Innovation and the effects on market dynamics: a theoretical synthesis of Smith and Schumpeter

The purpose of this article is to review the concepts of innovation and entrepreneurship as well as to investigate how they produce effects on capitalism in Adam Smith and Schumpeter. It then begins with Adam Smith, with his concepts of "capitalist" and "division of labor", comparing them with "innovation" and "entrepreneur" by Joseph Schumpeter. This work is significant, since innovation is the key to understanding the evolution of the capitalist system and, therefore, helps to understand the effects of public policies of innovation in the Brazilian capitalist system.

Key words:
innovation; capitalism; economic theory