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:
“Beyond the horizon, or even the knowledge, of the cities along the coast, a great, creative impulse is at work—the only thing, after all, that gives this continent meaning and a guarantee of the future. Every Australian ought to climb up here, once in a way, and glimpse the various, manifold life of which he is a part.”
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