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14 - “Entrepreneurial Capitalism” in Capitalist Development

Toward a Synthesis of Capitalist Development and the “Economy as a Whole”

Published online by Cambridge University Press:  05 June 2012

By
Zoltan J. Acs
Edited by
Zoltan J. Acs ,
David B. Audretsch  and
Robert J. Strom
Zoltan J. Acs
Affiliation:
George Mason University; Max Planck Institute of Economics; The Kauffman Foundation
Zoltan J. Acs
Affiliation:
George Mason School of Public Policy, Fairfax
David B. Audretsch
Affiliation:
Indiana University, Bloomington
Robert J. Strom
Affiliation:
Kauffman Foundation, Kansas City
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Summary

Introduction

The concepts that Schumpeter developed have experienced a renaissance in the last few decades of the twentieth century. This was in large part due to the technological revolution, especially in the United States, which rediscovered the importance of innovation and entrepreneurship, the process by which new opportunities are discovered and implemented (Theory of Economic Development (1911 [1934], hereafter TED). However, despite the renaissance of his thought, Schumpeter has remained hostage to Capitalism, Socialism and Democracy (1950 [1942], hereafter CSD), with its emphasis on the large corporation and the state. Therefore no acceptable theory of the economy as a whole has emerged.

CSD is in fact a theory of the economy as a whole. The reason that Schumpeter never returned to the “lost” seventh chapter is that at the time he was writing CSD in the early 1940s the institutions of economic development were on a track fundamentally different from that of today. This was the world of “managerial capitalism,” the transition from capitalism to socialism, where the entrepreneurial function as well as the entrepreneurial class would disappear. The large corporation, by taking over the entrepreneurial function, not only makes the entrepreneur obsolete, but also undermines the sociological and ideological functions of capitalist society.

This is so obvious that I am surprised that scholars even debate this point (Acs, 1984). An interesting question remains, however: How would Schumpeter close the model of capitalist development, given what has happened to the institutional structure of society since his death?

Type
Chapter
Information
Entrepreneurship, Growth, and Public Policy , pp. 319 - 338
Publisher: Cambridge University Press
Print publication year: 2009

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References

Acs, Zoltan J. 1984. The Changing Structure of the U.S. Economy: Lessons from the Steel Industry. New York: Praeger.Google Scholar
Acs, Zoltan J., and Armington, Catherine. 2006. Entrepreneurship, Geography and American Economic Growth. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Acs, Zoltan J., and Audretsch, David B.. 1987. “Innovation, Market Structure and Firm Size.” Review of Economics and Statistics, 69, 567–575.CrossRefGoogle Scholar
Acs, Zoltan J., and Audretsch, David B.. 2001. “The Emergence of the Entrepreneurial Society.” Swedish Foundation for Small Business. Stockholm, Sweden, May 2001.Google Scholar
Acs, Zoltan J., and Braunerhjelm, Pontus. 2005. “The Entrepreneurship-Philanthropy Nexus: Implications for Internationalization.” Management International Review, 45, 111–144.Google Scholar
Acs, Zoltan J., and Dana, Leo P.. 2001. “Contrasting Two Models of Wealth Redistribution.” Small Business Economics, 16(2), 63–74.CrossRefGoogle Scholar
Acs, Zoltan J., and Phillips, Ronnie J.. 2002. “Entrepreneurship and Philanthropy in American Capitalism.” Small Business Economics, 19(3), 189–204.CrossRefGoogle Scholar
Acs, Zoltan J., and Karlsson, Charlie. 2002. “Institutions, Entrepreneurship and Firm Growth: The Case of Sweden.” Special issue of Small Business Economics.Google Scholar
Acs, Zoltan J., and Varga, Attila. 2004. “Entrepreneurship, Geography and Technological Change.” ERSA Conference paper, European Regional Science Association.Google Scholar
Acs, Zoltan J., Audretsch, David B., Braunerhjelm, Pontus, and Carlsson, Bo. 2004. “The Missing Link: The Knowledge Filter and Entrepreneurship in Economic Growth.” CERP Working Paper 4783.
Acs, Zoltan J., Audretsch, David B., Braunerhjelm, Pontus, and Carlsson, Bo. 2005. “The Knowledge Spillover Theory of Entrepreneurship.” CEPR Discussion Paper 5326.
Aghion, P., and Howitt, P.. 1992. “A Model of Growth through Creative Destruction.”Econometrica, March, 323–351.CrossRefGoogle Scholar
America, Richard F. 1995. Philanthropy and Economic Development. Westport, Conn.: Greenwood Press.Google Scholar
Arrow, Kenneth J. 1962. “Economic Welfare and the Allocation of Resources for Invention.” In Nelson, Richard (ed.), The Rate and Direction of Inventive Activity. Princeton: Princeton University Press, 609–626.Google Scholar
Bremner, Robert. 1960. American Philanthropy. Chicago: University of Chicago Press.Google Scholar
Carnegie, Andrew. 1889. “Wealth.” North American Review, June.Google Scholar
Caves, Richard. 1998. “Industrial Organization and New Findings on the Turnover and Mobility of Firms.” Journal of Economic Literature, 36, 1947–1982.Google Scholar
Chernow, Ron. 1999. Titan: The Life of John D. Rockefeller Sr. New York: Vintage.Google Scholar
Curti, Merle. 1957. “The History of American Philanthropy as a Field of Research.” American Historical Review, 62(2), 352–363.CrossRefGoogle Scholar
Dewey, J. 1963. Philosophy and Civilization. New York: Capricorn Books.Google Scholar
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Dowie, Mark. 2001. American Foundations: An Investigative History. Cambridge, Mass.: MIT Press.Google Scholar
Galbraith, John K. 1967. The New Industrial State. Boston: Houghton Mifflin.Google Scholar
Grossman, Gene, and Helpman, Elhanan. 1991. Innovation and Growth in a Global Economy. Cambridge, Mass.: MIT Press.Google Scholar
Hamer, J. H. 1998. “Money and the Moral Order in Late Nineteenth and Early Twentieth-Century American Capitalism.” Anthropological Quarterly, 71, 138–150.CrossRefGoogle Scholar
Hebert, Robert F., and Link, Albert N.. 1989. The Entrepreneur: Mainstream Views and Radical Critiques. New York: Praeger.Google Scholar
Heilbroner, Robert. 1985. The Nature and Logic of Capitalism. New York: Harper and Row.Google Scholar
Henreksen, Magnus, and Jakonsson, Ulf. 2000. “Where Schumpeter Was Nearly Right: The Swedish Model and Capitalism, Socialism and Democracy.” Working Paper no. 370, Stockholm School of Economics.
Jones, Kenneth. 1995. “R&D Based Models of Economic Growth.” Journal of Political Economy, 103, 759–784.CrossRefGoogle Scholar
Jordan, W. K. 1961.“The English Background of Modern Philanthropy.” American Historical Review, 66(2), 401–408.CrossRefGoogle Scholar
Keynes, John M. 1963. Essays in Persuasion. New York: Norton.Google Scholar
Kirchhoff, Bruce A. 1994. Entrepreneurship and Dynamic Capitalism: The Economics of Business Firm Formation and Growth. Praeger Studies in American Industry. Westport, Conn., and London: Greenwood.Google Scholar
Knight, Frank Praeger. 1921. Risk, Uncertainty and Profit. New York: Houghton Mifflin.Google Scholar
,“The Knowledge Factory.” 1997. The Economist, October 4, pp. 1–22.
,“The Land of the Handout.” 1997. Newsweek, September 29, pp. 34–36.
Levy, Johah D. 1999. Tocqueville's Revenge: State, Society and Economics in Contemporary France. Boston: Harvard University Press.Google Scholar
MacMullen, Ramsay. 1988. Corruption and the Decline of Rome. New Haven: Yale University Press.Google Scholar
Mathews, John A. 2002. “Introduction: Schumpeter's ‘Lost’ Seventh Chapter.” Industry and Innovation, 9(1–2), 1–6.CrossRefGoogle Scholar
,“Most Generous Americans.” 1998. Fortune, February 2, p. 88.
Myers, Gustavus. 1907. History of Great American Fortunes. New York: Modern Library.Google Scholar
Nelson, Richard. 1993. National Innovation Systems: A Comparative Analysis. New York: Oxford University Press.Google Scholar
Nelson, Richard, Peck, M. J., and Kalachek, E. D.. 1967. Technology, Economic Growth and Public Policy. Washington: Brookings Institution.Google Scholar
Owen, David. 1964. English Philanthropy 1660–1960. Cambridge: Belknap Press of Harvard University.CrossRefGoogle Scholar
Parker, Franklin. 1971. George Peabody: A Biography. Nashville: Vanderbilt University Press.Google Scholar
Porter, E. Michael. 2000. Can Japan Compete?London: Macmillan Press.Google Scholar
Romer, Paul. 1986. “Increasing Returns and Long Run Growth.” Journal of Political Economy, 94, 1002–1037.CrossRefGoogle Scholar
Romer, Paul M. 1990. “Are Nonconvexities Important for Understanding Growth?” American Economic Review, 80(2), 97–103.Google Scholar
Romer, Paul M. 1994. “The Origins of Endogenous Growth.” Journal of Economic Perspectives, 8(1), 3–22.CrossRefGoogle Scholar
,“Sachs on Globalization.” 2000. The Economist, June 24, pp. 81–83.
Salamon, Lester M., Anheier, Helmut K., et al. 1999. “The Emerging Sector Revisited.” Johns Hopkins University Institute for Policy Studies Center for Civil Society Studies.
Saxenian, AnnaLee. 1994. “Lessons from Silicon Valley.” Technology Review, 97(5).Google Scholar
Schumpeter, Joseph A. 1934 (1911). The Theory of Economic Development. Cambridge: Harvard University Press.Google Scholar
Schumpeter, Joseph A. 1950 (1942). Capitalism, Socialism and Democracy. New York: Harper and Row.Google Scholar
Schumpeter, Joseph A. 2002 (1911). “The Economy as a Whole: The Seventh Chapter of Schumpeter's The Theory of Economic Development.” Translated by Backhaus, Ursula. Industry and Innovation, 9, 93–145.Google Scholar
Schumpeter, Joseph A. 2005. “Development.” Journal of Economic Literature, 43(1), 108–120.CrossRefGoogle Scholar
Streech, Wolfgang, and Yamamura, Kozo. 2002. The Origins of Nonliberal Capitalism: Germany and Japan in Comparison. New York: Cornell University Press.Google Scholar
Tocqueville, Alexis. 1966 (1835). Democracy in America. New York: Harper and Row.Google Scholar
Williamson, Oliver E. 1975. Markets and Hierarchies: Analysis and Antitrust Implications. New York: Free Press.Google Scholar
Acs, Zoltan J. 1984. The Changing Structure of the U.S. Economy: Lessons from the Steel Industry. New York: Praeger.Google Scholar
Acs, Zoltan J., and Armington, Catherine. 2006. Entrepreneurship, Geography and American Economic Growth. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Acs, Zoltan J., and Audretsch, David B.. 1987. “Innovation, Market Structure and Firm Size.” Review of Economics and Statistics, 69, 567–575.CrossRefGoogle Scholar
Acs, Zoltan J., and Audretsch, David B.. 2001. “The Emergence of the Entrepreneurial Society.” Swedish Foundation for Small Business. Stockholm, Sweden, May 2001.Google Scholar
Acs, Zoltan J., and Braunerhjelm, Pontus. 2005. “The Entrepreneurship-Philanthropy Nexus: Implications for Internationalization.” Management International Review, 45, 111–144.Google Scholar
Acs, Zoltan J., and Dana, Leo P.. 2001. “Contrasting Two Models of Wealth Redistribution.” Small Business Economics, 16(2), 63–74.CrossRefGoogle Scholar
Acs, Zoltan J., and Phillips, Ronnie J.. 2002. “Entrepreneurship and Philanthropy in American Capitalism.” Small Business Economics, 19(3), 189–204.CrossRefGoogle Scholar
Acs, Zoltan J., and Karlsson, Charlie. 2002. “Institutions, Entrepreneurship and Firm Growth: The Case of Sweden.” Special issue of Small Business Economics.Google Scholar
Acs, Zoltan J., and Varga, Attila. 2004. “Entrepreneurship, Geography and Technological Change.” ERSA Conference paper, European Regional Science Association.Google Scholar
Acs, Zoltan J., Audretsch, David B., Braunerhjelm, Pontus, and Carlsson, Bo. 2004. “The Missing Link: The Knowledge Filter and Entrepreneurship in Economic Growth.” CERP Working Paper 4783.
Acs, Zoltan J., Audretsch, David B., Braunerhjelm, Pontus, and Carlsson, Bo. 2005. “The Knowledge Spillover Theory of Entrepreneurship.” CEPR Discussion Paper 5326.
Aghion, P., and Howitt, P.. 1992. “A Model of Growth through Creative Destruction.”Econometrica, March, 323–351.CrossRefGoogle Scholar
America, Richard F. 1995. Philanthropy and Economic Development. Westport, Conn.: Greenwood Press.Google Scholar
Arrow, Kenneth J. 1962. “Economic Welfare and the Allocation of Resources for Invention.” In Nelson, Richard (ed.), The Rate and Direction of Inventive Activity. Princeton: Princeton University Press, 609–626.Google Scholar
Bremner, Robert. 1960. American Philanthropy. Chicago: University of Chicago Press.Google Scholar
Carnegie, Andrew. 1889. “Wealth.” North American Review, June.Google Scholar
Caves, Richard. 1998. “Industrial Organization and New Findings on the Turnover and Mobility of Firms.” Journal of Economic Literature, 36, 1947–1982.Google Scholar
Chernow, Ron. 1999. Titan: The Life of John D. Rockefeller Sr. New York: Vintage.Google Scholar
Curti, Merle. 1957. “The History of American Philanthropy as a Field of Research.” American Historical Review, 62(2), 352–363.CrossRefGoogle Scholar
Dewey, J. 1963. Philosophy and Civilization. New York: Capricorn Books.Google Scholar
Dickinson, Frank. 1970. The Changing Position of Philanthropy in the American Economy. National Bureau of Economic Research, Distributed by Columbia University Press, New York.Google Scholar
Dowie, Mark. 2001. American Foundations: An Investigative History. Cambridge, Mass.: MIT Press.Google Scholar
Galbraith, John K. 1967. The New Industrial State. Boston: Houghton Mifflin.Google Scholar
Grossman, Gene, and Helpman, Elhanan. 1991. Innovation and Growth in a Global Economy. Cambridge, Mass.: MIT Press.Google Scholar
Hamer, J. H. 1998. “Money and the Moral Order in Late Nineteenth and Early Twentieth-Century American Capitalism.” Anthropological Quarterly, 71, 138–150.CrossRefGoogle Scholar
Hebert, Robert F., and Link, Albert N.. 1989. The Entrepreneur: Mainstream Views and Radical Critiques. New York: Praeger.Google Scholar
Heilbroner, Robert. 1985. The Nature and Logic of Capitalism. New York: Harper and Row.Google Scholar
Henreksen, Magnus, and Jakonsson, Ulf. 2000. “Where Schumpeter Was Nearly Right: The Swedish Model and Capitalism, Socialism and Democracy.” Working Paper no. 370, Stockholm School of Economics.
Jones, Kenneth. 1995. “R&D Based Models of Economic Growth.” Journal of Political Economy, 103, 759–784.CrossRefGoogle Scholar
Jordan, W. K. 1961.“The English Background of Modern Philanthropy.” American Historical Review, 66(2), 401–408.CrossRefGoogle Scholar
Keynes, John M. 1963. Essays in Persuasion. New York: Norton.Google Scholar
Kirchhoff, Bruce A. 1994. Entrepreneurship and Dynamic Capitalism: The Economics of Business Firm Formation and Growth. Praeger Studies in American Industry. Westport, Conn., and London: Greenwood.Google Scholar
Knight, Frank Praeger. 1921. Risk, Uncertainty and Profit. New York: Houghton Mifflin.Google Scholar
,“The Knowledge Factory.” 1997. The Economist, October 4, pp. 1–22.
,“The Land of the Handout.” 1997. Newsweek, September 29, pp. 34–36.
Levy, Johah D. 1999. Tocqueville's Revenge: State, Society and Economics in Contemporary France. Boston: Harvard University Press.Google Scholar
MacMullen, Ramsay. 1988. Corruption and the Decline of Rome. New Haven: Yale University Press.Google Scholar
Mathews, John A. 2002. “Introduction: Schumpeter's ‘Lost’ Seventh Chapter.” Industry and Innovation, 9(1–2), 1–6.CrossRefGoogle Scholar
,“Most Generous Americans.” 1998. Fortune, February 2, p. 88.
Myers, Gustavus. 1907. History of Great American Fortunes. New York: Modern Library.Google Scholar
Nelson, Richard. 1993. National Innovation Systems: A Comparative Analysis. New York: Oxford University Press.Google Scholar
Nelson, Richard, Peck, M. J., and Kalachek, E. D.. 1967. Technology, Economic Growth and Public Policy. Washington: Brookings Institution.Google Scholar
Owen, David. 1964. English Philanthropy 1660–1960. Cambridge: Belknap Press of Harvard University.CrossRefGoogle Scholar
Parker, Franklin. 1971. George Peabody: A Biography. Nashville: Vanderbilt University Press.Google Scholar
Porter, E. Michael. 2000. Can Japan Compete?London: Macmillan Press.Google Scholar
Romer, Paul. 1986. “Increasing Returns and Long Run Growth.” Journal of Political Economy, 94, 1002–1037.CrossRefGoogle Scholar
Romer, Paul M. 1990. “Are Nonconvexities Important for Understanding Growth?” American Economic Review, 80(2), 97–103.Google Scholar
Romer, Paul M. 1994. “The Origins of Endogenous Growth.” Journal of Economic Perspectives, 8(1), 3–22.CrossRefGoogle Scholar
,“Sachs on Globalization.” 2000. The Economist, June 24, pp. 81–83.
Salamon, Lester M., Anheier, Helmut K., et al. 1999. “The Emerging Sector Revisited.” Johns Hopkins University Institute for Policy Studies Center for Civil Society Studies.
Saxenian, AnnaLee. 1994. “Lessons from Silicon Valley.” Technology Review, 97(5).Google Scholar
Schumpeter, Joseph A. 1934 (1911). The Theory of Economic Development. Cambridge: Harvard University Press.Google Scholar
Schumpeter, Joseph A. 1950 (1942). Capitalism, Socialism and Democracy. New York: Harper and Row.Google Scholar
Schumpeter, Joseph A. 2002 (1911). “The Economy as a Whole: The Seventh Chapter of Schumpeter's The Theory of Economic Development.” Translated by Backhaus, Ursula. Industry and Innovation, 9, 93–145.Google Scholar
Schumpeter, Joseph A. 2005. “Development.” Journal of Economic Literature, 43(1), 108–120.CrossRefGoogle Scholar
Streech, Wolfgang, and Yamamura, Kozo. 2002. The Origins of Nonliberal Capitalism: Germany and Japan in Comparison. New York: Cornell University Press.Google Scholar
Tocqueville, Alexis. 1966 (1835). Democracy in America. New York: Harper and Row.Google Scholar
Williamson, Oliver E. 1975. Markets and Hierarchies: Analysis and Antitrust Implications. New York: Free Press.Google Scholar

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