creative destruction

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Creative Destruction

A concept in capitalist theory stating that innovation causes failure, but that failure, in turn, creates more innovation. For example, suppose someone invents a better widget. If he/she markets this widget effectively, he/she will eventually drive all previous widget manufacturers out of business. However, this forces older widget manufacturers to create their own innovations that will either keep themselves in business or improve their financial situations in other ways. This is considered one of the most important concepts in capitalism.
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creative destruction

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
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The book's title leads one to believe that its object of inquiry is Capitalism proper, the monetary system of societal interactions characterized by private ownership of the means of production--or what Mises (2008, 1) described in the first sentence of The Anti-Capitalistic Mentality as "mass production of goods destined for consumption by the masses." Instead, Greenspan and Wooldridge quote Schumpeter (2003, 83) to say that capitalism means creative destruction ("Creative Destruction is the essential fact about capitalism"), and then interpret creative destruction to roughly mean 'industrial innovation', after which they take the reader us on a fascinating journey through most major American industrialists, their businesses, their innovations and their achievements.
Those with inclusive institutions incentivized their people to innovate and produce, becoming rich in the process, whereas those fearing creative destruction and suppressing innovation became poor and are still suffering today.
The high order bit therefore becomes a framework where the forces of creative destruction are allowed to take their course in the foreground, whilst in the background, the architecture in place is one where there is increasing flexibility embedded into the system.
Creative Destruction Lab (CDL) - Montreal was founded in 2012 in Toronto by Ajay Agrawal in collaboration with the Rotman School of Management at the University of Toronto.
"It is a systemic threat for government, for its revenues, it's a systemic threat for our banking sector and it is what I call creative destruction of a sector," he said.
Klenow, Stanford University and NBER; and Huiyu Li, Federal Reserve Bank of San Francisco, "Missing Growth from Creative Destruction"
Creative Destruction: How to Start an Economic Renaissance
Creative destruction is often seen as the primary engine of growth in the modern economy.
The economic theory of creative destruction suggests that the success of new businesses comes at a cost to existing businesses.
Much like creative destruction, evolution preserves what works, discards what does not, and sometimes adds new, disruptive features." Oil and commodity prices contribute to the condition of Latin American state coffers.
Only when that happens, can we see the creative destruction which the revival of the world economy depends on.

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