Competition, Diversity and Economic Performance

Competition, Diversity and Economic Performance

Processes, Complexities and Ecological Similarities

Clement A. Tisdell

This thought-provoking book explores the influences of market competition and diverse behaviours of economic agents on economic performance, particularly dynamic economic performance.

Chapter 4: Schumpeter and the dynamics of capitalism: the driving force of business innovation

Clement A. Tisdell

Subjects: economics and finance, evolutionary economics, industrial economics, environment, ecological economics

Extract

This chapter highlights the special nature of Joseph Schumpeter’s distinction between statics and dynamics. Schumpeter’s notion of dynamics is important because it is closely connected by Schumpeter with uncertainty and the central role of innovation in economic development under capitalism. It also discusses the relationship between Schumpeter’s theories and Darwinian- type theories of economic evolution. Furthermore, this chapter emphasizes that Schumpeter’s ideal market structures differ greatly from those of neoclassical economics. His vision has much in common with theories of workable competition espoused by John Maurice Clark (1940). It brings attention to Schumpeter’s changing view about the sources of innovation under capitalism as well as the possible reason for this change, and compares Schumpeter’s views about the evolution of capitalism and industrial structure with those of Marx. Both writers believe that capitalism will culminate in socialism, but for different reasons. Some important issues which were not addressed by Schumpeter, for example, neo- Malthusian concerns, or which were only partially addressed by him are identified.

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