THOUGH HE'S BEEN DEAD since 1950, Austrian economist Joseph Schumpeter has just recently come into his own. He's best known for his concept of "creative destruction," the idea that new technologies constantly destabilize the economic landscape, creating opportunities for new companies and threatening existing companies. It sounds pretty basic today, but in the late 1930s, identifying this cycle as the engine of growth was a challenge to the orthodoxy of his day, which viewed technology as largely outside the realm of economics. For most of the fifty or so years since he died, Schumpeter's theories hovered at the periphery of economic thought, respected but not garnering much attention. But in the last decade, it's become commonly accepted that technological innovation is driving the economy. The result is that Schumpeter isn't only hip with the editors of Wired anymore, his ideas have become practically gospel amongst a new generation of academics and management consultants. Just in time to cash in on the hype, two new business books, both titled Creative Destruction, are being published this month.
Of course, while Schumpeter's theories are useful for understanding how the economy works, he never talked much about how these could be applied to the day-to-day running of a company. He focused on the big picture, namely, preventing socialism's triumph over capitalism. This hasn't stopped the authors of both books. (One is written by Richard Foster, a senior partner and director with the consulting firm McKinsey & Co., and his former colleague, Sarah Kaplan. The other is a collection of essays by several economists and academics edited by Lee McKnight, Paul Vaaler, and Raul Katz.) Each trumpets Schumpeter, as the tag line of one of the books puts it, as the key to "business survival strategies for the global Internet economy."
At a time when the reach and scope of global capitalism could scarcely become more widespread, the prevailing idea of both books is that corporate executives aren't capitalistic enough. How could this possibly be the case? Kaplan and Foster write that this is because corporations, which are focused on operations and continuity, aren't enough like the capital markets. Corporations need to "evolve at the pace of the market" and thus internalize the creative destructiveness of capital, which seeks out promising new opportunities only to ruthlessly turn its back on them when the rate of return drops. The most glaring example of this is the recent dot-com boom and bust.
How can corporations learn to move at "market speed"? Executives are exhorted to embrace change, cleanse themselves of sentimentality, and be unafraid to cannibalize their own companies in the quest for profits. Divisions, products, people, all must be readily dispensable and replaced as quickly as possible to take advantage of new potential markets. The biggest transgression executives and managers can commit? To become locked into a static worldview that prevents a company from recognizing radical changes or "discontinuities" and mutating itself. The result: In chapter after chapter of each book, scores of companies and industries are excoriated as examples of failing to get with the program while their newer, nimbler competitors are stealing coveted market share. In both books, a portrait of the ideal corporation takes shape: It is a perfectly fluid entity, one that is increasingly virtual and decentralized. Everything that can be outsourced is, and, whenever possible, employees, are redefined as "free agents" who can be effortlessly let go as the need arises. Anything that can slow the company down is to be eliminated.
The world is already moving towards this ideal, even if it isn't there yet. Most people still have traditional full-time employment, but, as competition increases, companies will be under ever-greater pressure to "virtualize" their workforce. The current economic downturn should make "creative destruction" only more appealing to executives trying to justify the cutthroat strategies that it will take to survive in a harsher climate. While, ostensibly, transformation and growth are the ultimate goals, it is pretty clear that the authors of both books think that it is the destruction part of the equation that corporate executives are having trouble dealing with, not the creation part.
Of course, the only thing that is not subject to destruction is the logic of the market itself, a logic that is never to be questioned. The assumption is that market forces, once unleashed, will always bring about the best of all possible worlds, no matter the collateral damage. The result will be a world where the destructiveness of capitalism need not be obscured -- it will be something for executives to be proud of. It's why layoffs aren't such bad publicity anymore and are becoming a permanent part of corporate strategy. They're a badge of honor, a sign that the management is willing to take "the right steps" to maximize profitability. And it will only get worse. Under the guise of "creative destruction," the violence of the marketplace will have found the perfect means to rationalize and extend itself into every part of life.

Pete Rojas is a writer with Red Herring magazine.

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