Aviott John, Stromness, 14.01.2023
When Austrian-born American economist Joseph Schumpeter spoke of creative destruction, he was referring to cycles of innovation in industry as new technologies displaced older, less efficient ones. As a new technology gained the upper hand, older industries died out, giving rise to a period of disruption and major unemployment.
In a chapter in his book Capitalism, Socialism and Democracy, Schumpeter writes:
“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,” he said.
Schumpeter was more right than he knew, not only about industrial mutation, but in regard to natural mutation. As a passionate environmentalist, I would assert that Schumpeter’s insight is primarily applicable to natural systems. More than 60% of the world’s wealth is embedded in nature and natural systems. Heedless of that, we, in developed industrial societies and all aspiring, developing industrial societies, are recklessly plundering our planet’s natural resources in order to fuel economic growth; in pursuit of the cachet of success, of material wealth far beyond basic human needs of food, clothing and shelter.
Studies show that most forest trees need to be exposed to fire every 50 to 100 years to invigorate new growth. Epidemiologists have long predicted pandemics like the current one, but societies at large have been too busy chasing prosperity to pay much attention. Now that Nature has targeted humanity with some creative destruction of its own, it’s up to us to learn the lessons of the forest; clearing away the dead wood of outdated industrial practices, investing in lifestyles and technologies that eliminate waste and support planetary health.
What need for annual trillion dollar subsidies for fossil fuels when 99% of scientific studies say we should stop carbon emissions? What need for continued economic growth when wealth accrues to the 1% of the population and leaves the other 99% behind? What need for new technologies when the best ones currently available are not being used widely enough?
Political leaders won’t ask us these questions. We must ask it of them. Our survival as a species depends on it.
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Beautifully said stark truths!
“Our survival as a species depends on it.” Indeed.
You might like to read Steve Drury’s writings ….. https://theorkneynews.scot/2021/06/29/the-great-anthropocene-debate/
And…..I only wish we were Post-Covid… http://www.spanglefish.com/berniesblog/blog.asp?blogid=16098
I find this quite intriguing… because I also have thought about Schumpeter’s “creative destruction” in the whole context of what has been happening over the last few years (apparently I was not the only one), albeit perhaps in a rather wider – my own – interpretation.
First it came to mind when the government started hastily with the furlough scheme. Personally, I believe, that to a certain extent it was ill-designed. Businesses which failed to proactively take measures to prepare for an always possible pandemic-induced business impact and should have been forced to re-think the sustainability of their business model, were receiving support even in cases where this support only delayed the inevitable. Not all businesses might have been worth “saving”, and particularly not, if they were lacking foresight and resilience. They could have operated in changed circumstances if the absence of the latter had not compromised their ability.
Perhaps, had the government allowed “creative destruction” those businesses would have come out of the ashes with a more robust concept?