This Day in History: Austrian political economist Joseph Schumpeter was born on this day in 1883. Schumpeter was one of the most influential economists of the early 20th century, and popularized the idea of "creative destruction."
According to Christopher Freeman, a scholar who devoted much time researching Schumpeter's work: "the central point of his whole life work [is]: that capitalism can only be understood as an evolutionary process of continuous innovation and 'creative destruction'".
According to Schumpeter: "Capitalism ... is by nature a form or method of economic change and not only never is but never can be stationary. ... The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers' goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates... The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the process of industrial mutation 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. It is what capitalism consists in and what every capitalist concern has got to live in... Capitalism requires] the perennial gale of Creative Destruction."
Take for instance the Walmart Effect and now the Amazon Effect. Both companies revolutionized and changed the way people shopped, and they destroyed a lot of businesses along the way. Hence, Creative Destruction.
Schumpeter also predicted that Capitalism would weaken and collapse by devolving into Corporatism and to values hostile to capitalism, especially among intellectuals (intellectuals tend to have a negative outlook of capitalism).
See also The History & Mystery of Money & Economics-250 Books on DVDrom
For a list of all of my disks and ebooks (PDF and Amazon) click here
For a list of all of my disks and ebooks (PDF and Amazon) click here
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