Creative Destruction is the idea that innovation of processes or products or services will destroy the traditional way of doing things. This process can be wealth generating, but depending on where the innovation is, can also have a negative impact.
For many people the advent of the PC was wealth generating. Both in terms of something new to make, it also allowed us to do things differently. Work smarter, do things differently, and therefore earn more income. GSM and the mobile phone was also “life changing”, with the industries springing up around improved communication. The result was more jobs directly and indirectly.
Whilst the advent of the Internet has changed our lives, it is also a destroying influence. You can buy anything you want online. Traditional retail is losing jobs and this will change the makeup of our cities, towns, and retail parks in the future. Has the advent of the Internet meant more jobs or more wealth in the UK?
Its all Free!!!! One game that is being played out is the software that runs our PC's and phones, and can be so easily distributed over the Internet. For instance http://portableapps.com/ provides much of the software that you need to run a professional small business. It will all work from your memory stick. http://www.makeuseof.com/tag/portable-software-usb/ gives a list of 15 different types of software that will work from your memory stick, and by default will also work on many phones, and of course your PC. Whilst you can work smarter, its all free, and not wealth generating in a production or service sense. The apps are so well productized you don't even need a tame geek to make them work. So you can get a PC and memory stick on ebay for less than £100. You can put up a website with ecommerce using OS Commerce without paying huge amounts for webdevelopment – after all the logical end for software is that it will be free, and also useful, and therefore easily customizable.
Whilst the Internet is a wonderful tool, it may not directly lead to jobs. We will see further reduction in barriers to entry, increases in efficiency, but less jobs.
So whats ahead?
Genuinely talented individuals will always earn a good living. From entertainers to “clever” people in most walks of life, we will want to see the best or use the best available. The problem with the “best” is that it implies a few or not many people. “Public” goods and services are safe, but not life changing. At least “public” makes up over 40% (42.9% and rising) of this countries wealth at the moment. The bets on new beneficial areas of technology that “need” help are:
Intelligent Transport Systems Services
Low Impact Buildings
Low Carbon Vehicles
You can see why each has been chosen. There is a social benefit, economic benefits, and may well help the government in their programmes (and not freely available on the internet). If genuine progress is made in these areas then there is a chance of wealth generation. Ie more jobs.
What is certain is that for all the government intervention, growth will built on progress that generates wealth ie employs people. Governments are notorious in not predicting markets very well, and so it is equally likely that progress will come from somewhere else.
Somewhere there are companies considering new products and services and whether this is the best time to invest. Creative destruction suggests that innovation is not easy, and it takes a special sort of person or team to be able to innovate and then educate the market when everyone is blasting AC-DC out loud.