Creative destruction: Difference between revisions

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AccordingThe toconcept is usually identified with the [[Austrians|Austrian]] economist [[Joseph Schumpeter]],<ref>{{cite thebook "gale|last1=Ulgen |first1=Faruk |title=Encyclopedia of creativeCreativity, destruction"Invention, describesInnovation theand "processEntrepreneurship of|chapter=Creative industrialDestruction mutation|date=2017 that|pages=1–8 continuously|doi=10.1007/978-1-4614-6616-1_407-2|isbn=978-1-4614-6616-1 revolutionizes|s2cid=240686671 the}}</ref><ref>{{cite economicjournal structure|last1=Loesche from|first1=Frank within,|last2=Torre incessantly|first2=Ilaria destroying|title=Creative theDestruction old|journal=Encyclopedia one,of incessantlyCreativity creating(Third aEdition) new|date=2020 one"|pages=226–231 |doi=10.1016/B978-0-12-809324-5.23696-1|isbn=9780128156155 |s2cid=242692186 }}</ref><ref name="Schumpeter1942_2reinert" /> who derived it from the work of [[Karl Marx]] and popularized it as a theory of [[Innovation economics|economic innovation]] and the [[business cycle]]. It is also sometimes known as '''Schumpeter's gale'''. In [[Marxian economic theory]], the concept refers more broadly to the linked processes of the accumulation and annihilation of [[wealth]] under capitalism.<ref name="isbn0-14-044757-1">{{cite book

}}</ref> In the earlier work of Marx, however, the idea of creative destruction or annihilation (German: ''Vernichtung'') implies not only that capitalism destroys and reconfigures previous economic orders, but also that it must ceaselesslycontinuously devalue existing wealth (whether through war, dereliction, or regular and periodic economic crises) in order to clear the ground for the creation of new wealth.<ref name="isbn0-14-044757-1" /><ref name="isbn0-14-044575-7" /><ref name="Marx1863" />

In ''[[Capitalism, Socialism and Democracy]]'' (1942), Joseph Schumpeter developed the concept out of a careful reading of Marx's thought (to which the whole of Part I of the book is devoted), arguing (in Part II) that the creative-destructive forces unleashed by capitalism would eventually lead to its demise as a system (see below).<ref name="Schumpeter1942">{{cite book

}}</ref> Despite this, the term subsequently gained popularity within mainstream economics as a description of processes such as [[Layoff|downsizing]] in order to increase the efficiency and dynamism of a company. The Marxian usage has, however, been retained and further developed in the work of [[social science|social scientists]] such as [[David Harvey (geographer)|David Harvey]],<ref name="isbn1-84467-095-3">{{cite book

Although the modern term "creative destruction" is not used explicitly by Marx, it is largely derived from his analyses, particularly in the work of [[Werner Sombart]] (whom Engels described as the only German professor who understood Marx's ''Capital''),<ref>{{Cite journal |first=Abram L. |last=Harris |title=Sombart and German (National) Socialism |journal=[[Journal of Political Economy]] |volume=50 |issue=6 |year=1942 |pages=805–35 [p. 807] |doi=10.1086/255964 |jstor=1826617 |s2cid=154171970 }}</ref> and of Joseph Schumpeter, who discussed at length the origin of the idea in Marx's work (see below).

Social geographer [[David Harvey (geographer)|David Harvey]] sums up the differences between Marx's usage of these concepts and Schumpeter's: "Both Karl Marx and Joseph Schumpeter wrote at length on the 'creative-destructive' tendencies inherent in capitalism. While Marx clearly admired capitalism's creativity he ... strongly emphasised its self-destructiveness. The Schumpeterians have all along gloried in capitalism's endless creativity while treating the destructiveness as mostly a matter of the normal costs of doing business".<ref name="isbn1-84668-308-4">{{cite book|author=Harvey, David|author-link=David Harvey (geographer)|title=The Enigma of Capital and the Crises of Capitalism|publisher=Profile Books|location=London|year=2010|page=46|isbn=978-1-84668-308-4|url=https://books.google.com/books?id=ww1dPgAACAAJ|access-date=2010-11-10}}{{Dead link|date=December 2023 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

Geographer and historian [[David Harvey (geographer)|David Harvey]] in a series of works from the 1970s onwards (''Social Justice and the City'', 1973;<ref>{{Cite book |url=https://books.google.com/books?id=VCwLi2nVmooC |isbn=978-0-8203-3403-5 |title=Social Justice and the City |last=Harvey |first=David |author-link=David Harvey (geographer) |year=2009 |publisher=University of Georgia Press |orig-year=1973}}</ref> ''The Limits to Capital'', 1982;<ref>{{cite book |url=https://archive.org/details/limitstocapital00davi |url-access=registration |isbn=978-1-84467-095-6 |title=The Limits to Capital |publisher=Verso |last=Harvey |first=David |author-link=David Harvey (geographer) |year=2006 |orig-year=1982}}</ref> ''The Urbanization of Capital'', 1985;<ref>{{cite book |url=https://books.google.com/books?id=5lvaAAAAMAAJ |isbn=978-0-8018-3144-7 |title=The Urbanization of Capital: Studies in the History and Theory of Capitalist Urbanization |last=Harvey |first=David |author-link=David Harvey (geographer) |year=1985|publisher=Johns Hopkins University Press }}</ref> ''Spaces of Hope'', 2000;<ref>{{cite book |url=https://books.google.com/books?id=W00VHZg3u2MC |isbn=978-0-520-22578-7 |title=Spaces of Hope |last=Harvey |first=David |author-link=David Harvey (geographer) |year=2000|publisher=University of California Press }}</ref> ''Spaces of Capital'', 2001;<ref>{{cite book |url=https://archive.org/details/isbn_9780415932417 |url-access=registration |isbn=978-0-415-93241-7 |title=Spaces of Capital: Towards a Critical Geography |publisher=Routledge |last=Harvey |first=David |author-link=David Harvey (geographer) |year=2001}}</ref> ''Spaces of Neoliberalization'', 2005;<ref>{{cite book |url=https://books.google.com/books?id=Z7sS53uqTJoC |isbn=978-3-515-08746-9 |title=Spaces of Neoliberalization: Towards a Theory of Uneven Geographical Development |last=Harvey |first=David |author-link=David Harvey (geographer) |year=2005|publisher=Franz Steiner Verlag }}</ref> ''The Enigma of Capital and the Crises of Capitalism'', 2010<ref>{{cite book

}}{{Dead link|date=December 2023 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>), elaborated Marx's thought on the systemic contradictions of capitalism, particularly in relation to the production of the urban environment (and to the production of space more broadly). He developed the notion that capitalism finds a "[[spatial fix]]"<ref>See in particular "The Spatial Fix: Hegel, Von Thünen and Marx", in {{cite book |url=https://archive.org/details/isbn_9780415932417 |url-access=registration |isbn=978-0-415-93241-7 |title=Spaces of Capital: Towards a Critical Geography |publisher=Routledge |last=Harvey |first=David |author-link=David Harvey (geographer) |year=2001 |pages=[https://archive.org/details/isbn_9780415932417/page/284 284]–311}}</ref> for its periodic crises of overaccumulation through investment in fixed assets of infrastructure, buildings, etc.: "The built environment that constitutes a vast field of collective means of production and consumption absorbs huge amounts of capital in both its construction and its maintenance. Urbanization is one way to absorb the capital surplus".<ref>{{cite book

}}{{Dead link|date=December 2023 |bot=InternetArchiveBot |fix-attempted=yes }}</ref> While the creation of the built environment can act as a form of crisis displacement, it can also constitute a limit in its own right, as it tends to freeze productive forces into a fixed spatial form. As capital cannot abide a limit to profitability, ever more frantic forms of "[[time-space compression]]"<ref>{{cite book |url=https://books.google.com/books?id=RAGeva8_ElMC |isbn=978-0-631-16294-0 |pages=240–323 |title=The Condition of Postmodernity: an Enquiry into the Origins of Cultural Change |last=Harvey |first=David |author-link=David Harvey (geographer) |year=1995|publisher=Wiley }}</ref> (increased speed of turnover, innovation of ever faster transport and communications' infrastructure, "flexible accumulation"<ref>{{cite book |isbn=978-0-631-16294-0 |page=147 |title=The Condition of Postmodernity |last=Harvey |first=David |author-link=David Harvey (geographer) |year=1995|publisher=Wiley }}</ref>) ensue, often impelling technological innovation. Such innovation, however, is a double-edged sword:

{{Blockquote|The effect of continuous innovation ... is to devalue, if not destroy, past investments and labour skills. ''Creative destruction'' is embedded within the circulation of capital itself. Innovation exacerbates instability, insecurity, and in the end, becomes the prime force pushing capitalism into periodic paroxysms of crisis. ... The struggle to maintain profitability sends capitalists racing off to explore all kinds of other possibilities. New product lines are opened up, and that means the creation of new wants and needs. Capitalists are forced to redouble their efforts to create new needs in others .... The result is to exacerbate insecurity and instability, as masses of capital and workers shift from one line of production to another, leaving whole sectors devastated .... The drive to relocate to more advantageous places (the geographical movement of both capital and labour) periodically revolutionizes the international and territorial division of labour, adding a vital geographical dimension to the insecurity. The resultant transformation in the experience of space and place is matched by revolutions in the time dimension, as capitalists strive to reduce the turnover time of their capital to "the twinkling of an eye".<ref>{{cite book |isbn=978-0-631-16294-0 |pages=105–06 |title=The Condition of Postmodernity |last=Harvey |first=David |author-link=David Harvey (geographer) |year=1995|publisher=Wiley }}</ref>}}

In 2021, an article was published by Berman's younger son Daniel Berman whichin attempted to applywhich the elder Berman's conception of creative destruction was applied to the field of art history. Entitled ''Looking the Negative in the Face: Creative Destruction and the Modern Spirit in Photography, Photomontage, and Collage'', the essay reconsiders the modern media of photography, photomontage, and collage through the lens of "creative destruction". In doing so, the younger Berman attempts to show that in certain works of art of the above-mentioned media, referents (such as nature, real people, other works of art, newspaper clippings, etc.) can be given new and unique significance even while necessarily being obscured by the very nature of their presentation. The [https://www.assemblagejournal.org/issue-2-spring-2021/daniel-berman article] {{Webarchive|url=https://web.archive.org/web/20210518153649/https://www.assemblagejournal.org/issue-2-spring-2021/daniel-berman |date=2021-05-18 }} was published in the second volume of Hunter College's graduate art history journal ''[https://www.assemblagejournal.org/ Assemblage]''.

Developing the Schumpeterian legacy, the school of the [[Science Policy Research Unit]] of the [[University of Sussex]] has further detailed the importance of creative destruction exploring, in particular, how new technologies are often idiosyncraticincompatible with the existing productive regimes and will lead to bankruptcy companies and even industries that do not manage to sustain the rate of change. [[Christopher Freeman|Chris Freeman]] and [[Carlota Perez]] have developed these insights.<ref>[[Christopher Freeman|Chris Freeman]] and Francisco Louça, ''As Time Goes By: From the Industrial Revolutions to the Information Revolution'' (Oxford, Oxford University Press, 2001). [[Carlota Perez]], ''Technological Revolutions and Financial Capital. The Dynamics of Bubbles and Golden Ages'', (Cheltenham Glos, Edward Elgar, 2003).</ref> More recently, [[Daniele Archibugi]] and Andrea Filippetti have associated the 2008 economic crisis to the slow-down of opportunities offered by information and communication technologies (ICTs).<ref>Daniele Archibugi and Andrea Filippetti, [https://www.routledge.com/Innovation-and-Economic-Crisis-Lessons-and-Prospects-from-the-Economic/Archibugi-Filippetti/p/book/9780415602280 ''Innovation and Economic Crisis Lessons and Prospects from the Economic Downturn''], (London, Routledge, 2013).</ref> Using as a metaphor the film ''[[Blade Runner]]'', Archibugi has argued that of the innovations described in the film in 1982, all those associated to ICTs have become part of our everyday life. But, on the contrary, none of those in the field of Biotech have been fully commercialized. A new economic recovery will occur when some key technological opportunities will be identified and sustained.<ref name=Archibugi2017>{{cite journal |last1=Archibugi |first1=Daniele |title=Blade Runner economics: Will innovation lead the economic recovery? |journal=Research Policy |date=April 2017 |volume=46 |issue=3 |pages=535–543 |doi=10.1016/j.respol.2016.01.021 |url=https://eprints.bbk.ac.uk/id/eprint/18837/6/18837.pdf }}</ref>

Politicians often impose impediments to the forces of creative destruction by regulating entry and [exit rules<ref>{{Cite web|url=https://scholar.harvard.edu/files/shleifer/files/debt_enforcement_jpe_final.pdf|title=Debt exitEnforcement rules]around the World}}</ref> that make it difficult for churning to take place. In a series of papers [[Andrei Shleifer]] and [[Simeon Djankov]] [illustrate<ref>{{Cite web|url=https://scholar.harvard.edu/files/shleifer/files/reg_entry.pdf|title=The illustrate]Regulation of Entry}}</ref> the effects of such regulation on slowing down competition and innovation.

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** {{cite journal |last1=Archibugi |first1=Daniele |last2=Filippetti |first2=Andrea |last3=Frenz |first3=Marion |title=Economic crisis and innovation: Is destruction prevailing over accumulation? |journal=Research Policy |date=March 2013 |volume=42 |issue=2 |pages=303–314 |doi=10.1016/j.respol.2012.07.002 |s2cid=56038790 |url=https://eprints.bbk.ac.uk/8469/1/8469.pdf |archive-url=https://web.archive.org/web/20180719223940/http://eprints.bbk.ac.uk/8469/1/8469.pdf |archive-date=2018-07-19 |url-status=live }}

* [[John Komlos]], “Disruptive Innovation: the dark side,” ''[https://www.milkenreview.org/articles/disruptive-innovation-the-dark-side Milken Institute Review]'', 17, 1: 28-3528–35;

* {{cite journal |last1=Rogers |first1=Jim |last2=Sparviero |first2=Sergio |title=Same tune, different words: The creative destruction of the music industry |journal=Observatorio |date=14 November 2011 |volume=5 |issue=4 |doi=10.15847/obsOBS542011514 |doi-broken-date=31 December 20222024-09-12 |url=http://obs.obercom.pt/index.php/obs/article/view/514 }}