My father often jokes that he and I live better lives than Queen Victoria did. At first glance, this comparison seems absurd – after all, she ruled the world’s most powerful empire of her time. Yet, while Her Majesty commanded vast resources and armies, she lacked what we consider basic amenities today: no temperature control in her palace, no modern healthcare, and certainly no instant access to global information and entertainment. The more you think about it, Dad’s claim doesn’t seem so outrageous. In fact, if offered a choice between ruling the British Empire in 1850 or keeping today’s modern healthcare and technology, I would choose the latter.
This stark contrast in living standards perfectly illustrates the significance of this year’s Nobel Prize in Economics, awarded to Joel Mokyr, Philippe Aghion, and Peter Howitt for their work on sustained economic growth. Their research highlights humanity’s journey from millennia of economic stagnation to unprecedented technological advancement – a transformation that warns us not to take innovation for granted.
For most of human history, economic progress moved at a glacial pace. From the 1300s to the 1700s, life centered primarily on finding food and surviving. While this period saw occasional breakthroughs like the printing press, innovation remained rare. Then came the industrial revolution, triggering a cascade of changes that has permanently altered human society. The steam engine led to railways, enabling mass transportation and commerce and the electric bulb eliminated our dependence on daylight. Over the last 200 years, each innovation built upon its predecessors, creating an accelerating cycle of progress that continues today. This pace of economic growth is an outlier – one that must not be taken for granted and may very well be a blip in human existence unless we take specific steps to preserve the catalysts for innovation.
If you’ve crossed paths with me over the past month, you’ve undoubtedly heard me mention creative destruction. Peter Howitt’s theory of sustained growth through creative destruction is simple: if society isn’t willing to destroy, it cannot create. For economies to advance, new technologies and business models must displace existing ones. We’ve seen this repeatedly throughout history: the thriving horse industry gave way to automobiles, vast personal DVD collections were rendered obsolete by streaming services, and now, self-driving vehicles stand poised to revolutionize transportation once again. While the decline of established industries triggers economic anxiety and real human costs, it simultaneously catalyzes the birth of new opportunities and advancements. In short, for something new to emerge, something must be destroyed.
However, creative destruction inevitably creates conflicts. Without proper frameworks, innovation risks being stifled by established companies and interest groups fighting to protect their advantages. The challenge lies in preserving creative destruction while ensuring it doesn’t exact too steep a social cost – a particularly crucial balance in today’s world of accelerating innovation
The New Social Contract
The acceleration of technological change demands a new social contract. As AI, automation, and emerging technologies reshape our economic landscape, we need to relook at existing social structures. Economists have long advocated for universal basic income, housing, healthcare, and education as fundamental safety nets. Think of them as society’s shock absorbers, ensuring that while creative destruction is busy advancing society, individuals don’t fall through the cracks in the process.
Governments have an outsized role in overseeing social stability. This means implementing comprehensive safety nets including universal basic protection (because robots don’t need security, but humans do), investing in education (so we can understand the machines that are replacing us), and creating environmental standards (so we don’t end up with a perfectly efficient economy on an uninhabitable planet). The challenge lies not just in crafting these policies, but in funding them in an era of global competition and mobile capital. If this means increasing tax on our billionaires, so be it.
Organizations also wield economic power that rivals nations, bringing commensurate responsibilities. Their role extends beyond mere compliance with regulations or traditional corporate social responsibility. Companies must actively partner with governments through fair taxation, worker retraining, and direct investment in community development. As primary beneficiaries of creative destruction, their pursuit of innovation must enhance, not undermine, societal stability contrary to what we see happening today.
The ultimate aim of economic growth isn’t merely extending lifespans for a privileged few but enhancing quality of life for all. Progress should be measured in moments reclaimed – when laundry transforms from a day’s labour to pushing a button, when global communication becomes instantaneous, when medical breakthroughs make the debilitating manageable. These advances, when broadly accessible, represent the true promise of creative destruction.
That’s the social contract we need to build – one that ensures innovation lifts all boats, not just the yachts.
Progress at What Price?
There is one fundamental question that arises in all my conversations on creative destruction: is there such a thing as too much economic growth? How much innovation is too much innovation? And just how much better must life become and at what cost?
The answer is complex. The case for innovation is compelling. While continuous economic growth has lifted billions from poverty, unchecked acceleration of technological change threatens both social cohesion and environmental sustainability. Some economists argue that deliberate deceleration in certain sectors might enhance long-term progress by allowing social and regulatory frameworks to catch up. After all, innovation without integration is merely disruption. Consider social media’s rapid evolution. While it revolutionized communication, we’re only now understanding its profound impacts on mental health, democracy, and social fabric.
Yet the call to slow progress faces its own paradox. Many of our most pressing challenges, from climate change to healthcare accessibility, require rapid technological advancement. The COVID-19 pandemic demonstrated how accelerated innovation can literally save millions of lives, with vaccines developed at unprecedented speed. The key lies not in slowing innovation itself, but in better directing its course. This means prioritizing technologies that solve fundamental human challenges over those that merely enhance convenience.
Maybe the solution likely lies in selective acceleration – pushing forward aggressively in areas of critical human need while thoughtfully moderating progress in others. This requires a more nuanced approach to innovation policy, moving beyond simple metrics of economic growth to consider broader societal impacts. Perhaps the question isn’t how much innovation is too much, but rather, how do we ensure innovation serves humanity’s broader needs while maintaining our social and environmental balance? The answer may determine not just our prosperity, but our survival.
We too have a role to play. Here’s my challenge to you: take one piece of technology that’s woven into your daily life- your smartphone, Netflix, or that AI chatbot you’re using. Really dig into its true cost. Ask the AI bot how much your chat cost. Find out more about those rare earth minerals in your device, the energy burned by your cloud storage, and the workers displaced by automation. Ask yourself: How many jobs has it transformed? What social changes has it triggered? This isn’t just an academic exercise. It transforms us from passive consumers into informed participants in shaping technological progress. Only by understanding these connections can we make conscious choices about which innovations truly enhance human welfare, and which ones are just adding to our mounting environmental and social debt. Because in this age of breakneck change, being mindful about what we embrace might be our best shot at ensuring technology serves humanity, rather than the other way around. After all, do we really need AI generated dancing videos with our avatars?
A path forward
So here are my two takeaways.
First, innovation is not a luxury but a necessity for sustained economic growth. We must not take it for granted, for as history has shown us, it is easy to slide back into stagnation. Its power, like a potent medicine, requires careful calibration and monitoring. The challenge of our time is not just to maintain the engines of creative destruction, but to ensure they don’t eventually destroy us. This means putting in place the right catalysts: robust social safety nets, environmental protections, before it’s too late. The window for thoughtful implementation narrows as technology accelerates.
Second, take heart. When we witness the disruption of established industries or the demise of once-dominant companies, these are signs that creative destruction is alive and well, pushing our economy forward. As history has shown, stock markets will continue their upward trajectory, and with proper management, so will our collective quality of life. After all, we want future generations to look back at us the way we look back at Queen Victoria – not just with better technology, but with better solutions to humanity’s fundamental challenges. Just as we marvel at how far we’ve come from her era, I hope our descendants see our time as a pivotal moment when humanity chose to harness innovation’s power responsibly. The question isn’t whether we’ll continue to innovate, but whether we’ll do so wisely enough to leave them a world worth inheriting.
What takeaways would you add?
Further reading: https://www.nobelprize.org/uploads/2025/10/popular-economicsciences2025-3.pdf
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