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The Creative Response in Economic History by J. A. Schumpeter - Coggle…
The Creative Response in Economic History by J. A. Schumpeter
Creative Response
Creative response changes social and economic situations for good, or, to put it differently, it creates situations from which there is no bridge to those situations that might have emerged in its absence.
Creative response—the frequency of its occurrence in a group, its intensity and success or failure—has something to do (a) with the quality of the personnel available in a society, (b) with the quality available to a particular field of activity and to others, as well as (c) with individual decisions, actions, and patterns of behaviour.
The mechanism of economic change in capitalist society pivot on
Entrepreneurial activity
The entrepreneur and his function are not difficult
to conceptualise: the defining characteristic is simply the doing of new things or the doing of things that are already being done in a new way (Innovation)
It is but natural that such a definition does not draw any sharp line between what is and what is not "enterprise." For actual life itself knows no such sharp division, though it shows up the type well enough. It should be observed at once that
the "new thing" need not be spectacular or of historic importance.
It is particularly important to distinguish the entrepreneur from the "
inventor
."
The inventor produces ideas, the entrepreneur "gets things done," which may but need not embody anything that is scientifically new. Moreover, an idea or scientific principle is not, by itself, of any importance for economic practice:
Finally, "getting new things done" is not
only a distinct process but it is a process which produces consequences that are an essential part of capitalist reality. The whole economic history of capitalism would be different from what it is if new ideas had been currently and smoothly adopted, as a matter of course, by all firms to whose business they were relevant.
Though the phrase "getting a new thing done" may be adequately comprehensive, it covers a great many different activities which, as the observer stresses one more than another or as his material displays one
Though the phrase "getting a new thing done" may be adequately comprehensive, it covers a great many different activities
In some cases, it may be the activity of "setting up" or "Organising" that stands out from the others, or it may be the breaking down of the resistance of the environment, or even simply leadership or salesmanship.
Thus, it seems to me, there was a type of entrepreneur in early
capitalist industry that is best described as a "fixer.
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If innovations are neither individually small nor isolated events, complications crowd upon us. Entrepreneurial activity then affects wage and interest rates from the outset and becomes a factor in booms and depressions.
Wages, Returns, Income and copy of others invention
Does the importance of the entrepreneurial function decline as time goes on?
The entrepreneurial performance involves t
he ability to perceive new opportunities that cannot be proved at the moment in which action has to be taken, and will power adequate to break down the resistance that the social environment offers to change.
But the range of the provable expands, and action upon flashes or hunches is increasingly replaced by action that is based upon "figuring out." And modern milieus may offer less resistance to new methods and new goods than used to be the case. So far as this is so, the element of personal intuition and force would be less essential than it was: it could be expected to yield its place to the teamwork of specialists; in other words,
the improvement could be expected to become more and more automatic.
If this was to stand up under research, this would be a result of the utmost importance.. We should be led to expect that the whole mechanism of economic development will change significantly.
Just as warrior classes have declined in importance ever since warfare—and especially the management of armies in the field—began to be increasingly "mechanized," so the business class may decline in importance, as its most vital figure, the entrepreneur, progressively loses his most essential function. This would mean a different social structure.
I liked the quote
"A great and profitable task awaits those who undertake it."