Creative Destruction and Its Impacts on Detroit
This article that was written for anthropology class with Prof. Montgomery addresses "Creative Destruction" as one of the biggest Detroit's problems. I tried to look to this problem from macro to micro point of view.
Creative destruction, sometimes known as Schumpeter's gale, is a term in economics which has since the 1950s become most readily identified with the Austrian American economist Joseph Schumpeter's theory of economic innovation and business cycle. Creative destruction which is come from the Marxists’ thoughts, describes the:
"process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one."
Creative destruction is a unique issue for developed societies. So there are some examples in each industrialized places. From my point of view, the oldest tangible example of creative destruction is about industrial revolution era. The steam engine was a game changer at that time. For instance, the textile industry had a creative destruction because of steam engine. The skills and jobs title were changed. All of them happened in England especially in Manchester, Birmingham and Liverpool.
United States Perspective
United States has the most prominent examples of creative destruction in different industries from car industry to computer manufacturing. A very old and helpful example in United States is about agriculture industry: 90% of Americans were farmers in 1790, while 2.6% of Americans were farmers in 1990. Over those 200 years farm jobs were destroyed by exponential productivity gains in agricultural technology and replaced by jobs in new industries. Present day farmers and non-farmers alike enjoy much more prosperous lifestyles than their counterparts in 1790.
Creative destruction in Detroit is like a dramatic story. A big paradox in Michigan history is provided by this economic phenomenon. Early 1900s a new growing industry settled in Detroit. More than hundred automobile companies manufactured cars for billion people around the world. The results of this occurrence were more jobs and more money. From another point of view, the new shape of Detroit in a short-term process ruined several old jobs and industries (like forging) and also changed jobs title. This process is called “Creative Destruction”.
Less than one hundred years later, this phenomenon showed another face to the Detroit’s inhabitants. Although there are tens reasons about Detroit bankruptcy such as: rescission, suburbs rising and so on, creative destruction known as one of the most undeniable pillar to make this city as a death place. New technologies, cheaper labors, new markets and more opportunities are more necessary for big corporations' thinking than a city or workers. So another creative destruction happened in Detroit area. Big threes changed some parts of their business plans for example; GM canceled the production of some brands like Hammer and Pontiac and also transformed some factories to the other countries like Mexico and China.
Nowadays, city government thinks about the functionality of the closed factories in Detroit. They want to define new functions for these places to back the people.
From my perspective, Detroit is the best example to explain that “Creative Destruction” is a relative fact. This phenomenon is like a coin with two different sides, new technologies bring more new opportunities and remove the old structures. A macro point of view can describe it clearer than a micro point of view.
Creative Destruction in Economics: Nietzsche, Sombart, Schumpeter by Hugo Reinert, Erik S. Reinert, Volume 3, 2006, pp 55-85
About.com, A History of American Agriculture 1776-1990
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