Many people think that Joseph Schumpeter was the first person to explore the idea of ‘creative destruction’. But as Hugo and Erik Reinert explain in a fascinating paper, the idea of ‘creative destruction’ has a long history. In the same paper, they also provide some subtle insights into the meaning of creative destruction.
First, creation implies destruction. When Apple created the smartphone, it necessarily annihilated the sales of dumb-phones and cameras. However “this relationship exists only in one direction and does not function when reversed. Denial does not imply affirmation, destruction itself does not lead to creation”. Nietzsche often explored this theme in aphorisms such as:
Whoever must be a creator always annihilates.
affirmation requires denial and annihilation.
You must wish to consume yourself in your own flame: how could you wish to become new unless you had first become ashes!
Second, the opposite of creative destruction is stagnation. The ‘Great Stagnation’ is the logical consequence of an economic environment where both job creation and destruction are falling.