After the Crash

by on October 24, 2008 · 9 comments

Forbes has produced a scintillating special report on the market crash and what comes next. Steve Forbes tells “How Capitalism Will Save Us.” In “Curbing Washington’s Growing Power” economist David Malpass explains the policy mistakes that led here and describes the key threats that could make it worse. Rich Karlgaard compares today’s market to the malaise of the 1970s, but offers hints of optimism bubbling up. And George Gilder, summoning Peter Drucker’s mantra — “Don’t solve problems; pursue opportunities” — previews the technologies that portend a “Coming Creativity Boom” and offers, characteristically, the deepest insights on the nature of capitalism:

Knowledge is about the past; entrepreneurship is about the future. In a crisis the world of expertise pulls the global economy ever deeper into the past, where accountant-economists ruminate on the labyrinthine statistics of leviathan trade gaps, tides of debt and deficits, political bailouts and rebates, regulatory clamps and controls, all propping up the past in the name of progress.

The crucial conflict in every economy, however, goes on. It is not between rich and poor, Main Street and Wall Street, or even government and the private sector. It is between the established system and the new forms of wealth rising up to displace it–all the entrenched knowledge of the past and the insurrections of futuristic enterprise and invention.

The real source of all growth is human creativity and entrepreneurship, which always comes as a surprise to us, especially in the worst of times, as Rich Karlgaard notes. No amount of knowledge about the present can predict the specific profile and provenance of innovation. From the pits of the crash of 2000, when the Internet and the siege were famously dismissed as a barren “bubble,” came Google (nasdaq: GOOG – news – people ) and MySpace to rise up and take all the chips and establish a new Internet economy. If creativity was not unexpected, governments could plan it and socialism would work. But creativity is intrinsically surprising and the source of all real profit and growth.

You’ll find lots more economic and investing advice, including a report on “What Ben Graham would do.”

Previous post:

Next post: