Citation
Capitalism, Socialism and Democracy
TL;DR
Introduced 'creative destruction' as fundamental capitalist dynamic
Introduces 'creative destruction' concept - how capitalism evolves through the extinction of old firms and business models, replaced by innovative entrants. Foundational text for understanding business extinction as systemic process rather than isolated failure.
Schumpeter's creative destruction is the business analog of mass extinction followed by adaptive radiation. Just as the K-Pg extinction cleared ecological space for mammalian diversification, business extinctions (Blockbuster, Kodak, Sears) clear market space for new entrants (Netflix, smartphone cameras, Amazon). Extinction isn't just destruction - it's permission for the new.
Key Findings from Schumpeter (1942)
- Introduced 'creative destruction' as fundamental capitalist dynamic
- Old firms and business models must be destroyed for new ones to emerge
- Extinction is systemic feature of capitalism, not anomaly
- Innovation requires destruction of existing structures