Jump to ContentJump to Main Navigation
Show Summary Details
More options …

The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol, Emmanuelle / Brunner, Johann / Fleck, Robert / Mastrobuoni, Giovanni / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

4 Issues per year

IMPACT FACTOR 2017: 0.306
5-year IMPACT FACTOR: 0.492

CiteScore 2017: 0.50

SCImago Journal Rank (SJR) 2017: 0.414
Source Normalized Impact per Paper (SNIP) 2017: 0.531

See all formats and pricing
More options …
Volume 16, Issue 4


Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

Has Creative Destruction become more Destructive?

John Komlos
Published Online: 2017-01-19 | DOI: https://doi.org/10.1515/bejeap-2016-0179


Schumpeter’s concept of creative destruction as the engine of capitalist development is well-known. However, that the destructive part of creative destruction is a social and economic cost and therefore biases our estimate of the impact of the innovation on GDP is hardly acknowledged, with the notable exception of Witt (1996. “Innovations, Externalities and the Problem of Economic Progress.” Public Choice 89:113–30). Admittedly, during the First and Second Industrial Revolutions the magnitude of the destructive component of innovation was no doubt small compared to the net value added to GDP. However, we conjecture that recently the destructive component of innovations has increased relative to the size of the creative component as the new technologies are often creating products which are close substitutes for the ones they replace whose value depreciates substantially in the process of destruction. Consequently, the contribution of recent innovations to GDP is likely upwardly biased. This note calls for further research in innovation economics in order to measure and decompose the effects of innovations into their creative and destructive components in order to provide improved estimates of their contribution to GDP and to employment.

Keywords: creative destruction; Schumpeter; innovation

JEL Classification: B52; O3


  • Aghion, P., and P. Howitt. 1998. Endogenous Growth Theory. Cambridge, MA: MIT Press.Google Scholar

  • Akerlof, G., and R. Shiller. 2015. Phishing for Phools: The Economics of Manipulation and Deception. Princeton: Princeton University Press.Google Scholar

  • Brynjolfsson, E., and A. McAfee. 2012. Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy Digital Frontier Press .Google Scholar

  • Brynjolfsson, E., and A. McAfee. 2014. The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. New York: Norton.Google Scholar

  • Bureau of Labor Statistics. Using a Hedonic Model to Adjust Television Prices in the Consumer Price Index for Changes in Quality 2016. Accessed January30http://www.bls.gov/cpi/cpihe01.htm.Google Scholar

  • Carey, K Americans Think We Have the World’s Best Colleges. We Don’t. The New York Times 2014. Accessed June 29 2014 http://www.nytimes.com/2014/06/29/upshot/americans-think-we-have-the-worlds-best-colleges-we-dont.html?emc=edit_th_20140629&nl=todaysheadlines&nlid=48226764.Google Scholar

  • Cecchetti, S., and E. Kharroubi. Why Does Financial Sector Growth Crowd Out Real Economic Growth? Bank of International Settlement, Working Papers no. 490 2015 February.Google Scholar

  • Cowan, T. 2013. Average Is Over: Powering America Beyond the Age of the Great Stagnation. New York: Dutton.Google Scholar

  • Cowan, T. 2011. The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better. New York: Dutton.Google Scholar

  • Davis, S., J. Haltiwanger, and S. Schuh. 1996. Job Creation and Destruction. Cambridge, MA: MIT Press.Google Scholar

  • Easterlin, R. A.“Happiness and Economic Growth – The Evidence.”, edited by W. Glatzer, L. Camfield, V. Moller, and M. Rojas. In Global Handbook of Quality of LifeDordrecht: Springer, 2015. 283–299.Google Scholar

  • Easterlin, R. A. Paradox Lost? 2016 Lecture given at the 2016 meeting of the American Economic Association in San Francisco.Google Scholar

  • Egan, T. Digital Dog Collar. The New York Times 2015. March13 .Google Scholar

  • Eggertsson, G., and N. Mehrortra. A Model of Secular Stagnation. Working Paper Department of Economics, Brown University, 2014.Google Scholar

  • Fernald, J.“Productivity and Potential Output Before, During, and after the Great Recession.”, edited by J. Parker, and M. Woodford, In NBER Macroeconomics Annual 2014 Vol. 29 2014. 1–51. .Google Scholar

  • Fernald, J., and B. Wang. The Recent Rise and Fall of Rapid Productivity Growth. Federal Reserve Bank of San Francisco Economic Letters, no. 4 2015 February9.Google Scholar

  • Fowler, G. A., and J. Stern. The 12 Tech Nuisances That Annoy Us Most. The Wall Street Journal 2015 March10.Google Scholar

  • Frey, C. B., and M. A. Osborne. The Future of Employment: How Susceptible are Jobs to Computerisation? University of Oxford, 2013 Unpublished Manuscript,, http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf.Google Scholar

  • Fromm, E. The Sane Society Routledge, 1955 London.Google Scholar

  • Galbraith, J. K. 2014. The End of Normal. The Great Crisis and the Future of Growth. New York: Simon and Schuster.Google Scholar

  • Gordon, R. 2016. The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War. Princeton: Princeton University Press.Google Scholar

  • Gordon, R. The Demise of U.S. Economic Growth: Restatement, Rebuttal, and Reflections. NBER Working Paper No. 19895 2014 February.Google Scholar

  • Gordon, R. J. Is U. S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds. NBER Working Paper 18315 2012 August.Google Scholar

  • Gupta, H., S. Kumar, S. Kumar Roy, and R. S. Gaud. 2010. “Patent Protection Strategies.” Journal of Pharmacy and Bioallied Sciences 2 (1): 2–7.Google Scholar

  • Hayek, F. 1961. “The Non-Sequitur of the ‘Dependence Effect’.” Southern Economic Journal 27 : 346–348.CrossrefGoogle Scholar

  • Heertje, A.“Creative Destruction.”, edited by J. Eatwell, M. Milgate, and P. Newman, In The New Palgrave: A Dictionary of Economics, 1st ed. Palgrave Macmillan 1987. .Google Scholar

  • Heidhues, P., B. Kőszegi, and T. Murooka. 2016. “Exploitative Innovation.” American Economic Journal: Microeconomics 8 (1): 1–25.CrossrefGoogle Scholar

  • Hodgson, G. M. 2002. “Darvinism in Economics: From Analogy to Ontology.” Journal of Evolutionary Economics 12 : 259–281.CrossrefGoogle Scholar

  • Komlos, J. 2014. What Every Economics Student Needs to Know and Doesn’t Get in the Usual Principles Text. New York: Routledge.Google Scholar

  • Komlos, J. Growth of Income and Welfare in the U.S., 1979-2011. NBER working paper, no. 22211 2016a http://www.nber.org/papers/w22211.Google Scholar

  • Komlos, J. Another Road to Serfdom. CesIfo working paper no. 5967 2016b.Google Scholar

  • Krugman, P. 2012. End This Depression Now!. New York: W.W. Norton & Co.Google Scholar

  • Krugman, P. Secular Stagnation, Coalmines, Bubbles, and Larry Summers 2013 November162013Accessed June112013.http://krugman.blogs.nytimes.com/2013/11/16/secular-stagnation-coalmines-bubbles-and-larry-summers/?_php=true&_type=blogs&_r=0.Google Scholar

  • Krugman, P. Creative Destruction Yada Yada. The New York Times 2014;June 16. Accessed June 22 2014 http://krugman.blogs.nytimes.com/2014/06/16/creative-destruction-yada-yada/.Google Scholar

  • Lepore, J. The Disruption Machine. What the Gospel of Innovation Gets Wrong. The New Yorker 2014;June 23. Accessed June 21 2014. http://www.newyorker.com/reporting/2014/06/23/140623fa_fact_lepore.Google Scholar

  • Leichtmann Research Group. Press Release: 83 % of U.S. households subscribe to a pay-tv service 2016 Accessed January302016http://www.leichtmanresearch.com/press/090315release.html.Google Scholar

  • Mokyr, J. 2014. “Riding the Technology Dragon.” Milken Institute Review 2 : 87–94.Google Scholar

  • Mokyr, J., C. Vickers, and N. L. Ziebarth. 2015. “The History of Technological Anxiety and the Future of Economic Growth: Is This Time Different.” Journal of Economic Perspectives 29 (3): 31–50.CrossrefGoogle Scholar

  • Moulton, B. R., T. J. LaFleur, and K. E. Moses. Research on Improved Quality Adjustment in the CPI: The Case of Televisions. Bureau of Labor Statistics 1998 Accessed January302016.http://citeseerx.ist.psu.edu/viewdoc/download?doi= Scholar

  • Nordhaus, W., and J. Tobin.“Is Growth Obsolete?.”, edited by M. Moss. In The Measurement of Economic and Social PerformanceCambridge, MA: NBER, 1973. 509–564.Google Scholar

  • Offer, A. 2006. The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain since 1950. Oxford: Oxford University Press.Google Scholar

  • Olson, M. 1984. The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale University Press.Google Scholar

  • Pasinetti, L. 1993. Structural Economic Dynamics: A Theory of the Economic Consequences of Human Learning. Cambridge: Cambridge University Press.Google Scholar

  • Pearlstein, S. Review: "The Second Machine Age," by Erik Brynjolfsson and Anderew McAfee. The Washington Post 2014. January17 .Google Scholar

  • Piketty, T. 2013. Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press.Google Scholar

  • Schubert, C. 2012. “Is Novelty Always a Good Thing? Towards an Evolutionary Welfare Economics.” Journal of Evolutionary Economics 22 : 585–619.CrossrefGoogle Scholar

  • Schubert, C. 2013. “How to Evaluate Creative Destruction: Reconstructing Schumpeter’s Approach.” Cambridge Journal of Economics 37 (2): 227–250.CrossrefGoogle Scholar

  • Schubert, C. 2015. “What Do We Mean When We Say That Innovation and Entrepreneurship (Policy) Increase ‘Welfare’?” Journal of Economic Issues 49 (1): 1–21.CrossrefGoogle Scholar

  • Schumpeter, J. 1942. Capitalism, Socialism and Democracy. New York: Harper.Google Scholar

  • Statistic Brain. 2014. accessed May 11 http://www.statisticbrain.com/fashion-industry-statistics/.Google Scholar

  • Stiglitz, J. E. 2012. The Price of Inequality: How Today’s Divided Society Endangers Our Future. New York: W.W. Norton.Google Scholar

  • Stiglitz, J. E., A. Sen, and J.-P. Fitoussi. 2010. Mis-Measuring our Lives. Why the GDP Doesn’t Add up. New York: New Books.Google Scholar

  • Stevenson, B., and J. Wolfers. 2013. “Subjective Well-Being and Income: Is There Any Evidence of Satiation?” American Economic Review: Papers & Proceedings 103 (3): 598–604.CrossrefGoogle Scholar

  • Summers, L. Transcript of Larry Summers speech at the IMF Economic Forum, Nov. 8, 2013 2013 Accessed June112013.https://m.facebook.com/notes/randy-fellmy/transcript-of-larry-summers-speech-at-the-imf-economic-forum-nov-8-2013/585630634864563.Google Scholar

  • Summers, L. 2014a. “U.S. Economic Prospects: Secular Stagnation, Hysteresis, and the Zero Lower Bound.” Business Economics 49 (2): 65–73.CrossrefGoogle Scholar

  • Summers, L.“Low Equilibrium Real Rates, Financial Crisis, and Secular Stagnation.”, edited by M. N. Baily, and J.B., Taylor In Across the Great Divide: New Perspectives on the Financial CrisisHoover Institution, Stanford University. number 8, 2014b. 37–50. .Google Scholar

  • Tanner, E. 1996. Why Things Bite Back: Technology and the Revenge of Unintended Consequences. New York: Knopf.Google Scholar

  • Teather, D. Kodak Pulls Shutter down on Its Past. The Guardian 2014;January 22. Accessed June 4 http://www.theguardian.com/technology/2004/jan/23/newmedia.gadgets.Google Scholar

  • Veblen, T. 1899. The Theory of the Leisure Class. New York: Macmillan.Google Scholar

  • Vivarelli, M. 2014. “Innovation, Employment and Skills in Advanced and Developing Countries: A Survey of Economic Literature.” Journal of Economic Issues 48 (1): 123–154.CrossrefGoogle Scholar

  • Vijg, J. 2011. The American Technological Challenge: Stagnation and Decline in the 21st Century. New York: Algora Publishing.Google Scholar

  • Witt, U. 1996. “Innovations, Externalities and the Problem of Economic Progress.” Public Choice 89 : 113–130.CrossrefGoogle Scholar

  • Wolf., Martin. 2016. “An end to facile optimism about the future,” Financial Times, July 12., 2016.Google Scholar

About the article

Published Online: 2017-01-19

Published in Print: 2016-10-01

Citation Information: The B.E. Journal of Economic Analysis & Policy, Volume 16, Issue 4, 20160179, ISSN (Online) 1935-1682, ISSN (Print) 2194-6108, DOI: https://doi.org/10.1515/bejeap-2016-0179.

Export Citation

©2016 by De Gruyter.Get Permission

Comments (0)

Please log in or register to comment.
Log in