikipedia article on Deflationspolitik.

There it says

Joseph Schumpeter veröffentlichte im März 1929 in der Zeitschrift Der Deutsche Volkswirt einen Aufsatz, in dem er erklärte, dass sich Deutschland wegen einer angeblich zu hohen Lohnpolitik und der Sozialpolitik in einer Depression befindet, die durch eine Mischung aus Lohn- und Preissenkungen sowie Austeritätspolitik bekämpft werden sollte. Dies war exakt das Konzept der Deflationspolitik Brünings.[6] Friedrich August von Hayek empfahl damals (auch den Vereinigten Staaten) eine Deflationspolitik, um die Lohnrigidität zu brechen.

Short Translation; Joseph Schumpeter recommended a policy of slashing wages and austerity (sounds familiar?) to fight the great depression in Germany.

The article also states that the general philosophy (not necessary directly related to Schumpeter) was

Die aus der Deflation entstehende Depression sei heilsam, gerade weil ,,untüchtige" Betriebe beseitigt würden.

Translation: The Depression was a good thing, because it would crush 'unfit' companies.

Now this does not specify banks. But clearly, the concept of creative destruction was right there and it was considered to be of particular importance during a depressed economic state.

by rz on Sat Nov 1st, 2014 at 10:01:45 AM EST
[ Parent ]
>Translation: The Depression was a good thing, because it would crush 'unfit' companies.<

Creative destruction is the core of his thinking. And in in discussions in the UK about demand stimulus to fight the great depression he ahd the same position: Nothing could be done.

by IM on Sat Nov 1st, 2014 at 10:44:00 AM EST
[ Parent ]
If anyone is left to write the history of this period, the way that individuals who were clearly delusional at best were able to define policy will fascinate future historians.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Nov 1st, 2014 at 01:38:27 PM EST
[ Parent ]
You may well be right. I am certainly no expert on Schumpeter.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Nov 1st, 2014 at 11:06:43 AM EST
[ Parent ]
Schumpeter was another fool who thought the prolonged depression after The Panic of 1873 had nothing to do with hard money policies.
by rifek on Sat Nov 8th, 2014 at 09:44:46 PM EST
[ Parent ]


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