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. How Influential Economists Changed Our ...
    Fundamental Analysis

    How Influential Economists Changed Our ...

  2. 7 Courses Finance Students Should Take
    Professionals

    7 Courses Finance Students Should Take

  3. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

  4. Investing Books It Pays To Read
    Retirement

    Investing Books It Pays To Read

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. 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 ...
  3. Debit Spread

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

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center