ECONOMICS (CBSE/UGC NET)

ECONOMICS

ECONOMIC SYSTEMS

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

“Innovations are normally the creation of business people.” Joseph Schumpter, Economic Theorist, (1911) With which economic theory would Joseph Schumpter likely have agreed?

A	socialism
B	traditionalism
C	capitalism
D	communism

Explanation:

Detailed explanation-1: -According to Schumpeter, the process of technological change in a free market consists of three parts: invention (conceiving a new idea or process), innovation (arranging the economic requirements for implementing an invention), and diffusion (whereby people observing the new discovery adopt or imitate it).

Detailed explanation-2: -Schumpeter identified innovation as the critical dimension of economic change. He argued that economic change revolves around innovation, entrepreneurial activities, and market power. He sought to prove that innovation-originated market power can provide better results than the invisible hand and price competition.

Detailed explanation-3: -Somewhat ironically, despite Schumpeter being a staunch defender of capitalism and its long-run benefits, this view put him in agreement with the noted socialist writer, Karl Marx.

There is 1 question to complete.