Creative Destruction

ZACHARY MAGID: In 19th century Britain, a group known as the Luddites caused such havoc that the British army was forced to step in. This group, who feared that the manufacturing innovation would render their professions as textile workers and independent weavers obsolete is known best for their smashing of automated machines that made cloth that they used to manufacture by hand. History remembers them as crazy extremists who were trying to stop the progress of the Industrial Revolution, but their grievances are logical and have become all too familiar since the Industrial Revolution. It certainly seems unfair that an entire class of people’s livelihood, effectively ruining the lives of these workers and their families, can be eliminated with a single innovation. But if the luddites were successful and halted the progress of the industrial revolution, perhaps technology, lifestyle, and economics would have stagnated in the 1800’s.

I would argue that the spirit of a Luddite has never quite died, even if the stigma disappeared. Ever since the industrial revolution, new innovative ideas that require mass production and unskilled labor have developed incessantly. These unskilled laborers work until eventually the paradigm shifts and the technology they produce becomes obsolete in favor of new innovation. Now that we exist in the digital age, we have seen creative destruction act more quickly than ever. This, of course, is a byproduct of the unprecedented speed at which technological innovation takes place. The only reason why we do not hear a luddite-level uproar is because the creative destruction does not occur all at once, it takes over one industry at a time.

This process is known as creative destruction, a name coined by Austrian economist Joseph Schumpeter. As described by Schumpeter himself, creative destruction describes the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Schumpeter describes the economic ramifications of technology that induces paradigm shifts, saying that these innovations create entirely new economic structures. In the long term, Schumpeter estimates that the process of creative destruction accounts for over half of all productivity growth,

Today, politics revolves around limiting creative destruction. This is because of the destruction part. If one truly hopes to make progress, heads will roll - most notably the heads of the unskilled laborers in today’s economy. Automation will soon render their jobs obsolete, but as long as college is not realistic, these people are stuck in the same dying professions. Naturally, because they feel trapped in their jobs, these people will resist with everything they have. This means that the approximately 12 million Americans that work in manual labor, a number that has fallen from 20 million in 2000, will fight with everything they have against automation while big business will fight with everything they have in favor of automation. 

One of President Trump’s strongest stances, and one of the few pieces of policy he has been praised for, is his commitment to save jobs from going overseas. This seems like a good thing, because this seems like the best way to keep wealth in the United States. What he is doing, however, is simply temporarily delaying the inevitable. Low-level labor jobs will leave. Automation will eventually take their place entirely. If we allow jobs to leave now, this will make the process of automation simpler and make the transition towards progress smoother. Trying to save the laborers will not help the country, or the workers. Unwillingness to destroy means an inability to create, and letting industries innovate naturally will benefit the country in the long run.

Every single instance in history, whether it was a massive paradigm shift in terms of technology or new technology revolutionizing just one industry, has meant financial prosperity and progress. Jobs will gradually leave, but, as always, jobs will also gradually open up. The manufacturers will be trained to work in low-level technology jobs as the need for labor in this field increases. Although it may be uncomfortable in the short term and many families could lose their sources of livelihood, jobs will eventually come. If we continue to resist we will lose our place on the cutting edge of innovation and big businesses will leave, taking their money with them. In short, the United States would no longer be thought of as one of the world’s most pioneering countries. Right now, this concept may seem far-fetched. The U.S, even with its imperfections remains feared and respected by the rest of the world. Current policies and thought, however, imply that the United States is unwilling to participate in the natural cycle towards progress.