“Creative destruction” in economic growth and in the study and teaching of economic growth

Philippe Aghion, Céline Antonin, and Simon Bunel present in their new book The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations a comprehensive, detailed, accessible, and compelling overview of the modern theoretical framework of economic growth research, as well as the related theoretical and empirical literature.

The foundation of the book is the so-called Schumpeterian paradigm. The paradigm is named after the Austrian economist Joseph Schumpeter, who already in the 1940s and 1950s developed three important ideas about economic growth.

All three pass the test of common sense with ease. The first is that the core of economic growth lies in innovation and the diffusion of knowledge. The second is that innovation requires incentives and the protection of property rights. The third is that economic growth takes place through so-called “creative destruction.” New innovations displace earlier ones. The idea is not that destruction causes creation, but rather that creation causes destruction. New innovations generate new jobs, but at the same time eliminate old ones. (AI translation)

Publication Information

Maliranta, M. (2021), ”Luova tuho” talouskasvussa sekä talouskasvun tutkimuksessa ja opetuksessa, Kansantaloudellinen aikakauskirja, 117(3), 472–476.

• ISSN: 0022-8427