• creative destruction

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 • creative destruction

Posted by kerrb at 2005-05-13 10:12 AM


New communication technologies facilitate peer to peer collaboration and undermine traditional hierarchies. Can capitalism with it's traditional and inevitable boss - worker relationships adapt to these new technologies or will it somehow (how?) make a concerted efforted to stem the tide?

The new technologies (internet, mobile phones, blogs, wifi) and collaborative open source methods of production do represent new ways of doing things and many of our institutions (eg, schools )are finding are finding it hard to adapt.

Similar issues are also raised by Thomas Friedman in his new book, The World in Flat

I found this comment to an article about social software by Danah Boyd which is saying something similar to what I've been thinking for some time:
Schumpeter, the quintessential innovation theorist, wrote two books. The former in his early years, where he wrote about how radical innovators would, solely by entrepreneurial drive and a grandiose idea, be able to break large, established corporations.


In contrast, his latter work spoke about how large corporations would - to counteract the danger of the "omnipotent innovation" - internalise new innovations and that they would quickly realise that the most efficient way to embed innovations into their production process would be to pool all resources nationwide. Result: socialism.

WHILE all of the above is debatable, there is one interesting thought I'd like to point out: innovation can lead not only to social changes, but to changes of socio-economic systems.

In consequence, another question surfaces: Can social software - which is built on a collaboration/sharing/synergy paradigm - thrive in an evironment that is chiefly reliant on the possession and protection of knowledge as a market good. In a limited view, this is mirrored in the neverending "opensource vs. prop. software" debate. In a larger context, social software - as it is an innovation in the Schumpeterian sense - is a challenge to all those economies and social orders, that are realiant on protecting individual rights to own information to the same degree that one can own houses or cars.

Social software is thus a mutation of traditional corp-to-market software, because it reverses the mechanism. Viewed from a technological standpoint, it forms a networked organisation on "market/consumer" level and grows in importance, so as to rival other software products. In a sociological sense, it enables grassroots coordination, therefore strengthening the influence of all the Joe Bloggs out there, thus putting into question the whole idea of a hierarchical society.

There will be somebody, who - reading my ramblings - will inevitably call me a Communist. I have heard that argument before.

Regardless of whatever "vibe" you are getting from my post, I just want to put across one idea: there is the link you have discovered, between technological innovation and social innovation (which strongly manifests itself in social software), but there is a third component in that equation: that of political change and societal evolution, which may eventually outgrow the limitations of an order that no longer serves the purpose of supporting new things, new thoughts, new cultural innovations.

Posted by: Mike T at May 12, 2005 02:20 AM

I had heard of Schumpeter before but needed to look him up to refresh my memory. Schumpeter popularised the term creative destruction. Here's some more information about creative destruction from wikipedia:

The expression "creative destruction" was brought into the mainstream economic discourse via Schumpeter's book, Capitalism, Socialism and Democracy, first published in 1942. The idea as such derives from the philosophy of Friedrich Nietzsche, but scholars today agree that Schumpeter, although he did read Nietzsche himself, took the concept and phrase from the work of fellow economist Werner Sombart. Though a conservative, Schumpeter gained much of his understanding of competition and the essence of creative destruction from Karl Marx.

Given the relevance of creative destruction for the business world, it is surprising that Schumpeter's contributions are not included in most elementary economic textbooks, which focus on perfect competition and static supply and demand analysis. Schumpeter's revolutionary ideas are complementary to this type of analysis, because they add a deeper understanding of the dynamic elements of modern economies. Let us hope that a new generation of textbooks emerges soon: it is bound to creatively destroy the old.




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Bill Kerr
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