In economics creative destruction is a theory of economic innovation and the business cycle. The concept is most identified with Joseph Schumpeter who derived it from the work of Karl Marx. It describes the “process of industrial mutation that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one”. Apparently the incessancy of the phenomenon is important.

The Marxian usage was very different to how the term is understood in neo-liberal or free-market economics. In the latter is serves as a description of processes, such as downsizing, in order to increase the efficiency and dynamism of a company.

The former has been retained and further developed in the work of social scientists. Schumpeter developed his original concept out of Marx’s thought, arguing that the creative-destructive forces unleashed by capitalism would eventually lead to its’ demise.