Joseph Schumpeter

AAA

DEFINITION of 'Joseph Schumpeter'

One of the 20th century's great economic and political thinkers. Joseph Schumpeter is well known for his theory explaining the activities that lead to economic growth in capitalist economies. His theory centers around entrepreneurial innovations and their role as the key driver of economic growth. Schumpeter argues that competition among market participants leads to a desire to seek out new ways to improve technology, new ways to do business and other types of advantages that would increase profit margins and directly impact the entrepreneur's standard of living.

INVESTOPEDIA EXPLAINS 'Joseph Schumpeter'

Schumpeter describes the act of new innovations replacing old innovations as "creative destruction." This process is driven by the inevitable copying of new innovations, which causes profit margins to become low and creates a new incentive to seek out new innovations. This is the essential idea behind capitalism as Schumpeter describes it.

RELATED TERMS
  1. Destructive Creation

    When innovation leads to destruction. Destructive creation was ...
  2. Creative Destruction

    A term coined by Joseph Schumpeter in his work entitled "Capitalism, ...
  3. New Economy

    A buzzword describing new, high-growth industries that are on ...
  4. New Paradigm

    In the investing world, a new paradigm is a totally new way of ...
  5. Provisional Patent Application

    A short-term means of protecting an invention that requires less ...
  6. Franchise disclosure document

    A Franchise Disclosure Document (FDD) is a legal document presented ...
Related Articles
  1. Fundamental Analysis

    How Influential Economists Changed Our ...

  2. Professionals

    7 Courses Finance Students Should Take

  3. Options & Futures

    Explaining The World Through Macroeconomic ...

  4. Retirement

    Investing Books It Pays To Read

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center