Beyond Labels has often discussed elements of economics and political theory (or reality). This week, we’ll discuss the work of this year’s Nobel prize awards, which was split between an economic historian and two more traditional economists who have modeled creative destruction, the mechanism whereby new technologies replace old ones, and firms (or individuals) whose fortunes are tied to the outgoing technology must change (often rapidly) or suffer the consequences.
Here’s the Wikipedia page on creative destruction (sorry, it’s a long one), and here is the Nobel prize announcement.
And here are a few questions to get the discussion started:
- What should government’s role be (if any) in softening the impact of creative destruction on the “losers”–the corporations and/or the affected workers?
- Why do the dominant players in a given technology often fail to make a successful transition to the more modern replacements?
- What lessons should companies (and employees) take from the history of creative destruction (or continuous innovation) which, as one economist wrote, “devalue[s], if not destroy[s], past investments and labour skills?”
- Should politicians try to impose impediments to the forces of creative destruction to maintain the status quo for consituents and important corporate neighbors?