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The Power of Creative Destruction
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The Power of Creative Destruction

Economic Upheaval and the Wealth of Nations

Philippe Aghion, Céline Antonin and Simon Bunel
Belknap Press, 2021
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Editorial Rating

8

Qualities

  • Comprehensive
  • Analytical
  • For Experts

Recommendation

This densely packed, academically styled book offers a contemporary and comprehensive analysis of creative destruction, effectively spelling out the policies and priorities that can maximize innovation in an economy. It provides a robust defense of some of capitalism’s tools, like property rights and intellectual property, while at the same time noting that innovative companies are good for social mobility and bad for corruption. Economists Philippe Aghion, Céline Antonin and Simon Bunel make an intelligent and balanced contribution to the literature on modern economies: how to make them thrive and what governments need to do to let that happen.

Summary

Creative destruction provides an alternative way of looking at economic growth, competition and government policies.

Economist Joseph Schumpeter put forward the idea of creative destruction in his 1942 book Capitalism, Socialism and Democracy. He described how companies thrive or fail over time due to technology and innovation, and how this dynamic is crucial to propelling growth and progress. The concept of creative destruction consists of three assertions: First, innovation and the diffusion of knowledge are at the heart of the growth process. Second, innovation relies on the protection of property rights and on incentives, such as the rewards from patents. Innovation comes from the decision to invest, especially in research and development. Innovation is a social mechanism that responds to positive and negative incentives, which a country can frame through its institutions. And third, innovations render some processes obsolete, creating conflicts between old and new technologies.

Schumpeter also had a lot to say about how innovations tend to follow “General Purpose Technology...

About the Authors

Philippe Aghion is a professor at the College de France and the London School of Economics. Celine Antonin is a senior researcher at the French Economic Observatory. Simon Bunel is senior economist at the French National Institute of Statistics and Economic Studies. 

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