Creative destruction: getting ahead and staying ahead in a capitalist economy

Randall Holcombe

The Review of Austrian Economics, 2022, vol. 35, issue 4, No 4, 467-480

Abstract: Abstract The creative destruction inherent in a capitalist economy enables entrepreneurial individuals to get ahead, but threatens those who want to stay ahead. Those who want to get ahead benefit from the continual evolution that characterizes a market economy, whereas those who want to stay ahead prefer stability and want to establish institutions that preserve the status quo. Those who want to stay ahead push for government regulations, subsidies, differential tax benefits, and other politically generated protections that preserve the status quo and inhibit creative destruction. Long-established firms have an advantage in doing so because they tend to have more financial resources to devote to rent-seeking, and often have long-standing political connections. To prevent capitalist institutions from being undermined by those who want to stay ahead requires a robust entrepreneurial class that can give those who want to get ahead sufficient political influence to counter those who want to stay ahead.

Keywords: Creative destruction; Entrepreneurship; Joseph Schumpeter; Cronyism; Capitalism (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11138-020-00523-8

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