Innovation Theory

February 13th, 2009 § 3 comments

In a nutshell innovation helps to avoid depressions and recessions. Joseph Alois Schumpeter is a theorist that pointed it out best:

Schumpeter’s most popular book in English is probably Capitalism, Socialism and Democracy. This book opens with a treatment of Karl Marx. While he is sympathetic to Marx’s theory that capitalism will collapse and will be replaced by socialism, Schumpeter concludes that this will not come about in the way Marx predicted. To describe it he borrowed the phrase “creative destruction,” and made it famous by using it to describe a process in which the old ways of doing things are endogenously destroyed and replaced by new ways.

Schumpeter’s theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism; it will be replaced by socialism in some form. There will not be a revolution, but merely a trend in parliaments to elect social democratic parties of one stripe or another. He argued that capitalism’s collapse from within will come about as democratic majorities vote for the creation of a welfare state and place restrictions upon entrepreneurship that will burden and destroy the capitalist structure.

Thus the current capitalist structure will eventually turn into a socialist state if entrepreneurs are discouraged. Another reason to seize the moment while you can, you never know what awaits tomorrow.

Source: h(y)r collective blog comments section

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  • Terry Williams

    I have just forwarded this to a few colleagues. Good article.

  • mesol

    Thanks for a great idea about marketing. Really help me alot.

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