Joseph Schumpeter |
“Without innovations, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion. The atmosphere of industrial revolutions --- of “progress” ---- is the only one in which capitalism can survive (Business Cycles).” This type of philosophical thinking is what makes Joseph Schumpeter one of the greatest minds in the innovation of economics. In his book Business Cycles, Schumpeter set out to explain historical patterns of business booms and busts into a predictable cyclical oscillation. While not the foremost authority in the identification of business cycles, Schumpeter’s work on business cycles helped lay the foundation for macroeconomics.
Schumpeter was well recognized for his studies on the system of capitalism, and the pattern of fluctuation for growth and decline that “ebb and flow” like waves. These intervals of time can become predictable with proper calculation and analysis of production and economic status. As Schumpeter defined these cycles he noticed variance from 5 to 7, 8- to10, and 50 to 60 year cycles of growth an decline, showing the possible variance for booms and busts. Schumpeter explained that when regulation is limited, and this limited regulation is accompanied by innovation, then one particular individual or firm will experience growth, as this firm experiences superfluous growth compared with that industries norm then an irregularity occurs. In order for this problem off irregularity to fix itself in society naturally, typically an economic downfall of some sort must occur in order to call for industrial norms. Schumpeter showed how such occurrences have been documented for centuries citing the Weaver Act of 1555 which involved regulation in the textile industry after the invention of the weaving loom.
Schumpeter is most recognized however for the coining of the term “creative destruction”. The term is used to describe how products and methods continually displace old...