Joseph Schumpeter coined the seemingly paradoxical term “creative destruction,” a feature representative of a dynamic economy, where in the economy is constantly changing rather than being static.
The Austrian-born American economist then went on to describe capitalism as “the perennial gale of creative destruction“.
He acknowledged that in the free market economy, lost jobs, ruined companies and vanishing industries are inherent parts of the growth system. The saving grace however, comes from recognizing the good that comes from the turmoil. Over time, societies that allow creative destruction to operate grow more productive and richer; their citizens see the benefits of new and better products, shorter work weeks, better jobs, and higher living standards.
Additionally, entrepreneurship and competition fuel creative destruction as the incentive remains the profit motive hence, increasing productivity and the process of innovation.
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