Creative destruction & destructive creation

We have all heard of creative destruction. It is when a new technology emerges that destroys an existing one because of a superior way of doing things. Initially, of course, there is the pain of job losses and business closures but over the longer term there is gain. Owners of horse carriages, for example, suffered when mechanised automobiles came in but now the auto industry provides millions of jobs. That’s why it is called creative destruction.

Sadly, there is now a very high degree of mistrust and hatred amongst societies. The reasons may be manifold but, in a nutshell, there is too much inequality which results in too little opportunity for the less-fortunate or less-abled people. This is expressed, sadly, in violent terms and results in a diversion of resources needed to build things for human betterment, into efforts to make weapons with greater power of destruction.

This is sad, and perhaps, inevitable, given the level of mistrust. One cannot do anything about this trend except point to the futility of yielding to the military-industrial complex that dictates global policy.

As weapons technologies get more sophisticated, and consequently more expensive, countries divert more of their resources and human intelligence into making things that destroy (bombs, missiles, guns) than into making things that can be used.

This is what I term as destructive creation. You build weapons that (hopefully) will never be in use.

Does humankind benefit? One opinion is that people who develop and manufacture the weapons get jobs and this boosts the GDP. This is the modern equivalent of the Kensyian argument to employ, say, 700 people to dig a hole and 300 to fill it up. At the end of the day, if each is paid ₹500, the GDP has gone up by ₹5 lakh but nothing has been created, and, moreover, results in inflation too.

Yes, there are benefits, such as technology spin-offs for civilian use. The Internet happened because of technologies developed for use in war, but has brought about tremendous benefits to society. Unarguably.

Technology is a double-edged sword. The same drone can be used to help farmers gauge the quality of their land/spray pesticides on fields and also to attack civilians/spray nerve gas on them.

Creative destruction is a better option to spend resources and human effort on. Henrik Fisker, who launched the first plug in hybrid electric vehicle, called Fisker Karma, (the company went into bankruptcy) has now announced an electric vehicle, based on a solid state battery, with a range of 500 miles per charge and a re-charge time of one minute. If Fisker can live up to his claims, then Tesla is under extremely severe pressure.

It would be preferable if resources, mind power and energies were devoted to creative destruction, rather than destructive creation. Unlikely to happen. Neocons won’t permit it. But one can, like John Lennon, imagine “there’s no country, it isn’t hard to do, nothing to live or die for, and no religion too, imagine all the people, living life in peace.”

(The writer is India Head — Finance Asia/Haymarket. The views are personal.)

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