On Schumpeter, Services and Economic Change

Abstract . Joseph A. Schumpeter, the Austrian-American economist, worried about “Can capitalism survive” a generation ago, and so far it has. But his work poses these questions: How do growth and change take place in a free enterprise economy? Can his model for expansion through innovation and creative destruction through the competitive process be a basis for understanding present day industrial economies? He emphasized that capitalism was an evolutionary system and that the very need for newness or rejuventation should insure continual change in it. With respect to declining industries and firms the task of economics was to turn what might have been a rout into orderly retreat. And so he gave a limited blessing to certain monopoly practices deriving from a broader strategy, risk avoidance. Schumpeter's entrepreneurs have disappeared but innovative ability still is exercised, largely through issue-specific consulting services in the burgeoning service sector, services that foster stability as well as change