Creative destruction (German: ''schöpferische Zerstörung'') is a concept in

economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

which since the 1950s is the most readily identified with the

Austrian Austrian may refer to: * Austrians, someone from Austria or of Austrian descent ** Someone who is considered an Austrian citizen, see Austrian nationality law * Austrian German dialect * Something associated with the country Austria, for example: ...

-born economist Joseph Schumpeter who derived it from the work of

Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...

and popularized it as a theory of economic innovation and the business cycle. It is also sometimes known as Schumpeter's gale. According to Schumpeter, the "gale of creative destruction" describes the "process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one". In Marxian economic theory the concept refers more broadly to the linked processes of the accumulation and annihilation of

wealth Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an I ...

under capitalism. The German sociologist Werner Sombart has been credited with the first use of these terms in his work ''Krieg und Kapitalismus'' (''War and Capitalism'', 1913).Describing the way in which the destruction of forests in Europe laid the foundations for nineteenth-century capitalism, Sombart writes: "Wiederum aber steigt aus der Zerstörung neuer schöpferischer Geist empor" ("Again, however, from destruction a new spirit of creation arises"). 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 ceaselessly 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. In ''

Capitalism, Socialism and Democracy ''Capitalism, Socialism, and Democracy'' is a book on economics, sociology, and history by Joseph Schumpeter, arguably his most famous, controversial, and important work. It's also one of the most famous, controversial, and important books on ...

'' (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). Despite this, the term subsequently gained popularity within mainstream economics as a description of processes such as 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 scientists such as David Harvey,

Marshall Berman Marshall Howard Berman (November 23, 1940–September 11, 2013) was an American philosopher and Marxist humanist writer. He was a Distinguished Professor of Political Science at The City College of New York and at the Graduate Center of the Cit ...

Manuel Castells Manuel Castells Oliván (; ; born 9 February 1942) is a Spanish sociologist. He is well known for his authorship of a trilogy of works, entitled The Information Age: Economy, Society and Culture. He is a scholar of the information society, co ...

. and

Daniele Archibugi Daniele Archibugi (born 17 July 1958 in Rome, Italy) is an Italian economic and political theorist. He works on the economics and policy of innovation and technological change, on the political theory of international relations and on politi ...

History

In Marx's thought

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''), and of Joseph Schumpeter, who discussed at length the origin of the idea in Marx's work (see below). In '' The Communist Manifesto'' of 1848,

and

Friedrich Engels Friedrich Engels ( ,"Engels"
'' Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. ... It is enough to mention the commercial crises that by their periodical return put the existence of the whole of bourgeois society on trial, each time more threateningly. In these crises, ''a great part not only of existing production, but also of previously created productive forces, are periodically destroyed''. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity – the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilisation, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property; on the contrary, they have become too powerful for these conditions. ... And how does the bourgeoisie get over these crises? On the one hand by ''enforced destruction of a mass of productive forces''; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented. A few years later, in the ''Grundrisse'', Marx was writing of "the violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation". In other words, he establishes a necessary link between the generative or creative forces of production in capitalism and the destruction of capital value as one of the key ways in which capitalism attempts to overcome its internal contradictions:

These contradictions lead to explosions, cataclysms, crises, in which ... momentaneous suspension of labour and annihilation of a great portion of capital ... violently lead it back to the point where it is enabled o go onfully employing its productive powers without committing suicide.For further discussion of the concept of creative discussion in the Grundrisse, see

In the ''Theories of Surplus Value'' ("Volume IV" of ''

Das Kapital ''Das Kapital'', also known as ''Capital: A Critique of Political Economy'' or sometimes simply ''Capital'' (german: Das Kapital. Kritik der politischen Ökonomie, link=no, ; 1867–1883), is a foundational theoretical text in materialist phi ...

'', 1863), Marx refines this theory to distinguish between scenarios where the destruction of (commodity) values affects either use values or exchange values or both together. The destruction of exchange value combined with the preservation of use value presents clear opportunities for new capital investment and hence for the repetition of the production-devaluation cycle:

the destruction of capital through crises means the depreciation of values which prevents them from later renewing their reproduction process as capital on the same scale. This is the ruinous effect of the fall in the prices of commodities. It does not cause the destruction of any use-values. What one loses, the other gains. Values used as capital are prevented from acting again as capital in the hands of the same person. The old capitalists go bankrupt. ... A large part of the nominal capital of the society, i.e., of the exchange-value of the existing capital, is once for all destroyed, although this very destruction, since it does not affect the use-value, may very much expedite the new reproduction. This is also the period during which moneyed interest enriches itself at the cost of industrial interest.

Social 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".

Other early usage

In the '' Origin of Species'', which was published in 1859,

Charles Darwin Charles Robert Darwin ( ; 12 February 1809 – 19 April 1882) was an English naturalist, geologist, and biologist, widely known for his contributions to evolutionary biology. His proposition that all species of life have descended ...

wrote that the "extinction of old forms is the almost inevitable consequence of the production of new forms." One notable exception to this rule is how the extinction of the dinosaurs facilitated the

adaptive radiation In evolutionary biology, adaptive radiation is a process in which organisms diversify rapidly from an ancestral species into a multitude of new forms, particularly when a change in the environment makes new resources available, alters biotic in ...

of mammals. In this case creation was the consequence, rather than the cause, of destruction. In philosophical terms, the concept of "creative destruction" is close to

Hegel Georg Wilhelm Friedrich Hegel (; ; 27 August 1770 – 14 November 1831) was a German philosopher. He is one of the most important figures in German idealism and one of the founding figures of modern Western philosophy. His influence extends a ...

's concept of sublation. In German economic discourse it was taken up from Marx's writings by Werner Sombart, particularly in his 1913 text ''Krieg und Kapitalismus'':

Again, however, ''from destruction a new spirit of creation arises;'' the scarcity of wood and the needs of everyday life... forced the discovery or invention of substitutes for wood, forced the use of coal for heating, forced the invention of coke for the production of iron.

Hugo Reinert has argued that Sombart's formulation of the concept was influenced by Eastern mysticism, specifically the image of the

Hindu Hindus (; ) are people who religiously adhere to Hinduism. Jeffery D. Long (2007), A Vision for Hinduism, IB Tauris, , pages 35–37 Historically, the term has also been used as a geographical, cultural, and later religious identifier for ...

god

Shiva Shiva (; sa, शिव, lit=The Auspicious One, Śiva ), also known as Mahadeva (; Help:IPA/Sanskrit, ɐɦaːd̪eːʋɐ, or Hara, is one of the Hindu deities, principal deities of Hinduism. He is the Supreme Being in Shaivism, one o ...

, who is presented in the paradoxical aspect of simultaneous destroyer and creator. Conceivably this influence passed from

Johann Gottfried Herder Johann Gottfried von Herder ( , ; 25 August 174418 December 1803) was a German philosopher, theologian, poet, and literary critic. He is associated with the Enlightenment, '' Sturm und Drang'', and Weimar Classicism. Biography Born in Mohr ...

, who brought Hindu thought to German philosophy in his ''Philosophy of Human History'' (Ideen zur Philosophie der Geschichte der Menschheit) (Herder 1790–92), specifically volume III, pp. 41–64. via

Arthur Schopenhauer Arthur Schopenhauer ( , ; 22 February 1788 – 21 September 1860) was a German philosopher. He is best known for his 1818 work ''The World as Will and Representation'' (expanded in 1844), which characterizes the phenomenal world as the prod ...

and the Orientalist Friedrich Maier through

Friedrich Nietzsche Friedrich Wilhelm Nietzsche (; or ; 15 October 1844 – 25 August 1900) was a German philosopher, prose poet, cultural critic, philologist, and composer whose work has exerted a profound influence on contemporary philosophy. He began his ...

´s writings. Nietzsche represented the creative destruction of modernity through the mythical figure of

Dionysus In ancient Greek religion and Greek mythology, myth, Dionysus (; grc, wikt:Διόνυσος, Διόνυσος ) is the god of the grape-harvest, winemaking, orchards and fruit, vegetation, fertility, insanity, ritual madness, religious ecstas ...

, a figure whom he saw as at one and the same time "destructively creative" and "creatively destructive". In the following passage from ''

On the Genealogy of Morality ''On the Genealogy of Morality: A Polemic'' (german: Zur Genealogie der Moral: Eine Streitschrift) is an 1887 book by German philosopher Friedrich Nietzsche. It consists of a preface and three interrelated treatises ('Abhandlungen' in German) tha ...

'' (1887), Nietzsche argues for a universal principle of a cycle of creation and destruction, such that every creative act has its destructive consequence:

But have you ever asked yourselves sufficiently how much the erection of every ideal on earth has cost? How much reality has had to be misunderstood and slandered, how many lies have had to be sanctified, how many consciences disturbed, how much "God" sacrificed every time? If a temple is to be erected a temple must be destroyed: that is the law – let anyone who can show me a case in which it is not fulfilled! –
Friedrich Nietzsche Friedrich Wilhelm Nietzsche (; or ; 15 October 1844 – 25 August 1900) was a German philosopher, prose poet, cultural critic, philologist, and composer whose work has exerted a profound influence on contemporary philosophy. He began his ...
, ''
On the Genealogy of Morality ''On the Genealogy of Morality: A Polemic'' (german: Zur Genealogie der Moral: Eine Streitschrift) is an 1887 book by German philosopher Friedrich Nietzsche. It consists of a preface and three interrelated treatises ('Abhandlungen' in German) tha ...
''

Other nineteenth-century formulations of this idea include Russian

anarchist Anarchism is a political philosophy and movement that is skeptical of all justifications for authority and seeks to abolish the institutions it claims maintain unnecessary coercion and hierarchy, typically including, though not necessar ...

Mikhail Bakunin, who wrote in 1842, "The passion for destruction is a creative passion, too!" Note, however, that this earlier formulation might more accurately be termed "destructive creation", and differs sharply from Marx's and Schumpeter's formulations in its focus on the active destruction of the existing social and political order by human agents (as opposed to systemic forces or contradictions in the case of both Marx and Schumpeter).

Association with Joseph Schumpeter

The expression "creative destruction" was popularized by and is most associated with Joseph Schumpeter, particularly in his book ''

'', first published in 1942. Already in his 1939 book ''Business Cycles'', he attempted to refine the innovative ideas of Nikolai Kondratieff and his long-wave cycle which Schumpeter believed was driven by technological innovation. Three years later, in ''Capitalism, Socialism and Democracy'', Schumpeter introduced the term "creative destruction", which he explicitly derived from Marxist thought (analysed extensively in Part I of the book) and used it to describe the disruptive process of transformation that accompanies such innovation:

Capitalism ... is by nature a form or method of economic change and not only never is but never can be stationary. ... The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers' goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.
... The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the process of industrial mutation 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. It is what capitalism consists in and what every capitalist concern has got to live in.
.. Capitalism requiresthe perennial gale of Creative Destruction.

In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the disruptive force that sustained

economic growth Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate o ...

, even as it destroyed the value of established companies and laborers that enjoyed some degree of

monopoly A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situati ...

power derived from previous technological, organizational, regulatory, and economic paradigms. However, Schumpeter was pessimistic about the sustainability of this process, seeing it as leading eventually to the undermining of capitalism's own institutional frameworks:

In breaking down the pre-capitalist framework of society, capitalism thus broke not only barriers that impeded its progress but also flying buttresses that prevented its collapse. That process, impressive in its relentless necessity, was not merely a matter of removing institutional deadwood, but of removing partners of the capitalist stratum, symbiosis with whom was an essential element of the capitalist schema. .. Te capitalist process in much the same way in which it destroyed the institutional framework of feudal society also undermines its own.

Examples

Schumpeter (1949) in one of his examples used "the railroadization of the

Middle West The Midwest or Midwestern United States is a region of the United States. Mid West or Midwest may also refer to: Airlines * Air Midwest, based in the U.S. state of Kansas, subsidiary of Mesa, closed in 2008 * Midwest Airlines, based in the U.S. st ...

as it was initiated by the

Illinois Central The Illinois Central Railroad , sometimes called the Main Line of Mid-America, was a railroad in the Central United States, with its primary routes connecting Chicago, Illinois, with New Orleans, Louisiana, and Mobile, Alabama. A line also c ...

." He wrote, "The Illinois Central not only meant very good business whilst it was built and whilst new cities were built around it and land was cultivated, but it spelled the death sentence for the ldagriculture of the

West West or Occident is one of the four cardinal directions or points of the compass. It is the opposite direction from east and is the direction in which the Sun sets on the Earth. Etymology The word "west" is a Germanic word passed into some ...

." Companies that once revolutionized and dominated new industries – for example,

Xerox Xerox Holdings Corporation (; also known simply as Xerox) is an American corporation that sells print and digital document products and services in more than 160 countries. Xerox is headquartered in Norwalk, Connecticut (having moved from St ...

in copiers or

Polaroid Polaroid may refer to: * Polaroid Corporation, an American company known for its instant film and cameras * Polaroid camera, a brand of instant camera formerly produced by Polaroid Corporation * Polaroid film, instant film, and photographs * Polar ...

in instant photography – have seen their profits fall and their dominance vanish as rivals launched improved designs or cut manufacturing costs. In technology, the

cassette tape The Compact Cassette or Musicassette (MC), also commonly called the tape cassette, cassette tape, audio cassette, or simply tape or cassette, is an analog magnetic tape recording format for audio recording and playback. Invented by Lou Ott ...

replaced the 8-track, only to be replaced in turn by the

compact disc The compact disc (CD) is a digital optical disc data storage format that was co-developed by Philips and Sony to store and play digital audio recordings. In August 1982, the first compact disc was manufactured. It was then released in O ...

, which was undercut by downloads to MP3 players, which is now being usurped by web-based

streaming services An over-the-top media service is a streaming media service offered directly to viewers via the Internet. OTT bypasses cable, broadcast, and satellite television platforms, the companies that traditionally act as a controller or distributors of ...

. Companies which made money out of technology which becomes obsolete do not necessarily adapt well to the business environment created by the new technologies. One such example is the way in which online

ad-supported Online advertising, also known as online marketing, Internet advertising, digital advertising or web advertising, is a form of marketing and advertising which uses the Internet to promote products and services to audiences and platform users. ...

news sites such as ''

The Huffington Post ''HuffPost'' (formerly ''The Huffington Post'' until 2017 and sometimes abbreviated ''HuffPo'') is an American progressive news website, with localized and international editions. The site offers news, satire, blogs, and original content, and ...

'' are leading to creative destruction of the traditional newspaper. ''

The Christian Science Monitor ''The Christian Science Monitor'' (''CSM''), commonly known as ''The Monitor'', is a nonprofit news organization that publishes daily articles in electronic format as well as a weekly print edition. It was founded in 1908 as a daily newspaper ...

'' announced in January 2009 that it would no longer continue to publish a daily paper edition, but would be available online daily and provide a weekly print edition. The ''

Seattle Post-Intelligencer The ''Seattle Post-Intelligencer'' (popularly known as the ''Seattle P-I'', the ''Post-Intelligencer'', or simply the ''P-I'') is an online newspaper and former print newspaper based in Seattle, Washington, United States. The newspaper was fo ...

'' became online-only in March 2009. At a national level in USA, employment in the newspaper business fell from 455,700 in 1990 to 225,100 in 2013. Over that same period, employment in internet publishing and broadcasting grew from 29,400 to 121,200. Traditional French alumni networks, which typically charge their students to network online or through paper directories, are in danger of creative destruction from free social networking sites such as

LinkedIn LinkedIn () is an American business and employment-oriented online service that operates via websites and mobile apps. Launched on May 5, 2003, the platform is primarily used for professional networking and career development, and allows job se ...

and Viadeo. In fact, successful

innovation Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a new or changed enti ...

is normally a source of temporary

market power In economics, market power refers to the ability of a firm to influence the price at which it sells a product or service by manipulating either the supply or demand of the product or service to increase economic profit. In other words, market powe ...

, eroding the profits and position of old firms, yet ultimately succumbing to the pressure of new inventions commercialised by competing entrants. Creative destruction is a powerful

economic An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...

concept because it can explain many of the dynamics or

kinetics Kinetics ( grc, κίνησις, , kinesis, ''movement'' or ''to move'') may refer to: Science and medicine * Kinetics (physics), the study of motion and its causes ** Rigid body kinetics, the study of the motion of rigid bodies * Chemical kin ...

of industrial change: the transition from a competitive to a monopolistic market, and back again. It has been the inspiration of

endogenous growth theory Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces. Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economi ...

and also of evolutionary economics.

David Ames Wells David Ames Wells (June 17, 1828 – November 5, 1898) was an American engineer, textbook author, economist and advocate of low tariffs. Born in Springfield, Massachusetts, he graduated from Williams College in 1847. In 1848 he joined the staff ...

(1890), who was a leading authority on the effects of technology on the economy in the late 19th century, gave many examples of creative destruction (without using the term) brought about by improvements in

steam engine A steam engine is a heat engine that performs mechanical work using steam as its working fluid. The steam engine uses the force produced by steam pressure to push a piston back and forth inside a cylinder. This pushing force can be ...

efficiency, shipping, the international

telegraph Telegraphy is the long-distance transmission of messages where the sender uses symbolic codes, known to the recipient, rather than a physical exchange of an object bearing the message. Thus flag semaphore is a method of telegraphy, whereas ...

network, and agricultural mechanization.

Later developments

Ludwig Lachmann

David Harvey

Geographer and historian David Harvey in a series of works from the 1970s onwards (''Social Justice and the City'', 1973; ''The Limits to Capital'', 1982; ''The Urbanization of Capital'', 1985; ''Spaces of Hope'', 2000; ''Spaces of Capital'', 2001; ''Spaces of Neoliberalization'', 2005; ''The Enigma of Capital and the Crises of Capitalism'', 2010), 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 Spatial may refer to: * Dimension * Space * Three-dimensional space See also

* * {{disambig ...

" 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". 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" (increased speed of turnover, innovation of ever faster transport and communications' infrastructure, "flexible accumulation") ensue, often impelling technological innovation. Such innovation, however, is a double-edged sword: Globalization can be viewed as some ultimate form of time-space compression, allowing capital investment to move almost instantaneously from one corner of the globe to another, devaluing fixed assets and laying off labour in one urban conglomeration while opening up new centres of manufacture in more profitable sites for production operations. Hence, in this continual process of creative destruction, capitalism does not resolve its contradictions and crises, but merely "moves them around geographically".

Marshall Berman

In his 1987 book ''All That is Solid Melts into Air: The Experience of Modernity'', particularly in the chapter entitled "Innovative Self-Destruction" (pp. 98–104),

provides a reading of Marxist "creative destruction" to explain key processes at work within modernity. The title of the book is taken from a well-known passage from ''The Communist Manifesto''. Berman elaborates this into something of a ''

Zeitgeist In 18th- and 19th-century German philosophy, a ''Zeitgeist'' () ("spirit of the age") is an invisible agent, force or Daemon dominating the characteristics of a given epoch in world history. Now, the term is usually associated with Georg W. ...

'' which has profound social and cultural consequences: Here Berman emphasizes Marx's perception of the fragility and evanescence of capitalism's immense creative forces, and makes this apparent contradiction into one of the key explanatory figures of modernity. In 2021, an article was published by Berman's younger son Daniel Berman which attempted to apply the elder Berman's conception of creative destruction 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. Th
article
was published in the second volume of Hunter College's graduate art history journal
Assemblage
'.

Manuel Castells

The sociologist

, in his trilogy on '' The Information Age: Economy, Society and Culture'' (the first volume of which, ''

The Rise of the Network Society The Information Age: Economy, Society and Culture is a trilogy of books by sociologist Manuel Castells: ''The Rise of the Network Society'' (1996), ''The Power of Identity'' (1997), and ''End of Millennium'' (1998). The second edition was heavily re ...

'', appeared in 1996), reinterpreted the processes by which capitalism invests in certain regions of the globe, while divesting from others, using the new paradigm of "informational networks". In the era of globalization, capitalism is characterized by near-instantaneous flow, creating a new spatial dimension, "the space of flows". While technological innovation has enabled this unprecedented fluidity, this very process makes redundant whole areas and populations who are bypassed by informational networks. Indeed, the new spatial form of the mega-city or megalopolis, is defined by Castells as having the contradictory quality of being "globally connected and locally disconnected, physically and socially". Castells explicitly links these arguments to the notion of creative destruction:

Daniele Archibugi

Developing the Schumpeterian legacy, the school of the Science Policy Research Unit of the

University of Sussex , mottoeng = Be Still and Know , established = , type = Public research university , endowment = £14.4 million (2020) , budget = £319.6 million (2019–20) , chancellor = Sanjeev Bhaskar , vice_chancellor = Sasha Roseneil , ...

has further detailed the importance of creative destruction exploring, in particular, how new technologies are often idiosyncratic with the existing productive regimes and will lead to bankruptcy companies and even industries that do not manage to sustain the rate of change.

Chris Freeman Chris Freeman may refer to: Musicians * Chris Freeman (Australian musician) (c. 1950 – 1992), Australian classical and flamenco multi-instrumentalist * Chris Freeman (musician) (born 1961), American bassist, founding member of Pansy Division * Ch ...

and

Carlota Perez Carlota Perez ( es, Carlota Pérez; born September 20, 1939, in Caracas) is a British-Venezuelan scholar specialized in technology and socio-economic development. She researches the concept of Techno-Economic Paradigm Shifts and the theory of gre ...

have developed these insights. More recently,

and Andrea Filippetti have associated the 2008 economic crisis to the slow-down of opportunities offered by information and communication technologies (ICTs). Using as a metaphor the film ''

Blade Runner ''Blade Runner'' is a 1982 science fiction film directed by Ridley Scott, and written by Hampton Fancher and David Peoples. Starring Harrison Ford, Rutger Hauer, Sean Young, and Edward James Olmos, it is an adaptation of Philip K. Dick's ...

'', 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.

Others

In 1992, the idea of creative destruction was put into formal mathematical terms by

Philippe Aghion Philippe Mario Aghion FBA (born 17 August 1956) is a French economist who is a professor at College de France, at INSEAD, and at the London School of Economics. He is also teaching at the Paris School of Economics. Philippe Aghion was formerly ...

and Peter Howitt, giving an alternative model of endogenous growth compared to

Paul Romer Paul Michael Romer (born November 6, 1955) is an American economist and policy entrepreneur who is a University Professor in Economics at New York University. Romer is best known as the former Chief Economist of the World Bank and for co-recei ...

's expanding varieties model. In 1995,

Harvard Business School Harvard Business School (HBS) is the graduate business school of Harvard University, a private research university in Boston, Massachusetts. It is consistently ranked among the top business schools in the world and offers a large full-time MBA ...

authors Richard L. Nolan and David C. Croson released ''Creative Destruction: A Six-Stage Process for Transforming the Organization.'' The book advocated downsizing to free up slack resources, which could then be reinvested to create

competitive advantage In business, a competitive advantage is an attribute that allows an organization to outperform its competitors. A competitive advantage may include access to natural resources, such as high-grade ores or a low-cost power source, highly skilled ...

. More recently, the idea of "creative destruction" was utilized by Max Page in his 1999 book, ''The Creative Destruction of Manhattan, 1900–1940.'' The book traces

Manhattan Manhattan (), known regionally as the City, is the most densely populated and geographically smallest of the five boroughs of New York City. The borough is also coextensive with New York County, one of the original counties of the U.S. state ...

's constant reinvention, often at the expense of preserving a concrete past. Describing this process as "creative destruction," Page describes the complex historical circumstances, economics, social conditions and personalities that have produced crucial changes in Manhattan's cityscape. In addition to Max Page, others have used the term "creative destruction" to describe the process of urban renewal and modernization. T.C. Chang and Shirlena Huang referenced "creative destruction" in their paper ''Recreating place, replacing memory: Creative Destruction at the Singapore River.'' The authors explored the efforts to redevelop a waterfront area that reflected a vibrant new culture while paying sufficient homage to the history of the region. Rosemary Wakeman chronicled the evolution of an area in central Paris, France known as

Les Halles Les Halles (; 'The Halls') was Paris' central fresh food market. It last operated on January 12, 1973, after which it was "left to the demolition men who will knock down the last three of the eight iron-and-glass pavilions""Les Halles Dead at 200 ...

. Les Halles housed a vibrant marketplace starting in the twelfth century. Ultimately, in 1971, the markets were relocated and the pavilions torn down. In their place, now stand a hub for trains, subways and buses. Les Halles is also the site of the largest shopping mall in France and the controversial Centre Georges Pompidou. The term "creative destruction" has been applied to the arts. Alan Ackerman and Martin Puncher (2006) edited a collection of essays under the title ''Against Theater: Creative destruction on the modernist stage.'' They detail the changes and the causal motivations experienced in

theater Theatre or theater is a collaborative form of performing art that uses live performers, usually actors or actresses, to present the experience of a real or imagined event before a live audience in a specific place, often a stage. The perfor ...

as a result of the modernization of both the production of performances and the underlying economics. They speak of how theater has reinvented itself in the face of anti-theatricality, straining the boundaries of the traditional to include more physical productions, which might be considered avant-garde staging techniques. Additionally within art, Tyler Cowen's book ''Creative Destruction'' describes how art styles change as artists are simply exposed to outside ideas and styles, even if they do not intend to incorporate those influences into their art. Traditional styles may give way to new styles, and thus creative destruction allows for more diversified art, especially when cultures share their art with each other. In his 1999 book, ''Still the New World, American Literature in a Culture of Creative Destruction'', Philip Fisher analyzes the themes of creative destruction at play in literary works of the twentieth century, including the works of such authors as

Ralph Waldo Emerson Ralph Waldo Emerson (May 25, 1803April 27, 1882), who went by his middle name Waldo, was an American essayist, lecturer, philosopher, abolitionist, and poet who led the transcendentalist movement of the mid-19th century. He was seen as a cham ...

Walt Whitman Walter Whitman (; May 31, 1819 – March 26, 1892) was an American poet, essayist and journalist. A humanist, he was a part of the transition between transcendentalism and realism, incorporating both views in his works. Whitman is among ...

Herman Melville Herman Melville ( born Melvill; August 1, 1819 – September 28, 1891) was an American novelist, short story writer, and poet of the American Renaissance period. Among his best-known works are '' Moby-Dick'' (1851); '' Typee'' (1846), a ...

Mark Twain Samuel Langhorne Clemens (November 30, 1835 – April 21, 1910), known by his pen name Mark Twain, was an American writer, humorist, entrepreneur, publisher, and lecturer. He was praised as the "greatest humorist the United States has pr ...

, and

Henry James Henry James ( – ) was an American-British author. He is regarded as a key transitional figure between literary realism and literary modernism, and is considered by many to be among the greatest novelists in the English language. He was the ...

, among others. Fisher argues that creative destruction exists within literary forms just as it does within the changing of technology. Neoconservative author Michael Ledeen argued in his 2002 book ''The War Against the Terror Masters'' that America is a revolutionary nation, undoing traditional societies: "Creative destruction is our middle name, both within our own society and abroad. We tear down the old order every day, from business to science, literature, art, architecture, and cinema to politics and the law." His characterization of creative destruction as a model for social development has met with fierce opposition from paleoconservatives. Creative destruction has also been linked to sustainable development. The connection was explicitly mentioned for the first time by Stuart L. Hart and Mark B. Milstein in their 1999 article ''Global Sustainability and the Creative Destruction of Industries'', in which he argues new profit opportunities lie in a round of creative destruction driven by global sustainability. (An argument which they would later on strengthen in their 2003 article ''Creating Sustainable Value'' and, in 2005, with ''Innovation, Creative Destruction and Sustainability''.) Andrea L. Larson agreed with this vision a year later in ''Sustainable Innovation Through an Entrepreneurship Lens'', stating entrepreneurs should be open to the opportunities for disruptive improvement based on sustainability. In 2005, James Hartshorn (et al.) emphasized the opportunities for sustainable, disruptive improvement in the construction industry in his article ''Creative Destruction: Building Toward Sustainability''. Some economists argue that the destructive component of creative destruction has become more powerful than it was in the past. They claim that the creative component does not add as much to growth as in earlier generations, and innovation has become more rent-seeking than value-creating.

Alternative name

The following text appears to be the source of the phrase "Schumpeter's Gale" to refer to creative destruction:

Impediments to Creative Destruction

Politicians often impose impediments to the forces of creative destruction by regulating entry an
exit rules
that make it difficult for churning to take place. In a series of papers

Andrei Shleifer Andrei Shleifer ( ; born February 20, 1961) is a Russian-American economist and Professor of Economics at Harvard University, where he has taught since 1991. Shleifer was awarded the biennial John Bates Clark Medal in 1999 for his seminal works i ...

and Simeon Djankovbr>illustrate
the effects of such regulation on slowing down competition and innovation.

In popular culture

The film '' Other People's Money'' (1991) provides contrasting views of creative destruction, presented in two speeches regarding the takeover of a publicly traded wire and cable company in a small New England town. One speech is by a

corporate raider A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...

, and the other is given by the company CEO, who is principally interested in protecting his employees and the town.