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Creative Destruction (From Schumpeter (“The same process of industrial…
Creative Destruction
From Schumpeter
“The same process of industrial mutation — if I may use that biological term — that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of creative destruction is the essential fact about capitalism.” (pg. 83)
He explained economic progress is not gradual and peaceful but rather disjointed and sometimes unpleasant.
These cycles (of creative destruction) are tolerated, he explained, because it allows resources to be freed up for other, more productive uses.
believe idea of innovation inadequate and needed the strong implementation character of an entrepreneur
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In current business use the term is more likely to refer to unappealing choices that are considered necessary for sustainability.
According to Schumpeter’s theory, creative destruction will lead to the eventual failure of capitalism as an economic system.
Schumpeter’s arguments sharply deviated from the dominant tradition in many other respects. First, he highlighted the fact that markets do not passively tend toward equilibrium until profit margins are wiped out. Instead, entrepreneurial innovation and experimentation constantly destroy the old and introduce new equilibria, making possible higher standards of living.
Schumpeter held that consumer preferences are a given - don't go spontaneous change - and thus cannot be the source of economic change
In his first theory of entrepreneurship gave "entrepreneurs" a significant weight; however, in his second one in his 30s he emphasized much more the innovation than the person/s executing
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