Has Creative Destruction Become More Destructive?

22 Pages Posted: 17 Sep 2014

See all articles by John Komlos

John Komlos

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: August 21, 2014

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). 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 and to welfare is likely biased upward. This note calls for a research agenda to estimate and decompose innovations into their creative and destructive components.

Keywords: Schumpeter, creative destruction, innovation, technological change

JEL Classification: E01, O10

Suggested Citation

Komlos, John, Has Creative Destruction Become More Destructive? (August 21, 2014). CESifo Working Paper Series No. 4941. Available at SSRN: https://ssrn.com/abstract=2496883

John Komlos (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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