I’m just as tired of pandemic articles as you are. I’m tired of every day being called unprecedented and everyone feeling uncertain. Tired might be the most widely-accurate adjective for everyone in America right now. But as the show goes on, even a deeply tired person can find something interesting, eye-opening on depressing 2020 mornings. Never did I expect, however, that “something” would be an economic theory. Hang with me.
Economic Theory Except, You Know, Cool
I’d argue that most people have at least a very basic understanding of what capitalism is. In fact, it’s clear now that a lot of people seem really invested in the theories of capitalism without exactly knowing what they are or how they work — they’re just attuned to the phraseology and common takeaways. So let’s actually dive into one of the theories that caught my eye: creative destruction.
The term was coined by German sociologist Werner Sombart, but then popularized by economist Joseph Schumpeter from his derivation of a Karl Marx work. In essence, it refers to the business and wealth cycle under capitalism: one that continuously revolutionizes the economic structure from within. Basically, it’s the cycle (be it by the hand of recession, war, or something else) of existing wealth being destroyed, making room for new wealth. Ceaseless industrial mutation.
To illustrate, plenty of examples can be found with a simple Google. But why not use today and 2020 as a real-life example?
IRL Even Though RL Sucks Right Now
This time, by the hand of a global pandemic, economic order was obliterated. Brick and mortars fell, travel ceased, industry after industry saw deadly effects in one form or another. Of course, a select few sectors boomed: outdoor experiences, home delivery services, etc. Creative destruction left a war path on existing wealth.
But, as it turns out, and true to the theory, there has actually never been (in the history of new business applications) a higher number of startups as there are in the third quarter of 2020.
Creative destruction wiped out classic and new businesses alike, laid off millions, and then, like a hole left in the sand on a shoreline, was washed over and filled with new forms of wealth. At-home businesses, passion projects finally realized by people who otherwise never had time to dedicate, and desperation mutated the economy viciously. Are we still in a recession and still trending down? Yes. But at the same time, opportunity is running wild, ideas are taking off, and creation never stops. It’s the definition of hope. Or the American Dream.
As a top naming firm and growth marketing agency (in Austin, TX and the world), we can relate this to the always-evolving forms of growth strategy for businesses. Every new strategy comes from the death of an old one that no longer works, and those that succeed are those that are always in Creation mode instead of Catch Up mode. That’s kind of our whole thing– the reason we’ve been the best in B2B advertising for the last decade.
A Blue Period in a Red Era
Now, I don’t believe innovation requires destruction, but it does seem that destruction almost always breeds creativity. Much like an artist doing their best work during the worst emotional waves of their life, much like fire-burned soil becoming more fertile, and much like how no one really mentions hope as a concept unless it’s the last thing we have left to cling to, creative destruction turned 2020 into a graveyard, and then a breeding ground for newness.
Perhaps one day we’ll create a way of life where destruction isn’t necessary for creation/innovation, but even that hope itself would require the destruction of the current way of life.
So onward we go, almost without a choice, caffeine in hand and tired eyes, into 2021 with destruction at our backs. There will almost certainly continue to be destruction ahead, but as we now can accurately theorize: that means creation is ahead too.