Saturday, January 07, 2023

Creative destruction and Joseph Schumpeter

Directly or indirectly destroy/ignore the old to allow space and new resources for the new. The essence of free enterprise capitalism. Some useful materials:

1. Creative Destruction: Out With the Old, In With the New
By CAROL M. KOPP June 23, 2021


* Creative destruction describes the deliberate dismantling of established processes in order to make way for improved methods of production.

* Creative destruction is most often used to describe disruptive technologies such as the railroads or, in our own time, the internet.

* The term was coined in the early 1940s by economist Joseph Schumpeter, who observed real-life examples of creative destruction, such as Henry Ford’s assembly line. 

2. Creative Destruction
By Richard Alm and W. Michael Cox

Attempts to save jobs almost always backfire. Instead of going out of business, inefficient producers hang on, at a high cost to consumers or taxpayers. The tinkering shortcircuits market signals that shift resources to emerging industries. It saps the incentives to introduce new products and production methods, leading to stagnation, layoffs, and bankruptcies. The ironic point of Schumpeter’s iconic phrase is this: societies that try to reap the gain of creative destruction without the pain find themselves enduring the pain but not the gain.

3. Creative Destruction: Why It Matters And How To Implement It
Kate VitasekContributor. May 26, 2022

4. Capitalism, Socialism, and Democracy: Third Edition (Harper Perennial Modern Thought) Paperback – November 4, 2008
by Joseph A. Schumpeter

"The opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism." (p. 83)

See also: Austrian Economics and marginal utility (January 6, 2023)

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