Creative destruction

New methods compete with the old at a decisive advantage.

Mark Carney, the Governor of the Bank of England, gave a lecture at Liverpool John Moores University this week. In it, he connected two separate developments as the cause of the very slow real incomes growth that citizens have experienced. ‘Creative destruction’ is a term coined by the Economist Joseph Schumpeter in 1942. New methods of working and thus new jobs, for example the self-employed drivers compete with each other via apps or the internet, replacing black cabs. He juxtaposed this with the globalisation of the firms that enable this way of working. This, Mr. Carney said, may have caused our ‘lost decade’ during which the average worker did not benefit from the growth of the economy. The aggregate, or average, does not reflect the experience of the individual.