Creative destruction? The myth of ‘better capitalism’ behind the 2025 Economics Nobel

By Bhabani Shankar Nayak* 

The Royal Swedish Academy of Sciences has awarded the 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Joel Mokyr, Philippe Aghion, and Peter Howitt “for having explained innovation-driven economic growth.” According to the Nobel announcement on October 13, one half of the prize goes to Professor Joel Mokyr “for having identified the prerequisites for sustained growth through technological progress,” while the other half is shared by Professors Philippe Aghion and Peter Howitt “for the theory of sustained growth through creative destruction.”

Ideologically, the three laureates view modern prosperity as the outcome of innovation nurtured by free-market capitalism. They reject revolutionary change, arguing instead that capitalism—when improved through the process of creative destruction—can drive technological progress and sustainable economic growth. Yet this belief in “better capitalism” overlooks the system’s internal contradictions and exploitative nature. It conceals capitalism’s failures and crises, dressing them up as innovation. This is not mere naivety but a selective, ideologically driven reading of history that privileges capital over people and the planet. In truth, there is no such thing as “better capitalism.”

The much-celebrated concept of innovation-driven growth through creative destruction is itself rooted in the ideology of planned obsolescence—a mechanism that ensures continuous profit by rendering products and technologies outdated. This process has evolved from industrial capitalism to today’s platform capitalism, where control over data and algorithms defines power. Western economies continue to hide behind the Schumpeterian myth that technological change inherently leads to progress, when in fact it often reproduces inequality and alienation. Technology may increase productivity, but what is truly creative is human labour. Machines merely extend repetitive, lifeless functions, while it is the ingenuity of workers that fuels innovation and growth. Undermining labour’s role through technological domination ultimately erodes productivity and innovation itself.

History shows that technological revolutions—from steam engines to artificial intelligence—have not automatically yielded higher productivity. Economist Diane Coyle’s 2023 study Why Isn’t Digitalisation Improving Productivity Growth? highlights the “digital productivity puzzle.” Similarly, a UK Government review on “The Impact of Technology Diffusion on Growth and Productivity” finds that technology diffusion does not necessarily drive economic growth. In contrast, China’s experience suggests that rejecting the ideology of planned obsolescence allows digital innovation to contribute more effectively to productivity and development.

Capitalism’s creative destruction thus exploits and disciplines labour through new technologies, deepening the productivity paradox under digital capitalism. The emancipation of labour from capitalist domination is essential if both technology and human creativity are to flourish. A genuinely sustainable and inclusive model of economic growth requires the humanisation and democratisation of technology—its collective ownership, operation, and management—so that innovation serves all rather than enriching a few.

Today’s technological progress benefits a minority while marginalising the majority, perpetuating the same inequalities that capitalism has always produced. A society cannot be truly prosperous when abundance is reserved for a few and deprivation persists for many. Only when technology meets the needs of all can we envision a world free from exploitation and destitution. There is, therefore, little novelty in awarding a Nobel Prize to a theory that continues to romanticise capitalism under a different name. “Better capitalism” and “sustainable growth” remain contradictory illusions. The 2025 Nobel in Economics, celebrating creative destruction, merely reaffirms that illusion—without offering anything genuinely new.

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*Academic based in UK