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Feb 20, 2023 · Creative destruction is a concept introduced by economist Joseph Schumpeter that refers to the process of innovation and technological change that leads to the destruction of existing economic ...
Joseph Schumpeter (1883–1950) coined the seemingly paradoxical term “creative destruction,” and generations of economists have adopted it as a shorthand description of the free market’s messy way of delivering progress. In Capitalism, Socialism, and Democracy (1942), the Austrian economist wrote: The opening up of new markets, foreign or domestic, and the organizational development ...
Oct 24, 2020 · The process of creative destruction is the essential attribute of capitalism (Schumpeter 1942, p. 83), and Schumpeter described, “the history of capitalism is studded with violent bursts and catastrophes” (Schumpeter 1939) where “a perennial gale of creative destruction” is blowing (Swedberg 1991, p. 157).
- christopher.ziemnowicz@uncp.edu
Jan 1, 2017 · Schumpeter’s conception of creative destruction overturns the idea that price competition is the only component of the market behaviour of entrepreneurs. In fact, it is not that kind of competition which counts, but the competition from the new commodity, the new technology, the new source of supply, and the new type of organization.
Schumpeter first used the phrase creative destruction in 1942, to describe how innovative capitalist products and methods continually displace old ones. He gave abundant examples. The factory wiped out the blacksmith shop, the car superseded the horse and buggy, and the corporation overthrew the proprietorship.
Over the long run, the process of creative destruction accounts for over 50 per cent of productivity growth. At business cycle frequency, restructuring typically declines during recessions, and this add a significant cost to downturns. Obstacles to the process of creative destruction can have severe short- and long-run macroeconomic consequences.
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To Schumpeter it is also a major force in the economy and in economic development and progress that is reminiscent of a strong wind blowing—a gale. Thus, creative destruction is sometimes called “Schumpeter’s perennial gale”. On average, roughly 700,000 new establishments open and another 600,000 fail each year in the United States.
