ABSTRACT
This chapter examines Joseph Schumpeter’s position on the source of innovation, which appears to change over time, with his earlier views more supportive of classical economics and his later views more congenial to modern approaches. Borrowing the idea of evolution by natural selection from Darwinist biology, Schumpeter describes a world with economic markets that are constantly evolving due to the pressures of competition. Economic history, in Schumpeter’s eyes, has been a series of industrial revolutions. Schumpeter’s American Period is commonly thought to have begun around 1932 when he moved permanently to the United States. However, Schumpeter had spent some time teaching at Harvard as early as 1927, and his article, “The Instability of Capitalism”, reflects on the differences between competitive capitalism and what he calls “trustified” capitalism. The question of the source of innovation is interesting and subject to extensive debate both before Schumpeter and since.
