Disruptive Technologies and Creative Destruction
Seventy-five years ago, Joseph Schumpeter coined the phrase
“creative destruction” to describe the elimination of one
product by a superior one—and argued that economic growth
in all advanced economies relied on this process. This term is
still used today, although it is now becoming more common to
hear about the economic effects of “disruptive technologies.”
But the idea is the same: New firms and their products are
developed that compete against and often displace old firms
and their products. There are countless examples of this
process, both old and new. Here are just a few.
Steel-nibbed pens eliminated the quill pen with its sharpened
bird’s feather nib. Fountain pens eliminated the steel pen and
its accompanying inkwell. Ballpoint pens virtually eliminated
the fountain pen.
Silent films eliminated vaudeville. The talkies eliminated silent
films and colour films have all but eliminated black and white.
Television seriously reduced the demand for films (and radio)
while not eliminating either of them. Cable greatly reduced the
demand for direct TV reception by offering a better picture and
a more varied selection. Access to movies and programs that
can be streamed over the Internet is now challenging the
dominance of cable TV.
For long-distance passenger travel by sea, the steamship
eliminated the sailing vessel around the beginning of the