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The 12 Economists of Christmas: Joseph Schumpeter

Summary:
Almost every Christmas movie has one: the mad dash for the season’s latest must-have toy or other gift. Christmas classics from Miracle on 34th Street to Elf depict masses of frenzied holiday shoppers pouring into department stores swathed in red and green, storefronts alight with Christmas cheer, and malls buzzing with crowds. But in recent years the landscape of holiday shopping has changed drastically, giving these scenes an air of nostalgia.  The excitement and exhaustion of a full day of shopping, once a quintessential part of the holiday season, has at least partly given way to online shopping. Indeed, e-commerce has become such a norm that it’s easy to lose sight of how internet marketplaces like Amazon, Etsy, and eBay have dramatically changed the experience of buying holiday

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Almost every Christmas movie has one: the mad dash for the season’s latest must-have toy or other gift. Christmas classics from Miracle on 34th Street to Elf depict masses of frenzied holiday shoppers pouring into department stores swathed in red and green, storefronts alight with Christmas cheer, and malls buzzing with crowds. But in recent years the landscape of holiday shopping has changed drastically, giving these scenes an air of nostalgia. 

The excitement and exhaustion of a full day of shopping, once a quintessential part of the holiday season, has at least partly given way to online shopping. Indeed, e-commerce has become such a norm that it’s easy to lose sight of how internet marketplaces like Amazon, Etsy, and eBay have dramatically changed the experience of buying holiday presents. The growth of these and other internet giants has revolutionized gift-giving by eliminating the need to physically shop. With the click of a button, you can purchase electronics, clothes, and even homemade potholders all in one spot. 

Austrian economist Joseph Schumpeter (1883–1950) called this process “creative destruction”—a mechanism by which new market trends replace older means of production. Regarding the shift to online holiday shopping, Schumpeter’s principle suggests that as more products and services become available online, more people will be able to buy them. This kind of creative destruction allows customers to be more demanding because they expect to find the exact product to meet their needs without having to run from store to store. For example, you can tailor-order food baskets for your friends with allergies because of the lively online market for specialty goods like dairy-free cheese.

Online customization options, such as sizing and monogramming, allow entrepreneurs to sell their products in a more diverse marketplace. And even if you do brave the trek to your local mall, you can rest assured that if you don’t find what you’re looking for in the store, you can always find it online. 

Schumpeter praised the innovative process of creative destruction, arguing that it ultimately leaves everyone with greater access to goods and services. “Queen Elizabeth owned silk stockings,” he wrote, referring to England’s 16th-century monarch. “The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within reach of factory girls.”

In other words, items that were once purchased only by the upper classes are now available to people in every socioeconomic class—and in different colors, too. This demand for greater variety and customization of goods and services prompts entrepreneurs to specialize, which in turn induces them to operate at maximum efficiency. 

The creative destruction of Christmas shopping has made for a more dynamic market, resulting in wealthier business owners, happier customers, and less shopping stress for all. While the tradition of frenzied holiday shopping may someday be a thing of the past, the pleasures of giving and receiving gifts are easier and more accessible than ever, thanks to innovation and entrepreneurship. And who knows? In the continuing process of creative destruction, our holiday movies might one day tug on our heartstrings with nostalgic scenes of last-minute browsing and clicking.

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