Creative Destruction
The book also introduced the term 'creative destruction' to describe innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power. Because of the significant barriers to entry that monopolies enjoyed, new entrants would have to be radically different: ensuring fundamental improvement was achieved, not a mere difference of packaging. The threat of market entry would keep monopolists and oligopolists' disciplined and competitive, ensuring they invest their profits in new products and ideas. Schumpeter believed that it was this innovative quality that made capitalism the best economic system.
Read more about this topic: Capitalism, Socialism And Democracy
Famous quotes containing the words creative and/or destruction:
“For me, the principal fact of life is the free mind. For good and evil, man is a free creative spirit. This produces the very queer world we live in, a world in continuous creation and therefore continuous change and insecurity. A perpetually new and lively world, but a dangerous one, full of tragedy and injustice. A world in everlasting conflict between the new idea and the old allegiances, new arts and new inventions against the old establishment.”
—Joyce Cary (1888–1957)
“I ... must continue to strive for more knowledge and more power, though the new knowledge always contradicts the old and the new power is the destruction of the fools who misuse it.”
—George Bernard Shaw (1856–1950)