When something is destroyed, it makes room for recreation. Loss is inevitable, but destruction provides an opportunity for reconstructing what was, into something bigger and better than before.
Joseph Schumpeter coined the concept of ‘Creative Destruction’ in 1942, in his seminal work titled ‘Capitalism, Socialism, and Democracy’. He defined the concept as ‘the process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one’. This process results when innovation ‘deconstructs’ an existing structure, arrangement or a process and enables the freed resources to be deployed to more productive processes. He saw creative destruction as a ‘natural’ system for the creation of markets and for economic growth.
An example of the most literal form of creative destruction is reconstruction, or the concept of building back better, of institutions after the occurrence of disasters (natural or manmade).
While Schumpeter stressed the most on entrepreneurs, and their role as innovators, as the key elements to bring about economic change in a capitalist system, this article, irrespective of association with any economic system, focuses on the main essence of the concept that is: To let go (destroy) the old, to make room for the new.
An example of the most literal form of creative destruction is reconstruction, or the concept of building back better, of institutions after the occurrence of disasters (natural or manmade). Through innovation and advanced use of technology, Japan, a country that witnesses the worst forms of earthquakes, continues to offer solutions to the gravest of world problems. Despite the prevalence of recurrent disasters, the country has managed to build infrastructure which substantially minimizes loss. They have built buildings which possess the ability to absorb shocks and move with tectonic plates rather than collapsing from the severe erratic movement of the earth’s crust. On the contrary, Pakistan, which is another country that faces frequent disasters, has not built back better even after witnessing the earthquake of 2005, or the floods of 2010. The country’s disaster management policies also remain dormant, only adhering to crisis after the damage has been done.
There is a serious need for the dissemination of the concept of creative destruction when it comes to educational institutions in Pakistan. There is a reason why the county failed to meet its literacy target under the Millennium Development Goals, that is because of the prevalence of obsolete educational practices and curriculum in government schools that fail to compete with the standards of private education institutes.
There are countless number of ghost schools in Pakistan that need to be eliminated if the educational system is ever to progress. There is also a serious need to ensure that teachers play their part – come to class and encourage innovation and critical thinking among students and let go of the traditional ‘ratta’ practice. Creating educational institutions that are well functioning and meet the standards fit for the modern era requires a lot more than just increased educational budget and good governance. Look at Finland’s educational system, for example, the country that is continuously ranked as the one with the best educational system in the world. Mixed with learning that encompasses a modern way of thinking, Finland is the embodiment of what quality learning looks like – creative, inclusive, and stress-free. From the rote system of learning to lack of teacher training, and creativity, these are just some of the issues with our education system that need to be ‘destroyed’ and new efficient practices need to replace them.
The same stands true for industries. Pakistan’s textile industries continue to hold a prominent place because of them being a major source of earning through foreign exchange. But despite various attempts by successive governments to facilitate trade, through concessions and export subsidies, Pakistan’s major export goods remain low on the competitiveness scale. This is because the textile industries lack modernization techniques, and the technology needed to produce goods worth competing in the international market. Currently, Pakistan uses second hand imported machinery in its plants which fails to optimize quality and ultimately profits. Whereas China, one of the biggest trading partners of Pakistan, has excelled in trade and managed to produce such hi-tech machinery that it exports machinery to other countries, including Pakistan. Only if the country lets go of its old obsolete machinery and production practices, and upgrades technology, Pakistan might also be able to solve its trade deficit problem.
In this time and age where climate change continues to threaten the lives and livelihood of people, Pakistan continues to play a part in adding to the problem by burning fossil fuels and cutting down trees. What the country needs the most is to let go of such non-sustainable and damaging practices and adopt new, environmentally friendly processes of production. The country has so much potential for solar power and shifting to solar energy has the potential to prove so much more beneficial for Pakistan. However, in order to do that, the country needs to forego finance allocation from damaging processes to make investment in renewable energy.
Pakistan continues to rank lowest on the Global Innovation Index (GII) – 109 out of 126 countries as of August 2018 – given the current scenario.
‘Increasing capacity has long ceased to mean adding new factories, railways, and skyscrapers; instead, it involves the difficult business of technological advancement and reallocation of resources to sectors with higher productivity’ – The Economist.
Pakistan continues to rank lowest on the Global Innovation Index (GII) – 109 out of 126 countries as of August 2018 – given the current scenario. It is healthy to let go of all that is dormant and inefficient, especially when there is ample historical evidence to prove the incompetence of certain practices. Creative Destruction (in this sense) is and must be encouraged as a modern way of thinking for economies to evolve. Societies grow, perform better, and produce richer commodities when such a concept is adopted.
is a Development Economist with an MPhil in Development Studies from the Pakistan Institute of Development Economics, Islamabad. She is passionate about working towards a developed, inclusive, and greener environment and is currently working as a Research Associate at the Centre for Strategic and Contemporary Research.