Schumpter- Creative Destruction

Previous assumption about capitalism

"no such thing as perfect competition/equilibrium between Big Business, Big Labor and Big Gov't"--> monopolies and oligarchies control price "Capitalism is stationary/perfect/inequilibrum" --> captialism is about change, creative destruction

Why is economic growth not about equilibrium and why is capitalism not associed with change?

Becuase people will always be looking for solutions; part of human nature

According to Shumpter is private control of production crushing productivity?

NO

Problem with previous assumption of capitalism?

Need to focus on what happened before (how we got here) and what will happen in future (where we are headed) not on fixed point in time

Capitalism

evolutionary process, changing form with innovation at heart. someone is always looking for new goods, method of productions, markets, and oranizational management

oligarchy

industry that consists of few firms with restricted outputs that inflates prices

Monopoly

technological innovation often creates temporary monopolies, allowing abnormal profits that would soon be competed away by rivals and imitators. These temporary monopolies were necessary to provide the incentive for firms to develop new products and processes

Creative Destruction

when the economic structure is revolutionized from within, destroying the old economic structure and creating a new one. Caused by the opening up of new markets, new goods, new methods of production and organizational development