Do you think creative destruction is still happening at the scale needed (for now, let’s exclude the future impact of AI) to advance society, or are governments around the world protecting entities to avoid mass layoffs, which in turn impact growth?
It depends what's meant by growth. The word growth is generally aligned with size/numbers/speed - that could be cancer too. Natural growth is cyclical (which might fit Schumpeter's 'creative destruction') - but if it creates social unrest, does it qualify as real 'growth', let alone 'progress'? It used to be that the word 'growth' by definition meant 'sustainable growth" (otherwise it was parasitic growth that killed its host).
I reckon every new technology, especially the big-noise surrounding AI, should be contextualised by the Club of Rome's "Limits to Growth" (1972), [and regularly updated since].
True. I am only talking about economic growth. Creative destruction has slowed down if it is how we think that creative destruction should work. I do not want people to lose jobs, but sometimes it is suitable for a company to die for something new to take over. Since 2008, I have seen a lot more government involvement in who will survive and who will not. Only over time will we know whether it was the right thing to do.
Multiple points raised by you and Joshua. I agree there are many aspects of growth and the Limits of Growth is an important publication, I even referenced it in my substack about science fiction last week :-)
Schumpeter was focused on the entrepreneurs and how they disrupt industries, you could also add in what Clay Christensen called the Innovator's Dilemma. It seems that AI from startups backed by VC funds is starting to disrupt Google's ad revenue from search and this is one example - another is IBM with AWS and Google cloud - IBM, HP are good example's of how entrepreneurs are disrupting their businesses. At Palantir we did it against several software companies... incumbents.
Growth in economics and government, whilst they tout GDP, it is best measured by productivity - this is key - eg EU average has been circa 0.8 whereas Poland was 138.5 at the end of 2024 - https://tradingeconomics.com/poland/productivity
I would also recommend the recent interview with Marc Andreesen who discussed the measurement of growth as productivity for technological change, creative destruction (Paul Romer's work) around 59 minutes - https://www.youtube.com/watch?v=YqeI7iViRmE
As Marc says productivity in the US since 1971 has been lacklustre.
With almost all technology innovations, no edge is forever unless a company keeps evolving. However, inertia and bureaucracy take over as it grows, eventually leading to its demise.
I am not saying Marc Andreessen is wrong about stagnation but he is one of those people who thinks since they have expertise in one area, they can apply that across every field so whatever he says I take with the grain of salt.
That is a common problem with highly successful people as I believe you learn by doing or experiencing things and higher you go in an organization that less you experience or do. That’s why I still get involved in software and architectural design decisions even though my job has not required it for more than a decade.
Marc and I had quite an argument through 2013/14 about his opinions on European workers. Although, on this occassion he is right on Romer's work.
You do indeed learn by doing - James Bessen has a well researched book about this and innovation, creative destruction - he did the original work showing automated cash dispensers did not take away bank employee jobs, firmly in the camp of automation is a net job booster - "Learning by Doing: The Real Connection between Innovation, Wages, and Wealth"https://www.amazon.com/Learning-Doing-Connection-between-Innovation/dp/0300195664
Do you think creative destruction is still happening at the scale needed (for now, let’s exclude the future impact of AI) to advance society, or are governments around the world protecting entities to avoid mass layoffs, which in turn impact growth?
It depends what's meant by growth. The word growth is generally aligned with size/numbers/speed - that could be cancer too. Natural growth is cyclical (which might fit Schumpeter's 'creative destruction') - but if it creates social unrest, does it qualify as real 'growth', let alone 'progress'? It used to be that the word 'growth' by definition meant 'sustainable growth" (otherwise it was parasitic growth that killed its host).
I reckon every new technology, especially the big-noise surrounding AI, should be contextualised by the Club of Rome's "Limits to Growth" (1972), [and regularly updated since].
( For a discussion on 'growth', see: https://veronikabondsymbiopaedia.substack.com/p/the-metamorphosis-of-growth-part?utm_source=post-email-title&publication_id=1988887&post_id=152655876&utm_campaign=email-post-title&isFreemail=true&r=33iv10&triedRedirect=true&utm_medium=email )
True. I am only talking about economic growth. Creative destruction has slowed down if it is how we think that creative destruction should work. I do not want people to lose jobs, but sometimes it is suitable for a company to die for something new to take over. Since 2008, I have seen a lot more government involvement in who will survive and who will not. Only over time will we know whether it was the right thing to do.
Multiple points raised by you and Joshua. I agree there are many aspects of growth and the Limits of Growth is an important publication, I even referenced it in my substack about science fiction last week :-)
Schumpeter was focused on the entrepreneurs and how they disrupt industries, you could also add in what Clay Christensen called the Innovator's Dilemma. It seems that AI from startups backed by VC funds is starting to disrupt Google's ad revenue from search and this is one example - another is IBM with AWS and Google cloud - IBM, HP are good example's of how entrepreneurs are disrupting their businesses. At Palantir we did it against several software companies... incumbents.
Growth in economics and government, whilst they tout GDP, it is best measured by productivity - this is key - eg EU average has been circa 0.8 whereas Poland was 138.5 at the end of 2024 - https://tradingeconomics.com/poland/productivity
You can see the EU real productivity growth vs employment in the EU here - https://economy-finance.ec.europa.eu/economic-forecast-and-surveys/economic-forecasts/autumn-2024-economic-forecast-gradual-rebound-adverse-environment/productivity-growth-eu-there-trade-employment-growth_en?prefLang=cs
and here for more detail - https://economy-finance.ec.europa.eu/economic-forecast-and-surveys/economic-forecasts/autumn-2024-economic-forecast-gradual-rebound-adverse-environment/productivity-growth-eu-there-trade-employment-growth_en?prefLang=cs
I would also recommend the recent interview with Marc Andreesen who discussed the measurement of growth as productivity for technological change, creative destruction (Paul Romer's work) around 59 minutes - https://www.youtube.com/watch?v=YqeI7iViRmE
As Marc says productivity in the US since 1971 has been lacklustre.
With almost all technology innovations, no edge is forever unless a company keeps evolving. However, inertia and bureaucracy take over as it grows, eventually leading to its demise.
I am not saying Marc Andreessen is wrong about stagnation but he is one of those people who thinks since they have expertise in one area, they can apply that across every field so whatever he says I take with the grain of salt.
That is a common problem with highly successful people as I believe you learn by doing or experiencing things and higher you go in an organization that less you experience or do. That’s why I still get involved in software and architectural design decisions even though my job has not required it for more than a decade.
Marc and I had quite an argument through 2013/14 about his opinions on European workers. Although, on this occassion he is right on Romer's work.
You do indeed learn by doing - James Bessen has a well researched book about this and innovation, creative destruction - he did the original work showing automated cash dispensers did not take away bank employee jobs, firmly in the camp of automation is a net job booster - "Learning by Doing: The Real Connection between Innovation, Wages, and Wealth"https://www.amazon.com/Learning-Doing-Connection-between-Innovation/dp/0300195664
This post (the billionaire part of it) largely reflects my opinion about most of the people mentioned in it.
https://paulkrugman.substack.com/p/the-pathetic-billionaires-club?utm_source=%2Finbox&utm_medium=reader2&utm_campaign=posts-open-in-app&triedRedirect=true
Excellent. Thank you!