5 Media reflections of creative destructionĪlthough the modern term "creative destruction" is not used explicitly by Marx, it is largely derived from his analyses, particularly in the work of Werner Sombart (whom Engels described as the only German professor who understood Marx's Capital), and of Joseph Schumpeter, who discussed at length the origin of the idea in Marx's work (see below).The original Marxian usage has, however, been maintained in the work of influential social scientists such as David Harvey, Marshall Berman, and Manuel Castells. Despite this, the term subsequently gained popularity within neoliberal or free-market economics as a description of processes such as downsizing in order to increase the efficiency and dynamism of a company. In Capitalism, Socialism and Democracy (1942), Joseph Schumpeter developed the concept out of a careful reading of Marx’s thought (to which the whole of Part I of the book is devoted), arguing (in Part II) that the creative-destructive forces unleashed by capitalism would eventually lead to its demise as a system (see below). In the earlier work of Marx, however, the idea of creative destruction or annihilation (German: Vernichtung) implies not only that capitalism destroys and reconfigures previous economic orders, but also that it must ceaselessly devalue existing wealth (whether through war, dereliction, or regular and periodic economic crises) in order to clear the ground for the creation of new wealth. Īt its most basic, "creative destruction" (German: schöpferische Zerstörung) describes the way in which capitalist economic development arises out of the destruction of some prior economic order, and this is largely the sense implied by the German Marxist sociologist Werner Sombart who has been credited with the first use of these terms in his work Krieg und Kapitalismus ("War and Capitalism", 1913). These processes were first described in The Communist Manifesto (Marx and Engels, 1848) and were expanded in Marx's Grundrisse (1857) and "Volume IV" (1863) of Das Kapital. The term is derived from Marxist economic theory, where it refers to the linked processes of the accumulation and annihilation of wealth under capitalism. The term creative destruction, sometimes known as "Schumpeter's gale" (see below), has since the 1950s become most readily identified with the Austrian-American economist Joseph Schumpeter, who adapted it from the work of Karl Marx and popularized it as a theory of economic innovation and the business cycle.
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