The philosophy of creative destruction

Economics, considered today as a separate branch of Social Science, was previously understood as a science under Philosophy. The inception and development of the study of resources (land, labor, capital and entrepreneurship) was always by philosophy and philosophers.

Philosophy precedes economics. Current account deficit, direct taxation, expansionary fiscal policy, and even Prime Minister (PM) Imran Khan’s efforts of increasing foreign direct Investment (FDI), all these terms will only be relevant when Pakistan understands and directs itself to its future philosophy.

Adam Smith (the philosopher known to be the father of economics), David Hume, Karl Marx, Aristotle, and Confucius, all had different philosophies on governance, commerce, education, and necessities of a good life. Whatever is this ideology for Pakistan and whoever decides it, the explanatory power of ‘Creative Destruction’ is phenomenal, and needs to be understood.

Energy can neither be created nor destroyed. Whether its time, wealth, lifestyle, services or goods, in any effort to gain, something must or will be lost. This process is called creative destruction.

The acceptance of this loss is detrimental because it paves way for gains that are greater than the loss, and ultimately any resistance against this loss, will be in vain. Creation demands destruction or loss. In philosophy, this is the duality of the Yin and Yang.

The birth of cars and airplanes led to the demise of horse carriages and ships. Kodak Cameras, cassettes, VCD and DVD players are also some of the many losers and examples of this destruction.

If we are to proceed towards change and a truly “Naya Pakistan”, the destruction of the “Purana Pakistan” has to be considered

As we progress into the twenty first century, the digital revolution is accelerating the loss of methodologies and tools of the twentieth century. For instance, smartphones, LCD’s, online shopping websites and mobile apps are among the winners of this change.

The economic transitions, from domestic production and protectionism, to the global financial system and massive inflow of foreign trade and investment, creates winners and losers as well.

What are the necessary policy and legislative changes in commerce, transport, media, and education? How can it be ensured that these changes create substantial gains against the losses and simultaneously spread income distribution from concentration and monopolies? How can we support the winners and compensate the losers?

The government has promised on the slogan of change and the people voted for change. The problem of change is the cost of change and the cost of change is the loss and the losers. If we are to proceed towards change and a truly “Naya Pakistan”, the destruction of the “Purana Pakistan” has to be considered. If change is to come it will come with creative destruction, gain and loss.

The Writer is a Lecturer and Trainer, and has accumulated experience from US, Turkey, and Germany

Published in Daily Times, February 23rd 2019.