The Marxian usage has, however, been retained and further developed in the work of social scientists such as David Harvey, Marshall Berman, Manuel Castells and Daniele Archibugi.įreebase Rate this definition: 0.0 / 0 votesĬreative destruction, sometimes known as Schumpeter's gale, is a term in economics which has since the 1950s become most readily identified with the Austrian American economist Joseph Schumpeter, who adapted it from the work of Karl Marx and popularized it as a theory of economic innovation and the business cycle. Despite this, the term subsequently gained popularity within mainstream economics as a description of processes such as downsizing in order to increase the efficiency and dynamism of a company. In the earlier work of Marx, however, the idea of creative destruction or annihilation (German: Vernichtung) implies not only that capitalism destroys and reconfigures previous economic orders, but also that it must ceaselessly devalue existing wealth (whether through war, dereliction, or regular and periodic economic crises) in order to clear the ground for the creation of new wealth.In Capitalism, Socialism and Democracy (1942), Joseph Schumpeter developed the concept out of a careful reading of Marx's thought (to which the whole of Part I of the book is devoted), arguing (in Part II) that the creative-destructive forces unleashed by capitalism would eventually lead to its demise as a system (see below). In Marxian economic theory the concept refers more broadly to the linked processes of the accumulation and annihilation of wealth under capitalism.The German sociologist Werner Sombart has been credited with the first use of these terms in his work Krieg und Kapitalismus (War and Capitalism, 1913). It is also sometimes known as Schumpeter's gale.Īccording to Schumpeter, the "gale of creative destruction" describes the "process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one". Wikipedia Rate this definition: 0.0 / 0 votesĬreative destruction (German: schöpferische Zerstörung) is a concept in economics which since the 1950s is the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of Karl Marx and popularized it as a theory of economic innovation and the business cycle.
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