During 1989, a computer scientist wrote a memo in which he explained how information could be shared through a computer network. Two years later we had the first web pages and by 1998, one quarter of the US population was using them.
Just 9 years.
By contrast, for one-quarter of the US population to use electricity, it took 46 years. For the telephone, it was somewhat faster and, as you can see below, we seem to be adopting new technology ever more speedily.
Thinking about the impact of the web, I wanted to share some of what I have heard from venture capitalist, Mosaic co-creator and Netscape co-founder Marc Andreessen. Saying that it will take 10 years for software companies to take over “large swathes of the economy,” he explains, “…six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works…”
His examples? Amazon and the destruction of Borders, Netflix and the “evisceration” of Blockbuster, Apple’s iTunes and the demise of traditional record companies, Flickr and the disappearance of Kodak.
Our bottom line? In Capitalism, Socialism, and Democracy (1942), economist Joseph Schumpeter (1883-1950) conveyed how entrepreneurs propelled capitalism through creative destruction. Yes, new ideas destroy the status quo but also they fuel economic growth.
Nowadays, aren’t we all a part of the creative destruction process? Please let us know in a comment.
Software's Creative Destruction
Elaine Schwartz
Elaine Schwartz has spent her career sharing the interesting side of economics. At the Kent Place School in Summit New Jersey, she was honored with an Endowed Chair in Economics. Just published, her newest book, Degree in a Book: Economics (Arcturus 2023), gives readers a lighthearted look at what definitely is not “the dismal science.” She has also written and updated Econ 101 ½ (Avon Books/Harper Collins 1995) and Economics: Our American Economy (Addison Wesley 1994). In addition, Elaine has articles in the Encyclopedia of New Jersey (Rutgers University Press) and was a featured teacher in the Annenberg/CPB video project “The Economics Classroom.” Beyond the classroom, she has presented Econ 101 ½ talks and led workshops for the Foundation for Teaching Economics, the National Council on Economic Education and for the Concord Coalition. Online for more than a decade. econlife has had one million+ visits.
