3.2　Joseph Schumpeter's thought

The expression“creative destruction”was popularized by and is most associated with Joseph Schumpeter，particularly in his book Capitalism，Socialism and Democracy，first published in 1942.Already in his 1939 book Business Cycles，he attempted to refine the innovative ideas of Nikolai Kondratieff and his longwave cycle which Schumpeter believed was driven by technological innovation.Three years later，in Capitalism，Socialism and Democracy，Schumpeter introduced the term“creative destruction”，which he explicitly derived from Marxist thought and used it to describe the disruptive process of transformation that accompanies such innovation：

Capitalism is by nature a form or method of economic change and not only can be stationary.The fundamental impulse that sets and keeps the capitalist engine in motion comes from the new consumers'goods，the new methods of production or transportation，the new markets，the new forms of industrial organization that capitalist enterprise creates.

The opening up of new markets，foreign or domestic，and the organizational development from the craft shop and factory to such concerns as U.S.Steel illustrate the process of industrial mutation that incessantly revolutionizes the economic structure from within，incessantly destroying the old one，incessantly creating a new one.This process of Creative Destruction is the essential fact about capitalism.It is what capitalism consists in and what every capitalist concern has got to live in.

In Schumpeter's vision of capitalism，innovative entry by entrepreneurs was the disruptive force that sustained economic growth，even as it destroyed the value of established companies and laborers that enjoyed some degree of monopoly power derived from previous technological，organizational，regulatory，and economic paradigms.However，Schumpeter was pessimistic about the sustainability of this process，seeing it as leading eventually to the undermining of capitalism's own institutional frameworks：In breaking down the pre-capitalist framework of society，capitalism thus broke not only barriers that impeded its progress but also flying buttresses that prevented its collapse.That process，impressive in its relentless necessity，was not merely a matter of removing institutional deadwood，but of removing partners of the capitalist stratum，symbiosis with whom was an essential element of the capitalist schema.The capitalist process in much the same way in which it destroyed the institutional framework of feudal society also undermines its own.

Schumpeter nevertheless elaborated the concept，making it central to his economic theory，and it was later taken up as a major doctrine of the so-called Austrian School of free-market economic thought.