Is “creative destruction” the future of credit unions?
One of Austrian-American economist Joseph Schumpeter’s descriptions of capitalism was called “creative destruction.”
This refers to a competitive economy’s relentless efforts to innovate for advantage and market dominance. He described the process as: “the old way of doing things is constantly getting destroyed or supplanted as it is replaced by a newer, better.”
Some would suggest that business failures in a competitive economy are an inevitable and necessary event, even when they cause local hardship or dislocations.
The cooperative system is supposed to be immune from some of these economic forces. Credit unions are owned by their users, they have no traded stock, cannot be bought and sold as private firms, and reflect the values necessary for a communal, versus for-profit, enterprise. Their founding, focused on a ”local” constituency with a common bond, is intended to improve the welfare of a community, not just individuals.
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