We must use all means at our disposal to continue our economic success.
I am writing this from the beautiful city of Mendoza in western Argentina. The city lies at the edge of the great Argentinian plain, just before the flatlands are shockingly interrupted by the vertiginous Andes which erupt out of the plateau, throwing up an immense natural wall between the pampas and the Pacific.
Mendoza is the sunniest, yet also the most verdant, of all Argentina’s cities. But how can this be? How can the city that gets the least rainfall in the country sustain boulevards with row after row of huge sycamores which give this parched metropolis the breezy feel of a well-ventilated city in northern Europe?
More importantly for the region, how can a place with a desert climate be the centre of Argentina’s water-hungry wine industry, the fifth largest in the world? Without proper rainfall, vines simply won’t grow.
Here, thanks to a most fascinating invention, nature provides all the sun the vines need, all the water their roots can drink, and – as a result of the abundance of trees in the city – all the shade that the locals require to sit outside, enjoy their cafes and still remain industrious in 90 degrees of heat.
The key to this lies in the city’s architecture. Mendoza’s streets are lined with deep canals between the footpath and the road.There are 4,000 kilometres of canals in all. Each canal is overflowing with freshwater, thanks to an invention that is over 1,500 years old. The inventors were the Huarpe Indians, the indigenous civilisation that thrived here before the calamitous arrival (for the Indians, at least) of the Spaniards.
The Huarpe dominated the region because their agricultural harvests were so bountiful, allowing them to increase their population rapidly and thus breed the manpower necessary to kick lumps out of their neighbours. The secret of their strength lay in the fact that they had figured out how to trap the melting snow from the Andes in a series of dams high in the mountains.
From these dams, they operated a sophisticated number of locks which they opened and closed when necessary, feeding into thousands of irrigated canals, allowing water to cascade down into the fertile valleys. In short, the Huarpe made the desert green, and their potato and corn crops yielded many times that of their parched neighbours.
The Spaniards and, later, the Argentinians adapted the ancient Huarpe innovation. Today, 70 kilometres outside the city, high up at 2,000 metres, a huge dam traps the melting Andes snow, releasing water into the city and the region, and ensuring that Mendoza is one of Argentina’s premier agricultural areas. The city is possibly Argentina’s finest.
The Huarpe system once again underscored how crucial innovation is to keeping a tribe, region, company or individual ahead of the pack. It also reiterates how the whole system of capitalism is one great battle between innovator and innovation, where the innovators are constantly trying to outwit the status quo.
Therefore, an economy is not in a state of equilibrium, as textbook economics suggests, but quite the opposite. The natural conclusion from ongoing innovation is that the economy is in a permanent state of change. We are in a state of almost constant chaos, where new products, techniques and ideas are constantly undermining existing ones.
This is what Joseph Schumpeter, the Austrian economist, termed ‘‘creative destruction’’. This implies that recessions are the necessary product of innovation, and what Schumpeter was implying was that capitalism eats its young and, in so doing, it constantly renews itself.
Think about the ‘‘new’’ iPod Nano, which was introduced this Christmas by Apple, one of the most innovative companies in the world. It set about replacing the last model, not because it was specifically designed to do so, but because innovation can’t do anything else. To be successful, it must cannibalise.
Schumpeter’s ideas are now becoming more and more mainstream. Many economists are hailing him as the biggest unrecognised thinker in the science. Larry Summers, the former head of Harvard, has suggested that ‘‘if Keynes was the most important economist in the 20th century, Schumpeter might well be the most important in the 21st century’’. (If you are interested in this carry-on, see a recent article by the influential J Bradford De Long, professor of economics at the University of California, Berkeley, entitled Creative Destruction’s Reconstruction: Joseph Schumpeter Revisited. )
For countries, the implication of both Schumpeter’s ideas and of the triumph of Mendoza in Argentina is that we shouldn’t be afraid of innovation. On the contrary, we should embrace it. Much of our political debate over the years has centered on how to protect certain sections of society from this ongoing process. But if you subscribe to the ‘‘constant flux’’ idea of capitalism, then the idea is to join the innovators.
This goes for every one of us, whether you are a teacher, a journalist, a bricklayer, a company man or a sole trader/investor trying to outfox the next lad: use the technology and think up new ways to communicate ideas and to execute plans. In other words, join the permanent revolution.
This idea has huge implications for the way we approach enterprise in Ireland. If we have signed up to a club which demands that all of us be in a permanent state of flux, then the state should be investing more and more in the creative talent of the population. This means that, in the years ahead, the most important ministry in the country will be the Minister for Enterprise, because he or she is the one who will facilitate a framework for national creativity.
The downside of this ‘‘creative destruction’’ idea is that there will always be losers. The people, like the Huarpes’ neighbours, who did not innovate, who saw the Andes as an inhospitable threat rather than an agricultural opportunity, will lose out.
Now that the world is open, new ideas are coming at us from all angles, and we in Ireland have to respond with financial, technological and material smarts, using everything at our disposal.
As the property mirage of the past five years evaporates, 2008 will be the year Ireland has to start thinking its way out of our present economic dilemma. I can’t imagine a more refreshing, challenging way to start the New Year.
Great post David. You might be interested in CreativeCamp which is happening in Kilkenny on March 8th. It is a variation on the BarCamp unconference idea where the attendees drive the agenda for the day. Most of the irish BarCamps to date (Cork, Waterford, Dublin, Belfast and Galway) have had a strong Tech/Business focus. However the success of PodCamp in Kilkenny (opened by the Junior Minister, John McGuniness) highlighted that bringing the “creative community” into the mix enriched the experience for everyone. The best place to see creative destruction in action is in the whole area of tech stat-ups. The… Read more »
Hi David,
Just a few lines to encourage your take on creativity.
I enjoyed your article very much it echoed my own thoughts.
Please keep on reminding us that we need to be creative and to have a vision for our society going into the future.
Your explanation of the Huarpe peoples harnessing of their resources offer us an example of what can be achieved through creative thinking allied to a common purpose.
Yours Sincerely
Anthony
Hmmm, and can all play, or does it mean that wage inflation is fixed as if we were still on the gold standard. Get a bloody grip, we have people in this island who nip off to Bequia, Barbados and parts further, while whining about the cost of ironing. Agus, give a thought to the slaves of the Huarpe, it takes a while for their blood -used as a cement agent- to seep. You never Know, it may well impart that little revenge via the vine. Anyhoos, wishing you good travels, and as important cast iron gibblets, no point in… Read more »
The way to kick start innovation is by using the most important piece of technology known to mankind: the human brain.
Until we teach our children how to think and not what to think we will always be losing potential. Our schools should be teaching science not superstition. If our future prospects are not in the potential of the new minds arriving not been allowed to build on the shoulders of all who have gone before then where?
David, I just returned to the USA from Canada, where my wife and I spent ten days visiting with old classmates and friends in the Toronto area. Canada is starting to focus on the need to innovate. In fact, Richard Florida, whose “The Rise of the Creative Class” is now a classic study of the sociology of innovation today, moved to the University of Toronto in 2007 from Carnegie-Mellon University in Pittsburg, USA. His views are getting huge play in the national press there. As he argues, innovation in the end is the result of culture, values and related mindsets.… Read more »
It seems that most graduates are only versed in one skill upon leaving University: how to type out their CVs and post it to all the multinationals in the hope of being taken on as a small cog in a huge machine. Certain graduates still emigrate in this country because making ends meet is difficult after tax at 41 %, PRSI, pension contribution, rent, light, heat, car loan repayments, tax, insurance and petrol etc. All the more reason to ‘innovate’ you might say but Uncle Sam is always more attractive on a wet Monday evening in your pokey one-bedroom flat… Read more »
G-d spare us from any Minister of Enterprise. She will surely take the creative out of any creative destruction. Government is nearly always the problem not the solution.
To read J. Bradford’s article
“Creative Destruction’s Reconstruction: Joseph Schumpeter Revisited”
visit http://chronicle.com/free/v54/i15/15b00801.htm
Creative Destruction is the norm in industry – Industries become stale with time and go into decline. In my 40years experience, the greatest innovative changes occurred in the late 70s when European and American Industries were being held back by remnants from the Luddite era. American and European workers wouldn’t accept automation and some of their favourite lines were “ robots wont buy may cars”. The Japanese went for broke with automation and wiped out a lot of the old established western companies in consumer electronics. The one that I worked for had been in existence for forty years and… Read more »
Kevin Buckley posted:
“Government is nearly always the problem not the solution.”
Brilliant idea. The State should stop giving free cash through grants to small businesses to engage in innovation and R&D, it should stop pouring millions into research in ICT and Biotechnology, it should stop making subsidised incubation office and industrial premises available for start-ups. These are clearly holding back innovation and creative destruction in the country.
I’m sure you would be complaining if there was no government support for such things.
Might I second the Richard Florida recommendation above. This stuff should be compulsory reading for every City Councillor, planner and associated decision maker in Ireland.
He has a viable vision for innovation which is less rat race and more about creativity and human connections.
As a bonus, (but very much an aside), his work provides compelling arguments against the folly which is decentralisation.
Website @ http://creativeclass.com/
Con Morgan Richard Florida is very interesting judging from his talk on-line – he is, however, talking about America where the economic activity is all generated internally and doesn’t have to factor in the motives of large outside companies whose primary goal is profit. The multinationals are not really concerned with the quality of life in the countries to which they outsource jobs – decisions are made at their headquarters in their own countries. To apply his thinking to us would require either, a greater population in Ireland or a massive export drive to give our activities some critical mass… Read more »
Ed – i couldn’t agree more with your points on multinationals. However I’d rather see Florida’s vision less a one that doesn’t fit for us but more an alternative vision for us. The multi-nationals have been crucial to Ireland’s recent past, but they’ve given us a platform to graduate and create our own innovative society (apart from anything else with outsourcing trends, it’s what we need to do). It’s over time we did just that and Florida (although at times utopian) can be a vital informer for how this should be done to benenfit our lives as much as our… Read more »
Con Morgan I agree that it’s time that we started to move on to the next plane from the multinationals. The difficulty is to get people to leave well paid jobs and start from scratch – being pushed through closure is the main source of start-ups here, but that’s not enough for a sustainable vibrant society. I don’t know if our attitudes towards failure are changing, but it’s part of the entrepreneurial process and that’s a major barrier. The other problem is the availability of venture capital – there appears to be no problem in investing in foreign property,(50 Billion),… Read more »
Con Morgan
To add to the difficulties of starting up in absence of the available venture capital – the Banks don’t have the necessary knowledge/experience to evaluate projects and will only back ventures that are approved by the state bodies in the assumption that they know what they’re about. So instead of forging ahead with the project, priority must be given to the application process and the crazy thing about this is, that you have to gain grant approval whether you want a grant or not. There must be a better way of evaluating risk than through a state agency.
Ed – your insights into the availability of capital are spot on and is a topic that should be subject to FAR more journalistic and political commentary. But I think the point you make about attitudes towards failure is the bigger point – solve this and perhaps the availability of risk capital takes care of itself?
We are such an insecure society, constantly looking at our neighbours, buying the biggest cars we can etc. – At the risk of stalking – I go back to Florida’s alternative vision, where imagination, creativity, community & connectedness regain their rightful importance.
A few clarifications on the theme of Start-up and Growth Capital. Firstly, its is not entirely true to say there is no venture capital available. In the first 6 months of 2007 alone, Irish VCs invested more than €66M in Irish businesses. Many businesses also attract investment from overseas VC funds (It is a global financial market after all).What may be true is that the risk appetite and scale of investment by Irish VC funds is modest by International standards. Also, bear in mind that VC investment is not always the best source of funding for a company – it… Read more »
Eire 2008: Is that pint half empty, or half full…..Paddy? Warning: This post is a lengthy roller-coaster ride around ‘The Jargon Factory’. Seat-belts. Crash-helmets. Sick bags to the ready. Here we go! David, you make a number of ‘challenging statements’ in this article regarding the Meso-American Huarpe civilisation. But it’s not clear what anthological evidence supports your views. It would be helpful to understand which references you used from texts such as ‘The Cambridge History of Latin America’ by Leslie Bethell to support your propositions. In fact, there is no reliable cultural anthropology for the Huarpe: It’s impossible from this… Read more »
Hi Andrew, thanks for the post. You make so many observations that I don’t know where to start. On the Huarpes, my source is local knowledge – no books no reference – just chats with Huarpes/half Huarpes in cafes and bars. On the primacy of economics, I suppose that’s what I know; so I try to stick to it. I don’t believe that it is anything other than a partial rather than a general, all encompassing worldview (or ‘weltanschauung’ if you prefer) but it is at least a framework. On whether journalism is creative, I think it is – maybe… Read more »
“ Necessity is the mother of invention” and this can apply to a race under siege (Britain during WW2 )or to a driven individual who wants to leave his mark on society (Thomas Edison). What drove the Huarpe to build dams in the Andes is anyone’s guess – more than likely it was survival. England came up with the cast iron cannon when the couldn’t get or afford bronze ones . Invention/innovation has always been driven by necessity for all sorts of different reasons. – survival or ambition being the main ones. Now that we’re entering a difficult period it’ll… Read more »
David, again you have metaphorically put another pussy amongst these gormless Muppet’s who share this small bit of rock here in north europe, the land of saints and scholars the cost you have incurred with your jaunt to south america to look at a few canels for myself and many others working the current wheels and cogs of Irelands Service industries must put in prehaps 80 hours of labour just to cover your flights. So tell the saps who buy the journals you greece your palms with, to print the trurth ?. This week my greek doctor friend who brought… Read more »
Andrew G Mooney I can’t understand everything you say, but the parts which I do understand I tend to agree with. The people driving great new ideas (the computer, the cell phone, the internet, in-vitro fertilization, etc) and those who then bring them to the masses (e.g. Sinclair, Nokia, Microsoft, Bourne Hall, etc) I agree are more “movers and shakers” than the politicians and economists. You ask whether Finland re-emerged because of government policies or because of the reemergence of Finnish values of hard work, innovation and gritty determination? Does it matter? What if the two can go hand in… Read more »