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Why investors should expect creative destruction—without the creativity

Will failing firms clear the path for thriving successors? Not in this recovery

By Megan Greene   December 2020

A Bank Run in New York during the Great Depression. Photo: Wikimedia Commons

The pandemic has wrought destruction. The question for economic recovery—and for investors—is whether it will be what economist Joseph Schumpeter called “creative destruction,” whereby new, more productive businesses spring up to replace those that failed. There are some tentative beginnings, but because of the nature of the crisis, the creative aspect may not be as powerful as in economic shocks of the past.

Schumpeter theorised…

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