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A struggle of incomplete visions: Creative destruction vs. The economy of knowledge

Author

Listed:
  • James McClure

    (Ball State University)

  • Nathanael Snow

    (Ball State University)

  • David Thomas

Abstract

Hayek (1945) challenged Schumpeter’s (1942) thesis that, absent creative destruction, capitalism and socialism would become indistinguishable. Creative destruction aside, Hayek argued that given the ever-changing circumstances confronting producers and consumers, continually adjusting market prices are the only known means by which the plans of producers and consumers can rapidly be coordinated toward mutual gain. Unfortunately, by setting aside inquiry into creative destruction per se, Hayek missed opportunities to discover: 1) the unique knowledge problem applicable to new product research and development, 2) an economically sound explanation for the process of creative destruction in replacement of Schumpeter’s non-economic one. Subsequent developments in economics (e.g.: Israel Kirzner, Ludwig Lachmann, Peter Lewin, and Deirdre McCloskey) set the stage for an introduction of the role of sequestered capital in business cycle theory.

Suggested Citation

  • James McClure & Nathanael Snow & David Thomas, 2025. "A struggle of incomplete visions: Creative destruction vs. The economy of knowledge," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 38(1), pages 37-53, March.
    • Handle: RePEc:kap:revaec:v:38:y:2025:i:1:d:10.1007_s11138-023-00629-9
    DOI: 10.1007/s11138-023-00629-9
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    More about this item

    Keywords

    Creative Destruction; Socialist Calculation; The Economy of Knowledge; Sequestered Capital;
    All these keywords.

    JEL classification:

    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General
    • B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches

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