The Austrian economist Joseph Schumpeter argued that creative destruction was "the essential fact about capitalism".

The capitalist machine constantly creates new products, markets and methods of transportation and organisation that sweep away the old.

Occasionally, there are times when a similarly convulsive process applies to institutions and ideas, as the Northwestern University historian Joel Mokyr has described in his writings on the Industrial Revolution.

Are we living through such a moment today as a global pandemic, a technological revolution and an existential environmental threat unleash a new wave of creative destruction of old institutions and ideas?

Every generation likes to think it is living at a hinge point in history. It's more exciting that way. And so, after the 9/11 terrorist attacks in 2001 and the global financial crisis of 2008, we all told ourselves that nothing would be the same again. We were partly right, but mostly wrong.

In this latest crisis, we have again looked to the familiar institutions of the nation state and big corporations to save us. That is understandable in so far as they both deliver indispensable services.

The state is the only legitimate means of providing collective security and public health. It is also society's insurer of last resort: Some 84 countries have introduced social protection programmes in response to the pandemic. The market also remains the most efficient mechanism for delivering private goods. The way in which food retailers have continued to operate complex supply chains during this crisis is near miraculous.

But the latest pandemic-induced economic emergency is also exposing the limits of the state and the market and the fault lines of society. When finance ministries have maxed out their budget deficits and central banks have no further room left to cut interest rates, then we have to invent novel economic tools.

Profit-seeking companies are also far better at satisfying the pre-existing demands of consumers than pre-empting massive societal challenges, such as pandemics or the energy transition.

Dr Henry Kissinger, the grand old man of US strategic thinking, has argued that the latest crisis is triggering a political and economic upheaval that could last for generations.

"Nations cohere and flourish on the belief that their institutions can foresee calamity, arrest its impact and restore stability," he wrote last week.

"When the Covid-19 pandemic is over, many countries' institutions will be perceived as having failed. Whether this judgment is objectively fair is irrelevant. The reality is the world will never be the same after the coronavirus."

In their different ways, both governments and traditional corporations are relatively closed institutions optimised for efficiency, rather than agility. But the latter may now be the overwhelming demand of our fast-moving age.

Estonia and Singapore have seized the digital moment to create flexible tech-enabled platforms they call government as a service. Some of the biggest tech companies, including Apple, Google and Amazon, have big plans to pioneer preventive healthcare, too.

But the latest technologies have also allowed new collective organisations to emerge to address public needs: Wikipedia in information; the UK website Mumsnet in parental advice; and GitHub in open source software. The UK's National Health Service volunteer responders' app, designed to mobilise an army of support, has received a staggering 750,000 applications. Are these the new proto-institutions of the 21st century?

In his book, Professor Mokyr argued that it was the spread of Enlightenment ideas and the creation of new institutions that helped spark the Industrial Revolution in Britain. Innovation became a word of praise, rather than one of abuse.

A remarkable set of institutions, including the Royal Society (founded in 1660), the Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) (1754) and the Royal Institution (1799), led a discourse between "luciferous" and "fructiferous" knowledge, linking intellectuals and producers.

"The essence of the Enlightenment's impact on the economy was the drive to expand the accumulation of useful knowledge and direct it toward practical use," Prof Mokyr wrote.

Mr Matthew Taylor, the RSA's chief executive, argues that flourishing societies need constructive interaction between the state, the market and civil society, representing the values of authority, individual aspiration and connectedness, respectively.

However, the ideology of Western democracies in recent years has been for the state to serve the market, sidelining civil society and creating a "solidarity deficit" that has been filled by populism.

This latest crisis provides an opportunity to rebalance the imperatives of social solidarity with the dynamism of the market to enhance the legitimacy of government. "We need a mixture of practicality and idealism," he says.

In moments of crisis, it is all too easy to be mesmerised by the destruction, but there is a demand - and a real opportunity - to respond creatively, too.

FINANCIAL TIMES

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How to make good use of new wave of 'creative destruction' - straits times