Entreprenuership is the solution

Euskara: Joseph Schumpeter ekonomialaria
Euskara: Joseph Schumpeter ekonomialaria (Photo credit: Wikipedia)

When a recession bites and companies and jobs start to disappear there is often a demand for government intervention to counteract these effects…

The Austrian economist Joseph Schumpeter writing in the depth of the great depression in the 1930’s disagreed…

He insisted that recessions are what makes capitalism moves forward weeding out the inefficient and making a way for new growth in a process originally described by Karl Marx as “creative destruction

Schumpeter believed that entrepreneurs are at the heart of capitalist progress where Adam Smith saw profit arising from the earning of capital and Marx from the exploitation of labor…

Schumpeter said that profit comes from innovation—which does not derive from capital or labor…

He saw the entrepreneur as a new class of person an “upstart” outside the capital owning or working class who innovates creating new products and forms of production in uncertain conditions…

The entrepreneur creative response to economic change makes him or her stand out from the owners of existing firms who only make “adaptive responses” to minor economic change…

Forces to borrow to bring their innovations to market, entrepreneurs take risks and inevitably meet with resistance…

They disrupt the old system and open up new opportunities for profit as for Schumpeter innovation creates new markets far more effectively than Smith’s “invisible hand” or free-market competition

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