Attention Economy


Saturday, October 3, 2020

Creative Destruction and Business Dynamism

Has US business dynamism declined?

A thought-provoking piece from Adrian Daub:
The disruption con: why big tech’s favourite buzzword is nonsense
https://www.theguardian.com/news/2020/sep/24/disruption-big-tech-buzzword-silicon-valley-power
Adrian Daub notes:
“While “creative destruction” is a deeply ambivalent phrase, the word “disruption” is frequently positioned as something to be explicitly celebrated. It becomes something to be taught and striven for. And where Schumpeter’s view of the business cycle presumes a kind of Olympian view from above, disruption puts us in the trenches, and presumptively on the side of the attacker rather than the stalwart. While creative destruction was neutral on whether whatever was getting creatively destroyed deserved it, anything that is getting “disrupted” had it coming.
But there is a less obvious shift in usage. Schumpeter proposed creative destruction as a concept that applies to the business cycle. Companies dominate the market, are challenged by other companies and get displaced. But today’s rhetoric of disruption frequently applies to things other than companies. This is why people such as Peter Thiel are so intent on claiming that higher education, say, or healthcare as a whole, or government, are oligopolies or even monopolies. Schumpeter would have looked at Blockbuster’s gradual defeat by Netflix – a rival it never saw coming, a rival it didn’t take seriously when threatened and even refused to buy when given the chance – as a textbook case of creative destruction. But is the same true for your local travel agency, record shop and pharmacist? Is it true of the postal service or the regional bus company? Disruption is a concept that draws combatants into an arena they had no sense they were entering”.