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Book Review: Creative Destruction

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Creative Destruction: How Globalization Is Changing the World’s Culture
by Tyler Cowen (Princeton, N.J.: Princeton University Press, 2002); 179 pages; $24.95.

Most people can understand the common-sense logic and benefits from division of labor and international trade. After all, most people understand that there are some things that they are not able to provide for themselves, so they either buy them from someone else who can supply them or they will have to do without them. If you live in Kansas and you want to purchase an engagement ring, you’re going to have to buy the diamond from those who can bring the precious gem from South Africa or Siberia.

Likewise, most people can appreciate that differences in human skills or climate can result in something’s being a lot less expensive to obtain through trade than by trying to manufacture or grow the desired commodity oneself. If you want bananas and live in Alaska, it’s much more costly to grow them in a hothouse outside Nome than to buy them from suppliers in Central America, even counting the transportation costs that must be added on.

And while it takes a little bit more thought, most people can also appreciate, in principle, the logic behind the concept of comparative advantage. While a person may be far superior in his skills and abilities in many lines of productive activity relative to most others around him, it remains highly likely that he is probably better at some of those activities in comparison with other activities.

It is often worth it to allow less efficient workers do certain things for him through trade, so his time, abilities, and resources can be freed up to specialize in those activities that would bring him the greatest reward. The medical doctor who could do his own gardening around his house better and more cheaply than the professional gardener can is still wise to hire someone to take care of the lawn mowing and to tend the flower beds. It frees the doctor to devote his time to a marketable trade that will reward him more than enough to pay the gardener and still net him a significant increase in his income.
International trade

Of course, objections may still be raised. All that you say may be true in the abstract, it is often replied, but doesn’t international trade take jobs away, since the business goes to a company in a foreign country instead of going to someone right here at home?

The response is that the imports must ultimately be paid for with exports — assuming that the foreign supplier does not want to just give his goods away. The dollars earned by the foreign supplier will be used in one way or another to purchase American goods as payment for what has been bought from abroad. And hands will have to be set to work making those goods for export, no less than if they were devoted to making goods directly being sold to their own countrymen.

The very logic of trade based on the division of labor is that we all “import” into our own individual households the vast majority of the goods and services we use and consume. And we pay for them by “exporting” to all those others around us the specialized good or service that we can supply to them better or more cheaply than if they tried to provide it for themselves.

But are there not other dimensions to international trade that go beyond the mere buying and selling of goods and services in the marketplace? Can’t trade affect a wide variety of “nonmaterial” aspects of life and society? And can’t some of its consequences be viewed as harmful or negative from a wider perspective? And might not these aspects throw into doubt the supposed unlimited benefits and gains from unrestricted freedom of trade and commerce around the world?

Responding to such questions is the theme of Creative Destruction: How Globalization Is Changing the World’s Cultures, by Tyler Cowen. Cowen, who is a professor of economics at George Mason University in Virginia, has made a niche for himself by dealing with such unconventional arguments. In a previous work, In Praise of Commercial Culture, he argued that it has been capitalist society, with its innovations and material improvements, that has provided the tools and avenues for the development and marketing of various artistic forms. Capitalism, in other words, has been the best friend of the artist, the composer, the musician, and the literary author. (See the review in Freedom Daily, October 1998.)
The benefits of globalization

Now Cowen takes on those who argue that globalization of trade, commerce, and investment threaten the nonmaterial sides of culture and various other social sides of human life. First he points out that there are few peoples or cultures that are completely “homogeneous,” that is, untouched by the influences of other cultures and societies. Since ancient times there have been cross-cultural factors at work, as when the Romans adopted much of the philosophical and artistic thought of the ancient Greeks whom they had conquered, or when the ancient Japanese absorbed elements of Chinese culture, religion, and written language.

Indeed, Cowen explains that many musical and artistic forms in various countries only really developed when they began to import technologies from other nations, which enabled the indigenous populations to have the capability for various forms of artistic expression. As one simple example, he points out that the steel-band ensembles on the island of Trinidad developed their musical style on large oil drum containers brought there by the U.S. military during the Second World War. Also, the technology of cassette tapes has enabled‘West Indies and African music to flourish both in their homelands and with followings around the world because of the ease of reproduction and distribution.

Cowen does not deny that such interactions between countries can undermine local cultural forms but he reminds his readers that there are always unavoidable tradeoffs. The globalization of culture, especially American-influenced commercial culture, is making much of the world very much alike. Yet, at the same time, it is adding immense diversity to the rest of the world. People in otherwise isolated cultures now have a greater variety in their own lands from which to pick and choose — from both their own society’s traditions and cultural forms and those that have been imported. Nor is this a one-way street. In the West in general and certainly in America there are numerous examples of foreign music, dress, and culinary forms that have been integrated into American life everywhere.
Creative destruction

It is for this reason that Cowen employs the phase “creative destruction,” made famous by the Austrian economist Joseph Schumpeter. The idea is that every innovation and new idea undermines and threatens to overthrow the existing cultural and technological order of things.

But out of this “destruction” of the status quo arises the “creative” that transforms the social and economic structures into forms and shapes that then become the new status quo — until the next wave of innovation and change sets the process into motion once again.

This is what has made the modern world, with its standard of living, its comforts and amenities, and its cultural life and possibilities.

That conception of globalized cultural change does not please everyone. In the mind of many people, globalization has meant in practice the Americanization of the world. This vexes some, such as the French, who find American cultural “imperialism” intolerable.

Cowen devotes a chapter to Hollywood’s motion-picture “imperialism.” He finds the source of much of the problem with French cinematography to be due to the past half-century of government subsidization of the movie industry in France.

It has made producers and directors more concerned with satisfying the tastes and desires of those in political office, who have taxpayers’ money to hand out, than with the tastes and preferences of the moviegoing public, both inside and outside France.

He compares the French film industry with India’s movie industry, which has been far more free of government involvement and has become vastly more successful in both India and Asia in general.

America’s global movie success, as with many Hong Kong-manufactured films, is a focus on those universal themes that are appealing to multitudes, independent of the specifics of local culture and tradition. The universal themes are action and adventure, which practically everyone can understand and which a vast majority can enjoy.

In a market-based movie environment, there will always be profitable local and regional markets for more “serious” or “meaningful” films, with their interpretation and appreciation depending on local culture and tastes.

Cowen also responds to those who fear that a globalized world is a one that is culturally “dumbed down.” Yes, to appeal to people across many different societies there must be a search for some common denominators that detract from many cultural nuances and complexities. At the same time, global communication and international markets enable a handful of people in a number of countries to add up to being sufficiently many demanders and buyers for many narrow and specialized cultural goods that it is possible and profitable to satisfy these niche wants and tastes that otherwise would go unfulfilled in isolated individual nations.
Globalization and culture

Finally, Cowen turns to the case for preserving “national cultures” from outside (especially American) influences. He emphasizes the particular elitist attitude behind this idea, whether the elitism stems from within the nation in question or from cultural sophisticates in Western countries.

Both wish to “freeze” the peoples in these lands into a cultural mold that they, the elite, consider good, valuable, and worth preserving. The vast majority of those made to live in these cultural hothouses are to be denied and prohibited from making their own life choices by importing what they find useful and enjoyable and using what is home-grown in the forms and proportions that they individually find most attractive.

And Cowan argues that the same argument could be made against change across time within each society, that is, against domestic cultural evolution. If cross-cultural change is suspect today, is not intertemporal cultural change between today and tomorrow within a society equally doubtful? Might not the “younger generation” have little appreciation for preserving the culture bequeathed to them by their grandparents?

The world and what happens in it will never make everyone equally happy all the time. But as Tyler Cowen clearly demonstrates, the outcomes are more likely to be culturally enriching and individually fulfilling when the choices and opportunities are market-based, open, and free from the heavy hand of political manipulation and control.

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    Richard M. Ebeling is a professor of economics at Northwood University. He was formerly president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).