For Schumpeter a recession was necessary to "correct" "misallocation of resources" notably labour.
Krugman has gone over the evidence for this in his columns over the last year.
His conclusion is that Schumpeter's theory isn't borne out by the evidence and it's all a bit incoherent.
Players like The Economist love the "creative destruction" and "innovation" soundbites from Schumpeter - but his work doesn't seem to hang together that well in the end.
The nihilism of magic ponies. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
