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.
BREAKING DOWN '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.