Business Week  recently named Joseph Schumpeter "today’s hottest economist," citing his prescient analysis of the role of technology in the free economy. The article is useful because revisiting Schumpeterian thought presents the opportunity to review how a moral framework is so often required for a free-market system to serve the needs of mankind efficiently and humanely.
Much like Adam Smith and his followers, Schumpeter was a supporter of free markets. Whereas Smith was concerned with the effects of supply and demand on product price, Schumpeter looked at things differently. He focused on innovation, rather than price, as the dominant force in the business cycle. To that end, Schumpeter predicted that a full-labor economy would tend to lead firms to invest in new technology rather than raise product prices. Schumpeter’s predictions are consistent with the economic developments we have witnessed during the past few years.
Schumpeter lauded "creative destruction"—the term he used to describe how innovative products and processes make older ones obsolete—as the likely result of human progress. Indeed, Schumpeter’s theory is very much applicable to today’s economy. Think about recent innovations charged with the task of "revolutionizing" an industry or lifestyle. Odds are, it was not too long ago.
In celebrating technology, Schumpeter inherently (if not directly) recognized the creative expression of man. Christian social ethicists, however, acknowledge that the free economy is more than the development of goods and services. They look at economics in terms of what Ludwig von Mises  called human action.
All human action has the capacity for moral significance. This is also true in the world of economics; certain economic conditions produce an abundance of goods and services, and moral people attempt to determine whether these arrangements respect the human dignity and God-given rights of those involved.
Schumpeterian thought ultimately concentrates on technological advancement rather than human action as the key to understanding economics. While Schumpeter was technically accurate in many of his predictions, the assertion that we are living in the "Schumpeterian Age" of economics is incomplete, at least from a moral perspective.
This is not to discount the merits of Schumpeter’s contributions or analyses. In addition to his theories on innovation and business cycles, Schumpeter was one of the first economists to credit the Christian scholastics for developing the scientific study of economics (refer to Schumpeter’s book History of Economic Analysis ). He also argued that the family was the fundamental unit of the capitalist economy—an idea sustained by the Christian notion of subsidiarity.
Plus, Schumpeter did unintentionally recognize the dangers of disassociating human morality from economics when he predicted that capitalism would fall due to business and government bureaucracy/corruption that can occur in the free market. Though Schumpeter was known to embrace trendy ideas (which socialism was, during his time), economist William Milberg  offers this explanation for Schumpeter’s incorrect prognosis: "Schumpeter’s remarks on the end of capitalism should be read as a warning, not a forecast."
Indeed, if not tempered with the moral reasoning that comes from religion, the workings of the free market are subject to the corruption Schumpeter feared. As Lord Acton wrote, "Despotic power is always accompanied by the corruption of morality." That is justification enough to instill ethics and morality in our business leaders, government officials, and the general populace. Only within a morally informed culture can capitalism lead not just to the progress and prosperity described by Schumpeter but also to a free and virtuous society.