Image credit: Gerd Altmann • Freiburg/Deutschland | CC0 Public Domain | Image location

I am aware that some unquestioning followers of Joseph Schumpeter will find this note irksome. However, please hold your horses, as it is important to see the negative impact of Schumpeter’s famous theory on innovation & the-hero-entrepreneur. At least, intellectual honesty demands that we see how the rediscovered hero in Schumpeter fairs in this age of Digital everything.

For starters, Schumpeter propounded that “incessant innovation” and “the entrepreneur” as the reason for all economic progress. This progress will be achieved through “creative destruction” of the old with the new.

Nothing fundamentally wrong with these ideas, which are structurally correct in the framing of the words & language. Who can deny that innovation is the cornerstone of growth & all established enterprises of today were start-ups of yesterday? However, they yielded economic value only when they reached a size and not necessarily as start-ups.

Many people have mistakenly ascribed acts of nature & even spirituality to describe the profoundness of “creative destruction”. These are gross misinterpretations of Schumpeter’s original idea.

To understand Schumpeter’s motivations, step back a bit and see from where his ideas originated. For Schumpeter destruction of Capitalism through means other than Marx’s violent theory was his motivational aspect. At his core ideology, he believed that the destination is socialism & possibly communism and not the spirit of free enterprise. Schumpeter came from the era of world wars when the incessant battle of ideologies was being fought & colonist Europe was exploiting the wealth of other nations. Most thinkers of that era only propagated ideologies of war making & dominance through direct or other means.

Some of the worst violence had the ideological cover of thinkers like Marx, Clausewitz, etc. and in the world of economics by people like Schumpeter.

Schumpeter’s impact on our times

Schumpeter hero worship of the Entrepreneur left the established corporations and professionals listless about their work purpose and made the elusive high point of a career to be an Entrepreneur. It pushed an entrepreneur away from the mainstream world of business to a sort of an abandoned island of heroism. It also pushed Innovation to be a black