Process of creative destruction

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The economist Joseph Schumpeter (1883 - 1950) said that in textbooks, competition is about pushing price down to average cost, "[but] in capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization...competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives...this process of Creative Destruction is the essential fact about capitalism."

In the long run: zero economic profits across industries could help with a decision. If this were the case, and this fate was unavoidable, going into business would seem to be a fairly dismal choice, given that the end result of zero profits is known right out of the gate. Despite this, we constantly see entrepreneurs working hard to earn profits. Is this a waste of time? Is the fate of zero profit unavoidable? What would Joseph Schumpeter say about all of this?

Reference no: EM133063394

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