Jul 13, 2011

Capitalism is a process of creative destruction.

CAPITALISM is a process of creative destruction. The new destroys the old. Both the creation and the destruction are essential to driving the economy forward. Entrepreneurs are central to the process of creative destruction; they bring the new technologies and the new concepts into active commercial use. They are the change agents of capitalism.
The old patterns of powerful vested interests must be broken if the new is to exist, but those vested interests fight back. They are not willing to fade quietly into the pages of history. Entrepreneurs built the national companies that destroyed local companies at the end of the nineteenth century, and they are building the global companies that are destroying national companies at the end of the twentieth century.
History teaches us that it is only too easy to stamp out entrepreneurship. It is a fundamental human characteristic but, despite its creative and destructive powers, an extremely fragile one. Among most peoples in most times and most places entrepreneurs do not exist. The economic possibilities exist, but they are not seen, the energy to realize them is lacking, or the risks they involve seem too great.
When societies aren't organized so that the old vested interests can be brushed aside, entrepreneurs cannot emerge. Social systems have to be built in which entrepreneurs have the freedom to destroy the old. Yet destroying the old can too easily be seen as a step into chaos. Societies that aren't ready to break with the past aren't willing to let entrepreneurs come into existence.

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