When creative destruction becomes creative devastation
John Komlos of the Ludwig-Maximilians University in Munich proposes in a new paper that ‘creative destruction’ has become devastating, not just destructive:
the destructive power associated with Schumpeterian creative destruction has increased markedly relative to their creative component, in contrast to previous epochs. Creative destruction’s gentle winds have mutated into cyclones of destruction.Thus, our sense of well-being will probably not keep pace with even the slow economic growth being predicted by Gordon, Summers, and Krugman. While the economy will be growing, albeit slowly, we predict that our sense of well-being will be mysteriously lagging well behind.Furthermore, he argues, the latest innovation cycle is probably being overvalued in Net National Product data:
Market capitalization of Facebook is inching toward $200 Billion, and Twitter, WhatsApp, Instagram are all household names worth billions but probably add much less value to real NNP (net national product), welfare and employment beyond the technologies and firms they replaced. This is the case, because the needs they respond to were satisfied for the most part prior to their existence. They destroyed old forms of communication to which they are close substitutes; hence, my hypothesis is that their ScR value is relatively small. Besides, Facebook has merely 7,000 employees.The idea that faddy apps are leading to an over-estimation of net product obviously conflicts quite strongly with the alternative view, which is that they’re not being valued highly enough. The idea is that society’s standard of living is improving more than we appreciate due to an abundance of tech-advanced services and products, which can’t be monetised easily and therefore can’t be captured in national measures....MORE
The current list of “disruptive technologies” that are likely to usher in future waves of innovation include such fields as education, information, nano- and biotechnology including genetic engineering, cognitive science, robotics, and artificial intelligence. These are not likely to offer major consumer goods which make up the most important part (70%) of US NNP and even those that might be forthcoming promise not to satisfy a basic need that is not already satiated.