Apart from normalizing turmoil, Schumpeter focused on changes in industrial structure of capitalist economies and the rise of very large firms to explain the failure of austerity to produce recovery. This is his long-run evolutionary story in which the locus of production and innovation has undergone a scale-shift, and as a result, the capitalism of small producers, entrepreneurs, and perfect competition “is not only impossible, but inferior” and on its way to being replaced. Bureaucratization and institutional change are the prime movers in this story, driving economic evolution, taking innovation out of the hands of entrepreneurs and putting it in the hands of specialists and managers in large firms. Firms become giant bureaucratic entities that are slower to adapt to environmental shifts and that operate on much larger scales. They become, in short, more like, and more dependent upon, states. Oligopoly and interventionism go hand in hand.

Mark Blyth, Austerity, loc. 349