The Royal Swedish Academy of Sciences has decided to award the Swedish Bank Prize in Economic Sciences in Memory of Alfred Nobel 2025 to the American-Israeli Joël Mokyr “for having identified the preconditions for sustained growth through technological progress” and to a French-Canadian duo composed of the Frenchman Philippe Aghion and the Canadian Peter Howitt “for the theory of sustained growth through creative destruction”.
Joel Mokyr used historical sources to understand the causes of the sustained growth that has become the new normal. He demonstrated that for innovations to occur in a self-generated way, it is necessary not only to know if something works, but also to have scientific explanations. These were often lacking before the industrial revolution, making it difficult to capitalize on new discoveries and inventions. He also highlighted the importance of society being open to new ideas and allowing change.
Philippe Aghion and Peter Howitt have also studied the mechanisms of sustainable growth. In a 1992 paper, they built a mathematical model for so-called creative destruction: when a new and improved product hits the market, the companies that marketed the old products lose out. Innovation represents something new and is therefore creative. But it is also destructive, because the company whose technology becomes obsolete is supplanted by the competition.
In his book co-written with Céline Antonin and Simon Brunel, Philippe Aghion defines creative destruction as “the process by which new innovations constantly make existing technologies and activities obsolete.”
In different ways, the winners demonstrate how creative destruction creates conflicts that must be managed constructively. Otherwise, innovation will be blocked by established companies and interest groups, who risk being disadvantaged.
Creative destruction is a concept that we owe initially to the Austrian researcher Joseph Schumpeter. Growth is a permanent process of creation, destruction and restructuring of economic activities. Indeed, “the new does not emerge from the old, but together with the old it competes with it until it damages it,” he explains, quoted by the Ministry of Economy. This process of creative destruction is at the origin of economic fluctuations in the form of cycles.
Thus, digital audio file formats (e.g. mp3) are about to replace physical reading media (e.g. CDs), it is a phenomenon of creative destruction. This phenomenon is part of the strengthening of the digital economy, which will be at the origin of a new period of growth, explains Bercy.
Source: BFM TV
