Has Creative Destruction Become More Destructive?

John Komlos

No 20379, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Schumpeter's concept of creative destruction as the engine of capitalist development is well-known. However, that the destructive part of creative destruction is a social cost and therefore biases our estimate of the impact of the innovation on NNP and on welfare is hardly acknowledged, with the exception of Witt (1996). Admittedly, during the First and Second Industrial Revolutions the magnitude of the destructive component of innovation was probably small compared to the net value added to employment, NNP or to welfare. However, we conjecture that recently the new technologies are often creating products which are close substitutes for the ones they replace whose value depreciates substantially in the process of destruction. Consequently, the contribution of recent innovations to NNP is likely biased upward. This note calls for a research agenda to estimate innovations into their creative and destructive components in order to provide improved estimates of their contribution to NNP, welfare, and employment.

JEL-codes: E01 O10 (search for similar items in EconPapers)
Date: 2014-08
New Economics Papers: this item is included in nep-ino, nep-mac and nep-pke
Note: DEV EFG
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Citations: View citations in EconPapers (10)

Published as Komlos John, 2016. "Has Creative Destruction become more Destructive?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(4), pages 1-12, October.

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Related works:
Journal Article: Has Creative Destruction become more Destructive? (2016)
Working Paper: Has Creative Destruction become more Destructive? (2016)
Working Paper: Has Creative Destruction Become More Destructive? (2014)
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