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Summer 2021

ISSN 0890-913X

Volume 36, Number 2

Categories: Summer 2021 | Capitalism | Schumpeter, Joseph

Schumpeter’s Fatalistic View of Capitalism: How His “Essential” Process of Creative Destruction Survived

James E. McClure, Ball State University

David Chandler Thomas, Ball State University

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TheJournalofPrivateEnterprise36(2),2021,77–101Schumpeter’sFatalisticViewofCapitalism:HowHis“Essential”ProcessofCreativeDestructionSurvivedJamesE.McClureBallStateUniversityDavidChandlerThomasBallStateUniversity__________________________________________________________AbstractJosephSchumpeter(1883–1950)waspessimisticregardingcapitalism’sabilitytosurvive.Hepredictedthatlargefirmswouldcrowdoutstart-upentrepreneurs—theonesinspiringcreativedestruction.Theseentrepreneurs,hethought,wouldbeunabletoobtainsufficientfundstolaunchproductsonacompetitivescale.Since1950,aventurecapitalindustryhasemerged,whichnowinspirescreativedestructiononanunprecedentedscale.OurretrospectiveanalysisrevealsthattheventurecapitalindustryevolvedinSchumpeterianfashion.Finally,wearguethathadSchumpetertakenKnight(1921)andHayek(1945)intoaccount,hemightnothavemadetheclaimthatcapitalismrequirescreativedestructiontoendure.__________________________________________________________JELCodes:B26,B31,B53Keywords:JosephSchumpeter,creativedestruction,capitalism,F.A.Hayek,venturecapital,FrankKnight“ThisprocessofCreativeDestructionistheessentialfactaboutcapitalism.”—JosephA.Schumpeter(1942,p.83)“Cancapitalismsurvive?No.Idonotthinkitcan.”—JosephA.Schumpeter(1942,p.61)I.IntroductionWhenJosephSchumpetersawthecrowdingoutofperennialcreativedestructionwroughtbystart-upentrepreneurs,heconcludedthatcapitalismwouldnotsurvive.Largefirms,hethought,wouldsuppressinnovationbecauseoftheirgreatadvantageinaccessing

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Title	Schumpeter’s Fatalistic View of Capitalism: How His “Essential” Process of Creative Destruction Survived
Authors/Creators:	James E. McClure, Ball State University David Chandler Thomas, Ball State University
Year:	2021
Volume:	36
Number:	2
Pages:	77 - 101
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Joseph Schumpeter, creative destruction, capitalism, F. A. Hayek, venture capital, Frank Knight

Citation:
McClure, James E.; Thomas, David Chandler / 2021. "Schumpeter’s Fatalistic View of Capitalism: How His “Essential” Process of Creative Destruction Survived." The Journal of Private Enterprise, 36(2): 77-101.