Flatter world shaping our future

By David Knox Barker:In "Capitalism, Socialism and Democracy," Joseph Schumpeter coined the term "Creative Destruction" to explain the capitalist process of innovation. Innovation is continually disrupting and transforming companies, industries and entire global economies built on the demands, risks and rewards of international free market capitalism.

Cullen Roche submits: Joseph Schumpeter is famous for coining the phrase “creative destruction”. He described it as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” This is a necessary component of capitalism. The strong survive and the weak die.

Businesses can avoid creative destruction. Leaders, and investors, need to pay more attention to trends and invest in market shifts rather than trying to defend and extend outdated businesses. Creative destruction is not an investment philosophy, nor an inevitable outcome. Any business can grow if it focuses externally and makes the right investment decisions.

Rochester-based Eastman Kodak has been around since 1894, and was a blue-chip Dow Jones Industrial Average stock from 1930-2004.  The company has been on the annual Fortune 500 list of America's largest companies every year since the rankings started in 1955.  But the company hasn't turned a profit since 2007, and is now on the verge of filing for bankruptcy, according to an article in today's Wall Street Journal.

MARK THOMA sends us to a very interesting paper by Avi Goldfarb, Chris Forman, and Shane Greenstein called "The internet and local wages: a puzzle". Here's the abstract:

Recently, the rise of digital cameras put a lot of firms in the film and film-development trade out of business. But now it seems that smartphones are killing the market for point-and-shoot digital cameras.

These figures from the ONS have not received the attention they deserve. They show that even in  the worst recession in living memory, 236,000 new businesses were set up - equivalent to 10.1% of all firms. These are businesses registered for PAYE or VAT, so they don’t count the minor consultancies, odd-job outfits or interior designing businesses set up by the unemployed.

ChartProphet submit:With the recent housing bubble and its subsequent collapse at the forefront of investors’ minds, the technology bubble that preceded it appears to be more far removed from investors’ memory than it should be. And that loss of memory could be leading us to a renewed technology bubble.