Schumpeter - Capitalism, Socialism & Democracy

Since this was a rather difficult reading, I will clarify major points of Schumpeter's argument for my benefit:

-Capitalism is characterized by fifty year business cycles

-Compared to classical economists, Schumpeter believes that the economic engine of capitalism is not pure competition, which operates on the principle that companies compete against each other to produce the most goods and services at the cheapest cost while making the most profit. In such an environment, the net effect of this type of competition is lowered prices, increased output and the edging out of those who cannot compete. Monopolies and advertising campaigns are cited by Schumpeter as examples of a kind of hybrid competition, where companies and industries create artificial & intentionally high (or low) pricing structures.

-The economic engine of capitalism according to Schumpeter is creative destruction, where
"the opening of new markets, foreign or domestic, and the organization development from the craft shop and factory...illustrate the same process of industrial mutation if I may use that biological term- that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." (83)

-Creative destruction is the process of innovation and creation of new business models that emerge from technological development (I assume through capital investment) and widespread societal adoption. In other words, new paradigms in production, distribution, and consumption that can be reproduced on a mass scale correspond directly to the profitability and increased output of capitalist institutions, industries and corporations, as well as wealth for individuals (and the middle class) . Although this ongoing process of capitalist development has its winners and losers, it is ultimately of enormous social benefit since it opens new markets (via new products and services) in the process of closing, or destroying, existing ones.

I am interested in the question of credit, technological innovation, and the economic engine of capitalism. Somewhere in this dynamic of boom and bust is the ethical question of how many people (in America and elsewhere) fail to save and spend too much on crap they don't need that is pumped out at exponential rates. What defines innovation for Schumpeter- I have the feeling that he means anything in the business world and in the global flow of economy that mysteriously leads to improved social conditions for people(? not sure about this though) Does his notion of innovation apply to efficient processes like the ways in which global networks of capital investment, credit flows, trade legislation and labor practices are currently managed? The rapid transfer of capital, money, goods and services characterizing our current situation has shaped production, distribution and consumption of the material and non-material (information) world in a way that perpetuates increased output rates and decreasing costs of labor and goods, but also in a manner that can't be sustained indefinitely.

The destruction end of this picture is bleak, especially when we consider environmental costs. I think that at this point we are all aware of the fact that there is so much more to consider regarding innovation for innovation's sake. I am explicitly critiquing the ideology behind "nanotechnology" or Moore's law, ideas that are characterized by the desire to build things that are faster and smaller without taking into consideration the fact that whatever is being produced might be more disposable. Technological innovations related to the speeding up production processes- or chains of distribution- can lead to little to no comprehension and reflection of decisions that consumers might make.