SCHUMPETER LECTURE WITH PHILIPPE AGHION

© Photos by Christian Lendl

With his co-authors Céline Antonin and Simon Bunel, Aghion addresses the big questions of our time in his recently published book The Power of Creative Destruction (Harvard University Press, 2021). Following an invitation by the Schumpeter Society, Philippe Aghion presented his theses for the first time in Vienna. In a passionate lecture, Aghion took the audience on a tour through his book. The starting point was his assumptions on Schumpeterian growth, which is based on three premises: 1. Long-term growth is based on a cumulative innovation process. 2. Innovation, for its part, is driven by the prospect of future profits. 3. The result of these two previous assumptions is creative destruction which replaces old technologies with new ones.

It is the second point, the prospect of returns, on which the French economist sees a need for action. How do you guarantee returns for innovative ideas without creating new obstacles for future innovators? Aghion sees the answer in an adapted competition law that achieves precisely this balancing act. The economist also wants to overcome the climate crisis with more competition and not through degrowth. He is optimistic about the decoupling of growth and CO-2 emissions in recent years.

However, Aghion also acknowledges the downsides of an unbridled free market. For example, although the number of patents, and thus innovation, is very high in the USA compared to the rest of the world, the lack of social security leads to extreme social stress situations. Whereby unemployment is accompanied by a higher risk of poverty and a related health risk. Aghion sees the solution to this dilemma in a happy medium of competition-driven innovation on one hand and social protection on the other. One of the drivers of innovation in this regard is an equitable education system that seeks to promote talent regardless of the social status of the parents. He cited Finland as an example.

In the subsequent discussion round, Aghion's ideas from the lecture were discussed by the guests Philipp Schmidt-Dengler (University of Vienna), Birgit Niessner, (Chief Economist OeNB) and Karl Aiginger (Policy Crossover Center: Vienna-Europe) under the moderation of Michael Landesmann (Chairman of the Board Schumpeter Society). The audience was also able to ask the guest questions in a panel discussion at the end. Afterwards, a lively evening came to an end with a buffet and networking.