10. Schumpeter-1

Question 1

What is ‘creative destruction’ according to Joseph Schumpeter? And give an example.

Answer 1

The continuous cycle in capitalism of new innovations replacing old industries -> Amazon

Question 2

What does “Homo oeconomicus by habit” refer to in the stationary economy?

Answer 2

An individual that is not entrepreneurial and acts out of economic habit

Question 3

How are markets viewed in a stationary economy?

Answer 3

Markets are seen as systems of allocation of land and labour

Question 4

What is the normal state in a stationary economy?

Answer 4

The economy tends toward equilibrium

Question 5

What is the first characteristic of entrepreneurship as innovation and what does it mean?

Answer 5

1) Beyond the homo oeconomicus
-> means individuals driven by vision and the will to create something new

Question 6

What is the second characteristic of entrepreneurship as innovation and what are the steps and effect?

Answer 6

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

Question 7

What are the new tendencies of entrepreneurship as innovation? And explain them

Answer 7

A) Innovators tend to monopolize the market
-> Entrepreneurs outcompete all rivals until only they are left

B) Social unrest
-> Innovation triggers mass unemployment