Tuesday, June 24, 2008

Tom Wolfe, Schumpeterian

A year ago, just before the credit market crisis began, Tom Wolfe visited the New York Stock Exchange and declared: "we may be watching the end of capitalism as we know it." The Times' Andrew Ross Sorkin has an interesting follow up:
When I asked Mr. Wolfe about his comment on the floor of the stock exchange, he said, “I didn’t realize anyone would take me seriously.” He says he has since made up an explanation of why he thought it could be the end of capitalism.

Citing Joseph A. Schumpeter, the economist, Mr. Wolfe said, “Stocks and bonds are what he called evaporated property. People completely lose touch of the underlying assets. It’s all paper — these esoteric devices. So it has become evaporated property squared. I call it evaporated property cubed.”

Then he cautioned, “Of course, I’m not an economist.” Maybe that’s why he’s gotten it so right.

So, does this mean the 1980's are over for real this time?

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