Friday, February 17, 2017

It's Time for Free Market Economists to Abandon the Concept of "Creative Destruction"

It's a Marxist concept that is wrong.

I am glad to see Gary North take on the concept in an important essay: Entrepreneurship: Creative Production, Not Creative Destruction.

His conclusion:
It is time for defenders of the free market to abandon Schumpeter's concept of the free market's creative destruction. The concept is theoretically erroneous, as Murray Rothbard pointed out in 1987. But it is also a strategic liability. The market process is destructive for entrepreneurs who guessed wrong and failed to satisfy customers. It is creative for everyone else.

This also goes for the now hip Silicon Valley phrase "market disruption," when looked at from the market as a whole, it is better market coordination rather than disruption.


1 comment:

  1. I can't say I agree. Certain companies and business models inevitably fail eventually as economic circumstances change, and it's important to point out that this is not necessarily bad.