Power of Creative Destruction

Hayek Book Prize FinalistAn Economist Best Book of the YearA Foreign Affairs Best Book of the YearFrom one of the world’s leading economists and his coauthors, a cutting-edge analysis of what drives economic growth and a blueprint for prosperity under capitalism.Crisis seems to follow crisis. Inequality is rising, growth is stagnant, the environment is suffering, and the COVID-19 pandemic has exposed every crack in the system. We hear more and more calls for radical change, even the overthrow of capitalism. But the answer to our problems is not revolution. The answer is to create a better capitalism by understanding and harnessing the power of creative destruction—innovation that disrupts, but that over the past two hundred years has also lifted societies to previously unimagined prosperity.To explain, Philippe Aghion, Céline Antonin, and Simon Bunel draw on cutting-edge theory and evidence to examine today’s most fundamental economic questions, including the roots of growth and inequality, competition and globalization, the determinants of health and happiness, technological revolutions, secular stagnation, middle-income traps, climate change, and how to recover from economic shocks. They show that we owe our modern standard of living to innovations enabled by free-market capitalism. But we also need state intervention with the appropriate checks and balances to simultaneously foster ongoing economic creativity, manage the social disruption that innovation leaves in its wake, and ensure that yesterday’s superstar innovators don’t pull the ladder up after them to thwart tomorrow’s. A powerful and ambitious reappraisal of the foundations of economic success and a blueprint for change, The Power of Creative Destruction shows that a fair and prosperous future is ultimately ours to make.

Sweeping, authoritative and—for the times—strikingly upbeat…The overall argument is compelling and, with creative destruction falling out of political favor, it carries a trace of Schumpeterian subversion., [An] important book…[It] is lucid, empirically grounded, wide-ranging, and well-argued…Schumpeter himself feared capitalism would perish. So far, he seems to have been wrong. Another possibility is that democracy will die, as plutocracy allies with demagoguery. Either way, the civilizations of the contemporary high-income democracies would perish. By promoting a better understanding, this book could, with wisdom and luck, help us avoid that fate., Successfully navigating the supply chain disruptions created by COVID-19 requires strong political leaders to implement smart policies, but not leaders so strong that they can suppress organizational innovations that will disfavor them or their allies. The authors explain these dynamics and more in an eminently accessible fashion., Marvelous…Consistently thoughtful and, in its way, fearless. In The Power of Creative Destruction, readers will find much that transcends the facile arguments and moral posturing that too often characterizes today’s economic debates., Gather a group of economists together and ask what most concerns them, and a wide variety of topics would soon emerge…Decade after decade, numerous books have been written about each of these issues. But here we have in one compact package a blockbuster book that deals with all of them…A magisterial book with something new and imaginative to say on such a wide and important range of topics.

Philippe Aghion is Professor at the Collège de France, INSEAD, and the London School of Economics and was previously Professor of Economics at Harvard. He is coauthor, with Peter Howitt, of Endogenous Growth Theory and The Economics of Growth. Céline Antonin is Senior Researcher at OFCE, the French Economic Observatory at Sciences Po in Paris, and Research Associate in the Innovation Lab at the Collège de France. Simon Bunel is Senior Economist at INSEE, the French National Institute of Statistics and Economic Studies, and at the Bank of France. He is also Research Associate in the Innovation Lab at the Collège de France.