A struggle of incomplete visions: Creative destruction vs. The economy of knowledge

James McClure, Nathanael Snow () and David Thomas
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Nathanael Snow: Ball State University

The Review of Austrian Economics, 2025, vol. 38, issue 1, No 3, 37-53

Abstract: Abstract Hayek (1945) challenged Schumpeter’s (1942) thesis that, absent creative destruction, capitalism and socialism would become indistinguishable. Creative destruction aside, Hayek argued that given the ever-changing circumstances confronting producers and consumers, continually adjusting market prices are the only known means by which the plans of producers and consumers can rapidly be coordinated toward mutual gain. Unfortunately, by setting aside inquiry into creative destruction per se, Hayek missed opportunities to discover: 1) the unique knowledge problem applicable to new product research and development, 2) an economically sound explanation for the process of creative destruction in replacement of Schumpeter’s non-economic one. Subsequent developments in economics (e.g.: Israel Kirzner, Ludwig Lachmann, Peter Lewin, and Deirdre McCloskey) set the stage for an introduction of the role of sequestered capital in business cycle theory.

Keywords: Creative Destruction; Socialist Calculation; The Economy of Knowledge; Sequestered Capital (search for similar items in EconPapers)
JEL-codes: B00 E30 O00 P11 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11138-023-00629-9

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