A system, any system, economic or other that at every given point of time fully utilizes its possibilities to the best advantage may yet in the long run be inferior to a system that does so at no given point of time, because the latter's failure to do so may be a condition for the level or speed of long-run performance. This fact bears upon our problem in two ways.įirst, since we are dealing with a process whose every element takes considerable time in revealing its true features and ultimate effects, there is no point in appraising the performance of that process ex visu of a given point of time we must judge its performance over time, as it unfolds through decades or centuries. It is what capitalism consists in and what every capitalist concern has got to live in. This process of Creative Destruction is the essential fact about capitalism.
![joseph schumpeter bookz joseph schumpeter bookz](https://d1w7fb2mkkr3kw.cloudfront.net/assets/images/book/lrg/9781/5600/9781560007173.jpg)
Steel illustrate the same process of industrial mutation if I may use that biological term that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U. So is the history of the productive apparatus of the iron and steel industry from the charcoal furnace to our own type of furnace, or the history of the apparatus of power production from the overshot water wheel to the modern power plant, or the history of transportation from the mail-coach to the airplane. Similarly, the history of the productive apparatus of a typical farm, from the beginnings of the rationalization of crop rotation, plowing and fattening to the mechanized thing of today linking up with elevators and railroads is a history of revolutions. The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers' goods, the new methods of production or transportation, the new markets, the new forms of industrial organization that capitalist enterprise creates.Īs we have seen in the preceding chapter, the contents of the laborer's budget, say from 1760 to 1940, did not simply grow on unchanging lines but they underwent a process of qualitative change. Nor is this evolutionary character due to a quasi-automatic increase in population and capital or to the vagaries of monetary systems of which exactly the same thing holds true. And this evolutionary character of the capitalist process is not merely due to the fact that economic life goes on in a social and natural environment which changes and by its change alters the data of economic action this fact is important and these changes (wars, revolutions and so on) often condition industrial change, but they are not its prime movers. Let us restate the point and see how it bears upon our problem.Ĭapitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary. Yet that fragmentary analysis which yields the bulk of our propositions about the functioning of modern capitalism persistently neglects it.
![joseph schumpeter bookz joseph schumpeter bookz](https://qt.azureedge.net/resources/authors-images-large/joseph-a-schumpeter.jpg)
![joseph schumpeter bookz joseph schumpeter bookz](https://www.thefamouspeople.com/profiles/images/joseph-schumpeter-4.jpg)
It may seem strange that anyone can fail to see so obvious a fact which moreover was long ago emphasized by Karl Marx. It is what capitalism consists in and what every capitalist concern has got to live in.The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process. The process of Creative Destruction is the essential fact about capitalism. New York: Harper and Brothers, third edition, 1950. Schumpeter, Capitalism, Socialism, and Democracy.