Creative Destruction and the Age Anxiety of AI

*Innovation builds the future. Anxiety trades it.*

The AI investment boom is fully underway, but so is the anxiety. While markets are celebrating the future, workers and some investors are quietly questioning what may be lost along the way. This unease reminds us that every technological revolution feels existential while it is happening. Few do in hindsight.

Enthusiasm surrounding the "next big thing" has propelled markets to new highs as capital floods into semiconductors, data centers, and the broader infrastructure powering the AI revolution. The seven largest companies in the S&P 500 are expected to spend extraordinary amounts on AI infrastructure in 2026 and 2027 — combined, nearly two-thirds of the capital expenditures of the remaining S&P 500 companies excluding financials.

The Anxiety Beneath the Boom

Yet beneath the optimism, anxiety continues to quietly build. Search activity tied to layoffs, financial distress, and resume updates has hit all-time highs according to Google Trends. At the same time, several industries are confronting the potential threat AI poses to their business models and pricing power. The software sector has found itself squarely in the crosshairs, with many names down more than 30% year-to-date in 2026.

The tension simmering beneath this wave of enthusiasm was perhaps best captured in late February when a report titled *The 2028 Global Intelligence Crisis* began circulating across social media. The piece briefly rattled markets as it outlined a hypothetical but deeply unsettling future scenario driven by rapid advances in AI.

Written from the perspective of June 30, 2028, the authors imagined an economy more than two years into an AI-driven labor dislocation event. The opening paragraph captured the market's deepest fear: "The unemployment rate printed 10.2% this morning, a 0.3% upside surprise. The market sold off 2% on the number, bringing the cumulative drawdown in the S&P 500 to -38% from its October 2026 highs."

Despite the anxiety surrounding the paper and rising geopolitical tensions tied to the Strait of Hormuz, equities continue hovering near all-time highs. The S&P 500 is now up over 10% on the year. A 38% drawdown from the 8,000 level outlined in that doomsday piece would imply an index closer to 5,000 — levels last seen in 2022. This is a far cry from some Wall Street targets of 10,000 over the next few years.

This Anxiety Is Not New

No one can predict the future with certainty, not even the most sophisticated AI model or agent. But what cannot be denied is that the buildout is real — and that AI anxiety, while it feels unprecedented, is anything but new.

Every major technological revolution has triggered fears of labor obsolescence. In 1848, when Marx and Engels published *The Communist Manifesto*, they were responding to the massive social dislocation created by the Industrial Revolution. Machines were rapidly replacing physical labor, reshaping the relationship between workers, production, and capital itself.

More than a century later, a remarkably similar fear resurfaced. In 1964, a report titled *The Triple Revolution* warned of what its authors called the "cybernation revolution" — arguing that computers and automated systems would create a world in which machines advanced faster than humanity's ability to adapt. Productivity would soar, but employment opportunities would disappear alongside it.

This idea sounds strikingly familiar.

Creative Destruction

With "creative destruction," Joseph Schumpeter described capitalism as a system that advances through "a process of industrial mutation…relentlessly destroying the old and creating the new." Witnessing the aftermath of the Industrial Revolution alongside the devastation of a world war, Schumpeter understood that capitalism evolves through disruption.

And the Industrial Revolution did just that — replacing human muscle with machine power. The computer revolution did the same, accelerating information and automation beyond what previous generations thought possible. Each wave of innovation brought fears of disruption, uncertainty, and permanent displacement as old systems and industries gave way to new ones.

The AI revolution of the 2020s is no different. What makes AI distinct, however, is not simply its ability to automate repetitive tasks at extraordinary speed, but the potential automation of cognition itself.

Previous technological revolutions primarily threatened physical labor. AI is competing with our minds.

Increasingly vulnerable are analytical and creative tasks traditionally associated with white-collar employment. That distinction helps explain why the anxiety surrounding AI feels uniquely personal and more pervasive among today's workforce and investors alike.

The Long Arc of Innovation

Agentic software, large language models, and robotics will undoubtedly disrupt industries and eliminate certain jobs. Workers will be forced to retrain and adapt. Entire business models may become obsolete.

Historically, however, periods of technological disruption have eventually expanded productivity, created entirely new industries, and raised aggregate living standards — even if the path there was often painful and uneven. The early Industrial Revolution produced decades of stagnant wages before prosperity broadened across society. The post-1980s divergence between productivity and median wages serves as a reminder that the gains from innovation are not always evenly distributed.

The future of AI is no more certain than the future of industrial machinery was in the 1860s or computers were in the 1960s. The innovation and change that felt existential to prior generations ultimately became foundational to rising productivity, new industries, and higher standards of living for future ones.

Markets often fixate on the destructive side of Schumpeter's concept of "creative destruction" because destruction is immediate and visible. Creation, by contrast, tends to emerge slowly, unevenly, and only in hindsight. Yet it is ultimately the second half of the phrase that matters most.

The old is destroyed.

The new is created.

Every technological revolution begins with anxiety over what will be lost. History suggests the larger story is usually what gets created in its aftermath.

*Originally published: CS McKee Thought Leadership, June 2026. Download the full report with charts on the Research page.*