Since the British industrial revolution on textile happened in the second half of the 18th century

the market economy in the capitalist world has experienced repeated cycles of economic fluctuation

which is prosperity-recession-depression-recovery in the past two hundred years. The reason and mechanism for the business cycle of the capitalist market economy have become a hot topic for economic research globally for long. Hence

many scholars proposed different theoretical explanations on this

of which the innovation-driven business cycle theory by Schumpeter is unique and offers many insights and inspirations. He proposed initially the three-stage classification of business cycles

that is

Kondratieff long business cycle

Juglar medium business cycle and Kitchin short business cycle. And through many of his academic works

he created pure model of business cycle analysis

four-stage model of business cycle analysis and technical long wave theory

and proposed that the swarm-like emergence of entrepreneurs and their being innovation-driven were the fundamental reasons for the business cycle of the capitalist economy. Besides these

although he recognized the essentialness of money and credit in economic growth

Schumpeter did not agree with the idea of Austrian economists that the increase of money and expansion of credit were the fundamental reasons for the capitalist business cycle. He insisted that the market of money and capital provided the innovative entrepreneurs with credit

which led to the domination on distribution of production factors by these entrepreneurs

and then the innovation developed further to perform as an important factor of economic development.