As the management professor Joshua Gans has put it, disruption’s opposite is companies or people failing by doing what they’ve always done. When we speak of disruption, we are usually thinking about the perils of continuity; we express the sense that continuity works fine until it doesn’t. To some extent, the sense that stasis is dangerous, and puts us at risk of falling behind, is characteristic of modernity—not a specific time period so much as the condition of being modern, living in a modern age. As the poet Charles Baudelaire wrote when the world around him was modernizing at a breakneck pace, “The form of a city / changes faster, alas, than a mortal’s heart.” Keep living the way you’re living, and soon enough you’ll find yourself living in the past.
More specifically, though, disruption resonates well with our experience of capitalism—for if Baudelaire was shocked that he could outlive the form of his city, he would have been doubly shocked to measure his life span against that of the average corporation today. Think of all the companies and products you remember treating as permanent, inextricable fixtures of your everyday life, that nevertheless slid right out and disappeared over time. Recall, if you’re the right age, the act of respooling a cassette tape with your pinkie finger, or the phrase “Be kind, please rewind.” Or, for a slightly younger generation, the whistles of a dial-up modem or the mastication of a floppy disk drive.
Disruption tells a story of how things that work hard to appear eternal nevertheless come to be short-lived. Disruption looks for the foreshocks within stability. At the same time, we probably shouldn’t discount that sense of stability altogether. Is it purely illusory? Or does it get at something important about these gestures, actions, and objects that are reiterated in and integrated into the fabric of our everyday life? On the one hand, you may be unable to remember the last visit you made to a Blockbuster. On the other, you probably remember the pervading sense of shitty permanence that Blockbuster stores projected. At least when it comes to the ordering of our experience of capitalism, it would seem, stability and impermanence are equally valid: nothing lasts forever, but everything lives by pretending it will.
The idea of disruption has a particularly strange genealogy. Its oldest ancestors are probably Karl Marx and Friedrich Engels, who wrote in The Communist Manifesto (1848) that the modern capitalist world is characterized by “constant revolutionizing of production, uninterrupted disturbance of all social conditions,” so that, as they put it, “all that is solid melts into air.” Whereas the premodern world was defined by a few stable certainties and centuries-old tradition, and governed by ancient habits of thought, in modernity all fixed relations “are swept away, all new-formed ones become antiquated before they can ossify.” You can sense their giddiness, even though the situation they describe is disorienting and nightmarish. And yet they are giddy, because they feel that this accelerating cycle of constant destruction and replacement ultimately destroys itself.
This idea made its way from The Communist Manifesto into business jargon by way of the Austrian economist Joseph Schumpeter (1883–1950), who, in a 1942 book, coined the phrase “creative destruction.” Although hardly a communist himself, Schumpeter derived the term from Marx and intended it to be descriptive rather than affirmative. Born in Austria, Schumpeter was steeped in both Marxian economics and the work of classical liberal economists like Ludwig von Mises. He became one of the great analysts of the business cycle, but also of its social ramifications. In 1932 he became a professor at Harvard. A few of the shorter works he published in the United States give an idea of his overall thinking: in 1928 he gave a talk titled “The Instability of Capitalism,” and in 1949 he gave a cautionary lecture called “The March into Socialism” at the meeting of the American Economic Association. Schumpeter thought that capitalism would gradually lead to some kind of state socialism, a fact he didn’t exactly welcome but thought inevitable.
The instability of capitalism and the inevitability of socialism are two ideas one rarely hears mentioned today in connection with disruption. If anything, disruption seems to lean in the direction of more capitalism, of cast-off fetters and a more untrammeled expression of market forces. But it’s significant that this theory was first developed in dialogue with a philosopher who was trying to show that the capitalist mode of production made a revolution inevitable. Schumpeter agreed with Marx on two important points: that the ever-increasing efficiency of capitalist exploitation inevitably decreases the rate of profit, and that decreased rate of profit leads to monopolies.
Marx thought that the falling rate of profit doomed capitalism to exploit labor ever more harshly (thus setting the stage for revolution). Schumpeter countered with the idea of creative destruction: if markets were uniform over time, Marx might well have been proven correct, but this turns out not to be the case: “The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers’ goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.” Capitalism’s “creative destruction” of everything solid in the market, its tendency to shake up and redefine its markets, is the thing that actually accounts for its continuity. Yesterday’s monopolist is suddenly one competitor among many, and often enough goes under entirely. The cycle begins anew.
It would have been easy enough for Schumpeter to argue that, in this way, creative destruction would ensure capitalism’s long-term viability. But interestingly, in his 1942 magnum opus, Capitalism, Socialism and Democracy, Schumpeter argues just the opposite. It’s not necessarily a good thing that capitalism tends toward oligopolies that then have to be disrupted and destroyed
