Schumpeter along with many other economists of the Austrian Scholl Warned the Neoclassical Scholl that the premise on which they were building their models, diminishing returns, was not supported by the evidence. Schumpeter held that with the industrial revolution, increasing rather than decreasing returns were the rule. Schumpeter demonstrated the importance of economies of scale by tracing the trajectories of enterprises in five industries textiles, railroads, steel, automobiles and electric power in three countries The US, Germany and the UK. His main conclusion is that creative destruction is the engine of capitalism. Creative destruction can be decomposed into two terms: the contribution from entry and exit; the contribution of economies of scale
