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:
“Lying increases the creative faculties, expands the ego, lessens the friction of social contacts.... It is only in lies, wholeheartedly and bravely told, that human nature attains through words and speech the forebearance, the nobility, the romance, the idealism, that—being what it is—it falls so short of in fact and in deed.”
—Clare Boothe Luce (1903–1987)
“All other things to their destruction draw,
Only our love hath no decay;
This no tomorrow hath, nor yesterday,”
—John Donne (1572–1631)