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The Fraser Institute, Essential Schumpeter: Creative Destruction

Essential Schumpeter: Creative Destruction

Welcome to the essential ideas of Joseph Schumpeter.

The phrase “creative destruction” was popularized by economist Joseph

Schumpeter to describe the entrepreneurial process. What Schumpeter

observed is that entrepreneurship simultaneously creates something new...

while destroying something old. Consider this example: in the late 1800s the horse

and buggy was the most widespread form of transportation and it included a vast

array of businesses and workers: people who raised horses... leather shops that

made the harnesses and equipment... blacksmiths who forged and repaired the

metal fittings, and so on. One day Jane, an entrepreneur, saw the vast potential for

profit if a horse could be replaced by a machine.

Jane created a prototype that attracted some attention. At first these

"automobiles" were an interesting novelty that attracted a few customers. But Jane

made enough profit to pay her workers and other costs – the first sign she was

onto something. As Jane continued to innovate, more people wanted to buy her

automobiles. With the additional revenue, Jane hired more workers to speed up

production and moved into a larger space, which helped her lower prices, making

the automobile accessible to more people. Soon, other entrepreneurs entered the

automobile industry and added further innovations, This eventually lowered the

price, and demand for automobiles increased… while demand for horse-and-

buggies declined. This transfer of resources from the horse and buggy

industry to the automobile industry had far reaching implications for the entire

economy.Stables that raised horses began laying off staff… leather shops switched

switched to making leather car seats… and blacksmiths started fashioning parts for

automobiles. Eventually many of the old industry's workers found employment in

the new industry, or elsewhere in the growing economy. One of Schumpeter's

greatest contributions to economics was his observation that the destructive

element to entrepreneurship was necessary to reap the rewards of new,

creative entrepreneurship and innovation. For more information on Joseph

Schumpeter, visit EssentialSchumpeter.org and to learn about more essential

scholars, visit EssentialScholars.org

and to learn about more essential

scholars visit essential scholars org


Essential Schumpeter: Creative Destruction Wesentlicher Schumpeter: Schöpferische Zerstörung Schumpeter esencial: Destrucción creativa L'essentiel de Schumpeter : Destruction créatrice エッセンシャル・シュンペーター創造的破壊 Esminis Schumpeteris: Kūrybinė destrukcija Essential Schumpeter: Twórcza destrukcja O essencial de Schumpeter: Destruição Criativa Эссенциальный Шумпетер: Созидательное разрушение Есенціальний Шумпетер: Творче руйнування 熊彼特精要:创造性破坏 熊彼特精要:創造性破壞

Welcome to the essential ideas of Joseph Schumpeter.

The phrase “creative destruction” was popularized by economist Joseph A expressão “destruição criativa” foi popularizada pelo economista Joseph

Schumpeter to describe the entrepreneurial process. What Schumpeter Schumpeter para descrever o processo empreendedor. O que Schumpeter

observed is that entrepreneurship simultaneously creates something new... observado é que o empreendedorismo simultaneamente cria algo novo...

while destroying something old. Consider this example: in the late 1800s the horse enquanto destrói algo velho. Considere este exemplo: no final do século XIX, o cavalo

and buggy was the most widespread form of transportation and it included a vast e o buggy era o meio de transporte mais difundido e incluía uma vasta

array of businesses and workers: people who raised horses... leather shops that variedade de negócios e trabalhadores: pessoas que criam cavalos... lojas de couro que

made the harnesses and equipment... blacksmiths who forged and repaired the faziam os arreios e equipamentos... ferreiros que forjavam e consertavam виготовляли збрую та спорядження... ковалі, які кували та ремонтували

metal fittings, and so on. One day Jane, an entrepreneur, saw the vast potential for acessórios de metal, e assim por diante. Um dia, Jane, uma empresária, viu o vasto potencial de

profit if a horse could be replaced by a machine. lucro se um cavalo pudesse ser substituído por uma máquina.

Jane created a prototype that attracted some attention. At first these Jane criou um protótipo que atraiu alguma atenção. A princípio esses

"automobiles" were an interesting novelty that attracted a few customers. But Jane "automóveis" eram uma novidade interessante que atraiu alguns clientes. Mas Jane

made enough profit to pay her workers and other costs – the first sign she was teve lucro suficiente para pagar seus trabalhadores e outros custos - o primeiro sinal de que ela estava

onto something. As Jane continued to innovate, more people wanted to buy her em algo. Como Jane continuou a inovar, mais pessoas queriam comprá-la на щось. Оскільки Джейн продовжувала впроваджувати інновації, все більше людей хотіли купувати її

automobiles. With the additional revenue, Jane hired more workers to speed up automóveis. Com a receita adicional, Jane contratou mais funcionários para acelerar

production and moved into a larger space, which helped her lower prices, making produção e mudou-se para um espaço maior, o que a ajudou a baixar os preços, tornando

the automobile accessible to more people. Soon, other entrepreneurs entered the o automóvel acessível a mais pessoas. Logo, outros empresários entraram no

automobile industry and added further innovations, This eventually lowered the indústria automobilística e acrescentou mais inovações, Isso acabou diminuindo o

price, and demand for automobiles increased… while demand for horse-and- preço e a demanda por automóveis aumentou... enquanto a demanda por cavalos e

buggies declined. This transfer of resources from the horse and buggy buggies recusou. Essa transferência de recursos do cavalo e da charrete

industry to the automobile industry had far reaching implications for the entire indústria para a indústria automobilística teve implicações de longo alcance para todo o

economy.Stables that raised horses began laying off staff… leather shops switched economia.Estábulos que criavam cavalos começaram a demitir funcionários... lojas de couro trocadas

switched to making leather car seats… and blacksmiths started fashioning parts for passaram a fazer assentos de carro de couro... e os ferreiros começaram a fabricar peças para переключилися на виготовлення шкіряних автомобільних сидінь... а ковалі почали виготовляти деталі для

automobiles. Eventually many of the old industry's workers found employment in automóveis. Eventualmente, muitos dos trabalhadores da velha indústria encontraram emprego em

the new industry, or elsewhere in the growing economy. One of Schumpeter's a nova indústria, ou em outro lugar na economia em crescimento. Um dos Schumpeter

greatest contributions to economics was his observation that the destructive maiores contribuições para a economia foi sua observação de que o poder destrutivo найбільшим внеском в економіку було його спостереження про те, що руйнівні

element to entrepreneurship was necessary to reap the rewards of new, elemento para o empreendedorismo era necessário para colher os frutos do novo,

creative entrepreneurship and innovation. For more information on Joseph empreendedorismo criativo e inovação. Para mais informações sobre José

Schumpeter, visit EssentialSchumpeter.org and to learn about more essential

scholars, visit EssentialScholars.org estudiosos, visite EssentialScholars.org

and to learn about more essential

scholars visit essential scholars org estudiosos visitam a organização de acadêmicos essenciais