Creative Destruction. When you first hear this term, it seems somewhat counterintuitive or oxymoronic. On a second go round; you might wonder why we need to create destruction or why that destruction needs to be creative.
Joseph Schumpeter (1883-1950) first coined creative destruction in his work, Capitalism, Socialism, and Democracy. It refers to the process in which technology and innovation create new ways of doing things and, in the process, leave the old ways behind. Technological innovation might destroy entire businesses, industries, or streams of employment while allowing new enterprises to grow in their wake. Schumpeter believed the process of creative destruction, “which essentially revolutionizes the economic structure from within” was the hallmark of capitalism. Marx originally hinted at this idea in Das Capital when he stated that, “the violent destruction of capital was not by relations external to it, but rather as a condition of self preservation.” In a nutshell, Marx believed that the “destruction of capital” was necessary for a blossoming capitalist system.
Schumpeter also believed that entrepreneurs set this process of creative destruction in motion. Entrepreneurs were the disruptive economic force that maintained and fed economic growth. As these entrepreneurs create more advanced technology or more sophisticated organizational structures, they increase the efficiency of production. This rising productivity reduces per unit costs and increases profits for the individual entrepreneurs but also increases output, and promotes growth for the economy as whole. For Schumpeter, destroying the old ways of doing things was a necessary pre-condition for growth and continued profitability.
In Schumpeter’s famous example of creative destruction, he discusses railroads, and specifically the Illinois Central Railroad. As the railroads expanded, so did manufacturing of trains, of products that could be transported on the railways, and of the infrastructure around the railroads themselves. Towns began to pop up all along the railroads. However, this expansion of the railroads, led to the destruction of certain types of farming and agricultural systems in the Midwest. As new and more efficient means of transportation were created, an entire way of life was destroyed. Farmers moved from subsistence farming, growing crops that they needed, to more commercial farming, growing crops for the market that could be transported by rail.
What does creative destruction look like today?
LinkedIn meets Tinder in this mindful networking app
Swipe right to make the connections that could change your career.
Swipe right. Match. Meet over coffee or set up a call.
No, we aren't talking about Tinder. Introducing Shapr, a free app that helps people with synergistic professional goals and skill sets easily meet and collaborate.
26 ultra-rich people own as much as the world's 3.8 billion poorest
The Oxfam report prompted Anand Giridharadas to tweet: "Don't be Pinkered into everything's-getting-better complacency."
- A new report by Oxfam argues that wealth inequality is causing poverty and misery around the world.
- In the last year, the world's billionaires saw their wealth increase by 12%, while the poorest 3.8 billion people on the planet lost 11% of their wealth.
- The report prompted Anand Giridharadas to tweet: "Don't be Pinkered into everything's-getting-better complacency." We explain what Steven Pinker's got to do with it.
People who constantly complain are harmful to your health
Moans, groans, and gripes release stress hormones in the brain.
Could you give up complaining for a whole month? That's the crux of this interesting piece by Jessica Hullinger over at Fast Company. Hullinger explores the reasons why humans are so predisposed to griping and why, despite these predispositions, we should all try to complain less. As for no complaining for a month, that was the goal for people enrolled in the Complaint Restraint project.
Participants sought to go the entirety of February without so much as a moan, groan, or bellyache.
- Facebook and Google began as companies with supposedly noble purposes.
- Creating a more connected world and indexing the world's information: what could be better than that?
- But pressure to return value to shareholders came at the expense of their own users.
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