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Joseph
Schumpeter (1883-1950) viewed capitalism as a dynamic
engine of progress. In his view, mature economic systems find
a regular and stable routine of supply, demand, and exchange;
Schumpeter called this the "circular flow". Entrepreneurs interrupt
this circular flow with new ideas and visions about the economic
future, recombining existing resources to create new and more
valuable products and services. Schumpeter saw the freedom of
innovation and exchange as the foundation of material progress
in capitalist economies.
Schumpeter
called capitalism a process of "creative destruction"
because it overthrows old routines and methods of production.
But he recognized that this process is unstable, and therefore
unsettling, for those who have become accustomed to established
ways. Schumpeter predicted growing political opposition to capitalism
and a corresponding growth in socialism, in the 20th century.
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