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?
Step inside the unlikely friendship of a former ACLU president and an ultra-conservative Supreme Court Justice.
- Former president of the ACLU Nadine Strossen and Supreme Court Justice Antonin Scalia were unlikely friends. They debated each other at events all over the world, and because of that developed a deep and rewarding friendship – despite their immense differences.
- Scalia, a famous conservative, was invited to circles that were not his "home territory", such as the ACLU, to debate his views. Here, Strossen expresses her gratitude and respect for his commitment to the exchange of ideas.
- "It's really sad that people seem to think that if you disagree with somebody on some issues you can't be mutually respectful, you can't enjoy each other's company, you can't learn from each other and grow in yourself," says Strossen.
- The opinions expressed in this video do not necessarily reflect the views of the Charles Koch Foundation, which encourages the expression of diverse viewpoints within a culture of civil discourse and mutual respect.
French newspapers report that the trial hasn't lived up to expectations.
- The French government initially invested in a rural solar roadway in 2016.
- French newspapers report that the trial hasn't lived up to expectations.
- Solar panel "paved" roadways are proving to be inefficient and too expensive.
Erik Verlinde has been compared to Einstein for completely rethinking the nature of gravity.
- The Dutch physicist Erik Verlinde's hypothesis describes gravity as an "emergent" force not fundamental.
- The scientist thinks his ideas describe the universe better than existing models, without resorting to "dark matter".
- While some question his previous papers, Verlinde is reworking his ideas as a full-fledged theory.
Scientists make an important discovery for the future of computing.
- Researchers find a new state of matter called "topological superconductivity".
- The state can lead to important advancements in quantum computing.
- Utilizing special particles that emerge during this state can lead to error-free data storage and blazing calculation speed.