The New Global Competition

Abstract

The euphoria which followed the dismantling of the Berlin Wall in 1989 led a number of commentators to announce the ‘end of history’. Western capitalism had not only assigned communism to the archives of world history, but had also offered a final vindication that a market economy was the only way to deliver prosperity, democracy and social justice.¹ Yet at the very moment Eastern Europe was on the march to capitalism, Western nations were experiencing the full force of Schumpter’s ‘gale of creative destruction’. For most Americans and Europeans the sudden collapse of the Soviet Union did not confirm a sense of well-being but their anxieties about the basic facts of life. Job insecurity and unemployment were no longer the preserve of low-skilled blue-collar workers, as white-collar managers and professionals found themselves among the ranks of ‘surplus employees’. Since the mid-1970s the wages of lower-skilled workers have fallen precipitously behind the rest.² The real wages of middle Americans and those below them in the income parade have also fallen over the last twenty years.³ In the European Community close to 20 million workers are recognised as unemployed and in Britain, the gap between rich and poor is greater than at any time since the late nineteenth century.

The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organisation that capitalist enterprise creates …This process of Creative Destruction is the essential fact about capitalism.

Joseph A. Schumpeter