Question

Write 2 paragraphs on Schumpeter's view of competition.

Answer 1

Joseph Schumpeter saw competition as a destructive process whereby the assets, fortunes, riches and efforts were being continuously destroyed by innovation. This endless process of innovation regularly displaced older technologies in order to make way for the new ones. But this in turn led to a far more stable and conservative alternatives.

Schumpeter's view was in stark contrast to the neoclassical model of competition wherein the focus was on the price and output levels and there was an exceptional strategic behavior that sometimes dislodged one technology and replaced it by another. Thus, the conventional neoclassical view of competition was like looking at a sea which is calm and experiences infrequent high currents whereas the Schumpeter's view of competition was like looking at a raging storm. Thus, neoclassical economists were much more comfortable looking at stable situations as compared to the Schumpeterists.