Creative Destruction on the Steps of St. Paul’s


Protesters calling themselves Occupy LSX (?) have set up shop outside St Paul’s Cathedral in London after failing to disrupt the London Stock Exchange (LSE). It wouldn’t have mattered if they did – the trading floor vanished years ago when the exchange embraced technology and went screen-based, and the LSE Group is far too savvy an organization to have a single point of failure.

Still, even if they did somehow disrupt the operation of the server-racks contained deep within Paternoster Square – and the service didn’t fail over to other datacentres including Milan – then alternative venues such as BATS, Chi-X and Turquoise would take up the slack. Between them, these slim outfits see more volume than the LSE – yet BATS itself probably employs less people than the LSE’s canteen.

It’s an odd day when pseudo-Marxist protesters and the free market align to hurry the demise of an old business model and replace it with a leaner, nimbler and more efficient alternative – but however curious the alliance, it’s Joseph Schumpeter’s creative destruction at work: the same force for rapid progress that has seen Apple’s stock increase by 400% since the fall of Lehman, whereas RIM has lost 85% of its value.

I wonder whether the protesters appreciate their contribution to industry’s advancement?

One Response

  1. Richard,

    Here are a couple of other Financial blogs that have commented on the ‘Occupy’ protesters (or Flotsam as they are otherwise known).

    Streetwise Professor:
    ——————————-
    “The Occupy [Insert Location Here] crowd has to be the most inarticulate, inchoate, and incoherent protest movement in history. A decidedly motley collection of progressive types,….

    http://streetwiseprofessor.com/?p=5640

    The Park Paradigm:
    ———————-
    As the “Occupy[anywhere bankers work]” movement gains momentum, renewed calls and support for more regulation of banks and other financial institutions grow. And yet…
    Financial institutions are already highly regulated and one could argue that at best, this has not achieved the desired outcomes and at worst has actually contributed

    http://www.parkparadigm.com/2011/10/18/more-competition-beats-more-regulation/

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