Creative destruction according to Investopedia is a "term coined by Joseph Schumpeter in his work entitled "Capitalism, Socialism and Democracy" (1942) to denote a "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one."
Investopedia gives the following explanation of the economic benefit of creative destruction:
|“||Creative destruction occurs when something new kills something older. A great example of this is personal computers. The industry, led by Microsoft and Intel, destroyed many mainframe computer companies, but in doing so, entrepreneurs created one of the most important inventions of this century.||”|
Creative destruction is the force through which new innovations (or old innovations after conditions change) topple entrenched interests. While there is an amount of destruction (it is very rare to find a buggy whip manufacturer) the increased efficiency leads to increased resources, and the benefits far outweigh the costs. Creative destruction is a major component of the invisible hand and interfering with creative destruction lead to development of Value negative firms and the death by ignorance experienced by the soviet union.
- Ben Wattenberg's Corporate Graveyard Scene from "In Search of the Real America"
- Creative destruction