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:
“But this I know; the writer who possesses the creative gift owns something of which he is not always master—something that at times strangely wills and works for itself.... If the result be attractive, the World will praise you, who little deserve praise; if it be repulsive, the same World will blame you, who almost as little deserve blame.”
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