What are we to conclude, then, about the process of creative destruction? The main conclusion must be that however painful it may be for those who must make the wrenching adjustments required by the economy’s technological progress and changing structure, that pain plays an essential role in motivating the resource reallocation and other adjustments – for example, changes in the types of education, training, and experience people acquire – that make possible an ongoing process of economic development in which, in the course of time, nearly every member of society will be better off. Turning to the state, either for endless ad hoc intrusions or for across-the-board replacement of the market-directed economic order, may eliminate some of the pain associated with the process of creative destruction, to be sure, but only by replacing that process with one of uncompensated destruction, suffocating innovation and other forms of economic creativity and bringing real economic progress to a grinding halt.
DBx: Yes. Industrial-policy advocates take heed.