10. Schumpeter-1 Flashcards
What is ‘creative destruction’ according to Joseph Schumpeter? And give an example.
The continuous cycle in capitalism of new innovations replacing old industries -> Amazon
What does “Homo oeconomicus by habit” refer to in the stationary economy?
An individual that is not entrepreneurial and acts out of economic habit
How are markets viewed in a stationary economy?
Markets are seen as systems of allocation of land and labour
What is the normal state in a stationary economy?
The economy tends toward equilibrium
What is the first characteristic of entrepreneurship as innovation and what does it mean?
1) Beyond the homo oeconomicus
-> means individuals driven by vision and the will to create something new
What is the second characteristic of entrepreneurship as innovation and what are the steps and effect?
What does innovation do?
(1) Establish a market for a new product
(2) Discover a new market for an already existing product
(3) Find a new, more efficient method of production
(4) Acquire a new natural resource
(5) Implement a new way of organizing production more efficiently
Effect: profit
What are the new tendencies of entrepreneurship as innovation? And explain them
A) Innovators tend to monopolize the market
-> Entrepreneurs outcompete all rivals until only they are left
B) Social unrest
-> Innovation triggers mass unemployment