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145-410: Entrepreneurship is the creation or extraction of economic value in ways that generally entail beyond the minimal amount of risk (assumed by a traditional business), and potentially involving values besides simply economic ones. An entrepreneur ( French: [ɑ̃tʁəpʁənœʁ] ) is an individual who creates and/or invests in one or more businesses, bearing most of the risks and enjoying most of

290-483: A US citizen . At the beginning of World War II , the FBI investigated him and his wife, Elizabeth Boody (a prominent scholar of Japanese economics) for Nazi sympathies, but found no evidence of such leanings. At Harvard, Schumpeter was considered a memorable character, erudite, and even showy in the classroom. He became known for his heavy teaching load and his personal and painstaking interest in his students. He served as

435-470: A monetary theory of value , where "Money is the necessary form of appearance of value (and of capital) in the sense that prices constitute the only form of appearance of the value of commodities." Similarly to the exchange theory, this theory emphasizes value as being socially determined, rather than having a physical substance. According to this analysis, when money incorporates production into its M-C-M' circulation, it functions as capital implementing

580-447: A "labor theory of price" where the point of analyzing value was to allow the calculation of relative prices . Others see values as part of his sociopolitical interpretation and critique of capitalism and other societies, and deny that it was intended to serve as a category of economics. According to a third interpretation, Marx aimed for a theory of the dynamics of price formation but did not complete it. In 1860, John Ruskin published

725-527: A "veil" and (2) those who thought monetary institutions were important and money could be a separate driving force. Both Schumpeter and Keynes were among the latter. Schumpeter's most popular book in English is probably Capitalism, Socialism and Democracy . While he agrees with Karl Marx that capitalism will collapse and be replaced by socialism , Schumpeter predicts a different way this will come about. While Marx predicted that capitalism would be overthrown by

870-411: A 'rule by the people' concept both unlikely and undesirable. Instead, he advocated a minimalist model, much influenced by Max Weber , whereby democracy is the mechanism for competition between leaders, much like a market structure. Although periodic votes by the general public legitimize governments and keep them accountable, the policy program is very much seen as their own and not that of the people, and

1015-655: A business owner who is affiliated with millennials (also known as Generation Y), those people born from approximately 1981 to 1996. The offspring of baby boomers and early Gen Xers , this generation was brought up using digital technology and mass media. Millennial business owners are well-equipped with knowledge of new technology and new business models and have a strong grasp of its business applications. There have been many breakthrough businesses that have come from millennial entrepreneurs, such as Mark Zuckerberg , who created Facebook. However, millennials are less likely to engage in entrepreneurship than prior generations. Some of

1160-622: A capital levy as a way to tackle the war debt and opposed the socialization of the Alpine Mountain plant. In 1921, he became president of the private Biedermann Bank. He was also a board member at the Kaufmann Bank. Problems at those banks left Schumpeter in debt. His resignation was a condition of the takeover of the Biedermann Bank in September 1924. From 1925 until 1932, Schumpeter held

1305-753: A chair at the University of Bonn , Germany. He lectured at Harvard in 1927–1928 and 1930. In 1931, he was a visiting professor at the Tokyo College of Commerce . In 1932, Schumpeter moved to the United States, and soon began what would become extensive efforts to help fellow central European economists displaced by Nazism . Schumpeter also became known for his opposition to Marxism and socialism, which he thought would lead to dictatorship, and even criticized Franklin Roosevelt's New Deal . In 1939, Schumpeter became

1450-429: A college or university), science parks and non-governmental organizations, which include a range of organizations including not-for-profits, charities, foundations and business advocacy groups (e.g. Chambers of commerce ). Beginning in 2008, an annual " Global Entrepreneurship Week " event aimed at "exposing people to the benefits of entrepreneurship" and getting them to "participate in entrepreneurial-related activities"

1595-546: A commodity. However, this theory is rejected in Smith's work The Wealth of Nations . The famous diamond–water paradox questions this by examining the use in comparison to price of these goods. Water, while necessary for life, is far less expensive than diamonds, which have basically no use. Which value theory holds true divides economic thinkers, and is the base for many socioeconomic and political beliefs. Silvio Gesell denied value theory in economics. He thought that value theory

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1740-418: A critique of the economic concept of value from a moral point of view. He entitled the volume Unto This Last , and his central point was this: "It is impossible to conclude, of any given mass of acquired wealth, merely by the fact of its existence, whether it signifies good or evil to the nation in the midst of which it exists. Its real value depends on the moral sign attached to it, just as strictly as that of

1885-405: A cultural authority and leverage it to create and sustain various cultural enterprises"; "tycoons", defined as "entrepreneurs who buil[d] substantial clout in the cultural sphere by forging synergies between their industrial, cultural, political, and philanthropic interests"; and "collective enterprises", organizations which may engage in cultural production for profit or not-for-profit purposes. In

2030-448: A currency administration guided by value theory is doomed to sterility and inactivity. The theory of value is closely related to that of allocative efficiency , the quality by which firms produce those goods and services most valued by society. The market value of a machine part, for example, will depend upon a variety of objective facts involving its efficiency versus the efficiency of other types of part or other types of machine to make

2175-517: A factory, died when Joseph was only four years old. In 1893, Joseph and his mother moved to Vienna . Schumpeter was a loyal supporter of Franz Joseph I of Austria . Schumpeter was educated at the Theresianum and began his career studying law at the University of Vienna under Eugen von Böhm-Bawerk , an economic theorist of the Austrian School . In 1906, he received his doctoral degree from

2320-403: A few variables. Then they could argue that one caused the other in a simple monotonic fashion. This led to the belief that one could easily deduce policy conclusions directly from a highly abstract theoretical model. In this book, Joseph Schumpeter recognized the implication of a gold monetary standard compared to a fiat monetary standard . In History of Economic Analysis , Schumpeter stated

2465-444: A focus on opportunities other than profit as well as practices, processes and purpose of entrepreneurship. Gümüsay suggests a three pillars model to explain religious entrepreneurship: The pillars are the entrepreneurial, socio-economic/ethical, and religio-spiritual in the pursuit of value, values, and the metaphysical . A feminist entrepreneur is an individual who applies feminist values and approaches through entrepreneurship, with

2610-493: A higher degree Juglar wave. If each of these were in phase; more importantly, if the downward arc of each was simultaneous so that the nadir of each was coincident, it would explain disastrous slumps and consequent depressions. As far as the segmentation of the Kondratiev Wave, Schumpeter never proposed such a fixed model. He saw these cycles varying in time – although in a tight time frame by coincidence – and for each to serve

2755-466: A history of naming columns after significant figures or symbols in the covered field, including naming its British affairs column after former editor Walter Bagehot and its European affairs column after Charlemagne . The initial Schumpeter column praised him as a "champion of innovation and entrepreneurship" whose writing showed an understanding of the benefits and dangers of business that proved to be far ahead of its time. Schumpeter's thoughts inspired

2900-415: A level of risk is a necessity. Fourth, the entrepreneurial process requires the organization of people and resources. An entrepreneur uses their time, energy, and resources to create value for others. They are rewarded for this effort monetarily and therefore both the consumer of the value created and the entrepreneur benefit. The entrepreneur is a factor in and the study of entrepreneurship reaches back to

3045-471: A mathematical quantity depends on the algebraic sign attached to it. Any given accumulation of commercial wealth may be indicative, on the one hand, of faithful industries, progressive energies, and productive ingenuities: or, on the other, it may be indicative of mortal luxury, merciless tyranny, ruinous chicanery." Gandhi was greatly inspired by Ruskin's book and published a paraphrase of it in 1908. Economists such as Ludwig von Mises asserted that "value"

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3190-430: A minimalist definition, states which other scholars say have experienced democratic backsliding and which lack civil liberties, a free press, the rule of law and a constrained executive, would still be considered democracies. For Schumpeter, the formation of a government is the endpoint of the democratic process, which means that for the purposes of his democratic theory, he has no comment on what kinds of decisions that

3335-437: A nation come from entrepreneurs or wild spirits. He coined the word Unternehmergeist , German for "entrepreneur-spirit", and asserted that "... the doing of new things or the doing of things that are already being done in a new way" stemmed directly from the efforts of entrepreneurs. Schumpeter developed Mark II while a professor at Harvard . Many social economists and popular authors of the day argued that large businesses had

3480-504: A negative effect on the standard of living of ordinary people. Contrary to this prevailing opinion, Schumpeter argued that the agents that drive innovation and the economy are large companies that have the capital to invest in research and development of new products and services and to deliver them to customers more cheaply, thus raising their standard of living. In one of his seminal works, Capitalism, Socialism and Democracy , Schumpeter wrote: As soon as we go into details and inquire into

3625-433: A period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers". In recent years, entrepreneurship has been claimed as a major driver of economic growth in both the United States and Western Europe. Entrepreneurial activities differ substantially depending on

3770-410: A price system). In this treatment, the entrepreneur was an implied but unspecified actor, consistent with the concept of the entrepreneur being the agent of x-efficiency . For Schumpeter, the entrepreneur did not bear risk : the capitalist did. Schumpeter believed that the equilibrium was imperfect. Schumpeter (1934) demonstrated that the changing environment continuously provides new information about

3915-413: A profitable manner. But before such a venture is actually established, the opportunity is just a venture idea. In other words, the pursued opportunity is perceptual in nature, propped by the nascent entrepreneur's personal beliefs about the feasibility of the venturing outcomes the nascent entrepreneur seeks to achieve. Its prescience and value cannot be confirmed ex ante but only gradually, in the context of

4060-509: A recent statistical analysis of U.S. census data shows that whites are more likely than Asians, African-Americans and Latinos to be self-employed in high prestige, lucrative industries. Religious entrepreneurship refers to both the use of entrepreneurship to pursue religious ends as well as how religion impacts entrepreneurial pursuits. While religion is a central topic in society, it is largely overlooked in entrepreneurship research. The inclusion of religion may transform entrepreneurship including

4205-480: A specific purpose. In Schumpeter's theory, Walrasian equilibrium is not adequate to capture the key mechanisms of economic development. Schumpeter also thought that the institution enabling the entrepreneur to buy the resources needed to realize his vision was a well-developed capitalist financial system, including a whole range of institutions for granting credit . One could divide economists among (1) those who emphasized "real" analysis and regarded money as merely

4350-523: A tendency towards risk-taking that makes them more likely to exploit business opportunities . "Entrepreneur" ( / ˌ ɒ̃ t r ə p r ə ˈ n ɜːr , - ˈ nj ʊər / , UK also /- p r ɛ -/ ) is a loanword from French. The word first appeared in the French dictionary entitled Dictionnaire Universel de Commerce compiled by Jacques des Bruslons and published in 1723. Especially in Britain,

4495-506: A theoretical standpoint is that they have to "rewire" these temporary ventures and modify them to suit the needs of new project opportunities that emerge. A project entrepreneur who used a certain approach and team for one project may have to modify the business model or team for a subsequent project. Project entrepreneurs are exposed repeatedly to problems and tasks typical of the entrepreneurial process. Indeed, project-based entrepreneurs face two critical challenges that invariably characterize

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4640-497: A treatise of circular flow which, excluding any innovations and innovative activities, leads to a stationary state. The stationary state is, according to Schumpeter, described by Walrasian equilibrium . The hero of his story is the entrepreneur. The entrepreneur disturbs this equilibrium and is the prime cause of economic development, which proceeds cyclically along with several time scales. In fashioning this theory connecting innovations, cycles, and development, Schumpeter kept alive

4785-493: A variety of organizations with different sizes, aims, and beliefs. For-profit entrepreneurs typically measure performance using business metrics like profit , revenues and increases in stock prices , but social entrepreneurs are either non-profits or blend for-profit goals with generating a positive "return to society" and therefore must use different metrics. Social entrepreneurship typically attempts to further broad social, cultural, and environmental goals often associated with

4930-455: A violent proletarian revolution, which occurred in the least capitalist countries, Schumpeter believed that capitalism would gradually weaken itself and eventually collapse. Specifically, the success of capitalism would lead to corporatism and to values hostile to capitalism, especially among intellectuals. "Intellectuals" are a social class in a position to critique societal matters for which they are not directly responsible and to stand up for

5075-467: Is a need for a power theory of value. There is, however, a causality dilemma to their argument that has drawn criticism: power is based on the ability of firms to set monopoly prices yet the ability to set prices is based on firms possessing a degree of power in the market. Capitalization , in their theory, is a measure of power, as illuminated through the present discounted value of future earnings (while also taking into account hype and risk). This formula

5220-452: Is a subjective judgment. Prices can only be determined by taking these subjective judgments into account, and that this is done through the price mechanism in the market. Thus, it was false to say that the economic value of a good was equal to what it cost to produce or to its current replacement cost. Silvio Gesell denied value theory in economics. He thought that value theory is useless and prevents economics from becoming science and that

5365-426: Is basic to finance which is the overarching logic of capitalism. The logic is also inherently differential as every capitalist strives to accumulate greater earnings than their competitors (but not profit maximization ). Nitzan and Bichler label this process differential accumulation . In order to have a power theory of value there needs to be differential accumulation where some owners' rate of growth of capitalization

5510-471: Is complicated, however, by the efforts of classical economists to connect price and labor value. Karl Marx , for one, saw exchange value as the "form of appearance" (This interpretation of Marx is along the lines of the Marxist thinker Michael Heinrich ) [ Erscheinungsform ] of value, in his critique of political economy which implies that, although value is separate from exchange value, it is meaningless without

5655-599: Is faster than the average pace of capitalization. The subjective theory of value emphasizes the role of consumer preferences in influencing price. According to this theory, the consumer places a value on a commodity by determining the marginal utility , or additional satisfaction of one additional unit. Marginalism employs concepts such as marginal utility , marginal rate of substitution , and opportunity costs to explain consumer preferences and price. Subjectivist or marginalist theories of value were created by William Stanley Jevons , Léon Walras , and Carl Menger in

5800-421: Is largely responsible for long-term economic growth. The idea that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such continues to be debated in academic economics. An alternative description by Israel Kirzner (born 1930) suggests that the majority of innovations may be incremental improvements – such as the replacement of paper with plastic in

5945-473: Is mediated through a succession of relationships that have yet to be explored systematically in the context of the long wave. New inventions are typically primitive, their performance is usually poorer than existing technologies and the cost of their production is high. A production technology may not yet exist, as is often the case in major chemical and pharmaceutical inventions. The speed with which inventions are transformed into innovations and diffused depends on

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6090-447: Is necessary for life. This paradox was answered by the subjective theory of value by realizing that water, in total, is more valuable than diamonds because the first few units are necessary for life. The key difference between water and diamonds is that water is more plentiful and diamonds are rare. Because of the availability, one additional unit of diamonds exceeds the value of one additional unit of water. The subjective theory emphasizes

6235-410: Is no market to set a price then there is no economic value. In classical economics , the value of an object or condition is the amount of discomfort/labor saved through the consumption or use of an object or condition (Labor Theory of Value) . Though exchange value is recognized, economic value is not, in theory, dependent on the existence of a market and price and value are not seen as equal. This

6380-428: Is obtained by the rate at which transactions occur, telling observers the extent to which the purchase of the good has value over time. Said another way, value is how much a desired object or condition is worth relative to other objects or conditions. Economic values are expressed as "how much" of one desirable condition or product will, or would be given up in exchange for some other desired condition or product. Among

6525-415: Is part of a cost-of-production theory of value and price. Ricardo, but not Keen, used a " labor theory of price " in which a commodity's "innate worth" was the amount of labor needed to produce it. "The value of a thing in any given time and place", according to Henry George , "is the largest amount of exertion that anyone will render in exchange for it. But as men always seek to gratify their desires with

6670-484: Is therefore in a sense a means to ensure circulation among elites. However, studies by Natasha Piano of the University of Chicago emphasize that Schumpeter had substantial disdain for elites as well. The field of entrepreneurship theory owed much to Schumpeter's contributions. His fundamental theories are often referred to as Mark I and Mark II. In Mark I, Schumpeter argued that the innovation and technological change of

6815-458: Is useless and prevents economics from becoming science and that a currency administration guided by value theory is doomed to sterility and inactivity. In classical economics , the labor theory of value asserts that the economic value of a commodity is determined by the total amount of socially necessary labor required to produce it. When speaking in terms of a labor theory of value, value without any qualifying adjective theoretically refers to

6960-469: The Austrian School of economics without major qualifications while others maintain the opposite. Schumpeter was also influenced by Léon Walras and the Lausanne School , calling Walras the "greatest of all economists". The Austrian sociologist Rudolf Goldscheid 's concept of fiscal sociology influenced Schumpeter's analysis of the tax state. A 2012 paper showed that Schumpeter's writings displayed

7105-681: The German Reich . However, proof of competence was not required to start a business. In 1935 and in 1953, greater proof of competence was reintroduced ( Großer Befähigungsnachweis Kuhlenbeck ), which required craftspeople to obtain a Meister apprentice-training certificate before being permitted to set up a new business. In the Ashanti Empire , successful entrepreneurs who accumulated large wealth and men as well as distinguished themselves through heroic deeds were awarded social and political recognition by being called "Abirempon" which means big men. By

7250-452: The University of Wuppertal , Germany. According to University President Professor Lambert T. Koch , "Schumpeter will not only be the name of the Faculty of Management and Economics, but this is also a research and teaching programme related to Joseph A. Schumpeter." On September 17, 2009, The Economist inaugurated a column on business and management named "Schumpeter". The publication has

7395-413: The capitalist relation and the exploitation of labor power constitutes the actual presupposition for this incorporation. Radical institutional economists Jonathan Nitzan and Shimshon Bichler (2009) argue that it was never possible to separate economics from politics. This separation is required to allow for neoclassical economics to base their theory on utility value and for Marxists to base

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7540-454: The labour theory of value on quantified abstract labour . Instead of a utility theory of value (like neoclassical economics ) or a labour theory of value (as found in Marxian economics ), Nitzan and Bichler propose a power theory of value . The structure of prices has little to do with the so-called "material" sphere of production and consumption. The quantification of power in prices is not

7685-421: The voluntary sector in areas such as poverty alleviation, health care and community development . At times, profit-making social enterprises may be established to support the social or cultural goals of the organization but not as an end in itself. For example, an organization that aims to provide housing and employment to the homeless may operate a restaurant, both to raise money and to provide employment for

7830-435: The "capacity and willingness to develop, organize and manage a business venture along with any of its risks to make a profit ". The people who create these businesses are often referred to as "entrepreneurs". In the field of economics, the term entrepreneur is used for an entity that has the ability to translate inventions or technologies into products and services. In this sense, entrepreneurship describes activities on

7975-436: The "cradle of political economy". Cantillon defined the term as a person who pays a certain price for a product and resells it at an uncertain price, "making decisions about obtaining and using the resources while consequently admitting the risk of enterprise". Cantillon considered the entrepreneur to be a risk taker who deliberately allocates resources to exploit opportunities to maximize the financial return. Cantillon emphasized

8120-683: The "high point of his worldly success". He taught economic theory and met Irving Fisher and Wesley Clair Mitchell . Columbia awarded him an honorary doctorate. In 1918, Schumpeter was a member of the Socialisation Commission established by the Council of the People's Deputies in Germany. In March 1919, he was invited to take office as Minister of Finance in the Republic of German-Austria . He proposed

8265-572: The 1930s and other Austrian economists such as Carl Menger , Ludwig von Mises and Friedrich von Hayek . According to Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation . Entrepreneurship employs what Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products, including new business models . Extensions of Schumpeter's thesis about entrepreneurship have sought to describe

8410-616: The 2000s, story-telling has emerged as a field of study in cultural entrepreneurship. Some have argued that entrepreneurs should be considered "skilled cultural operators" that use stories to build legitimacy, and seize market opportunities and new capital. Others have concluded that we need to speak of a 'narrative turn' in cultural entrepreneurship research. The term "ethnic entrepreneurship" refers to self-employed business owners who belong to racial or ethnic minority groups in Europe and North America. A long tradition of academic research explores

8555-500: The 2000s, the term "entrepreneurship" has been extended to include a specific mindset resulting in entrepreneurial initiatives, e.g. in the form of social entrepreneurship , political entrepreneurship or knowledge entrepreneurship . According to Paul Reynolds, founder of the Global Entrepreneurship Monitor , "by the time they reach their retirement years, half of all working men in the United States probably have

8700-586: The 2000s, usage of the term "entrepreneurship" expanded to include how and why some individuals (or teams) identify opportunities, evaluate them as viable, and then decide to exploit them. The term has also been used to discuss how people might use these opportunities to develop new products or services, launch new firms or industries, and create wealth. The entrepreneurial process is uncertain because opportunities can only be identified after they have been exploited. Entrepreneurs exhibit positive biases towards finding new possibilities and seeing unmet market needs, and

8845-541: The 2010s, ethnic entrepreneurship has been studied in the case of Cuban business owners in Miami, Indian motel owners of the U.S. and Chinese business owners in Chinatowns across the U.S. While entrepreneurship offers these groups many opportunities for economic advancement, self-employment and business ownership in the U.S. remain unevenly distributed along racial/ethnic lines. Despite numerous success stories of Asian entrepreneurs,

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8990-546: The Russian Nikolai Kondratiev 's ideas on 50-year cycles, Kondratiev waves . Schumpeter suggested a model in which the four main cycles, Kondratiev (54 years), Kuznets (18 years), Juglar (9 years), and Kitchin (about 4 years) can be added together to form a composite waveform . A Kondratiev wave could consist of three lower-degree Kuznets waves. Each Kuznets wave could, itself, be made up of two Juglar waves. Similarly two (or three) Kitchin waves could form

9135-502: The US, in 1937, at the age of 54, Schumpeter married the American economic historian Dr. Elizabeth Boody (1898–1953), who helped him popularize his work and edited what became their magnum opus, the posthumously published History of Economic Analysis . Elizabeth assisted him with his research and English writing until his death. Schumpeter claimed that he had set himself three goals in life: to be

9280-447: The University of Vienna's faculty of law, with a specialisation in economics. In 1909, after some study trips, he became a professor of economics and government at the University of Czernowitz in modern-day Ukraine . In 1911, he joined the University of Graz , where he remained until World War I . In 1913–1914, Schumpeter taught at Columbia University as an invited professor. This invitation marked, according to Wolfgang Stolper ,

9425-425: The act of exchange. In this tradition, Steve Keen makes the claim that "value" refers to "the innate worth of a commodity, which determines the normal ('equilibrium') ratio at which two commodities exchange." To Keen and the tradition of David Ricardo , this corresponds to the classical concept of long-run cost-determined prices, what Adam Smith called "natural prices" and Marx called " prices of production ". It

9570-537: The actions that the nascent entrepreneur undertakes towards establishing the venture as described in Saras Sarasvathy 's theory of Effectuation , Ultimately, these actions can lead to a path that the nascent entrepreneur deems no longer attractive or feasible, or result in the emergence of a (viable) business. In this sense, over time, the nascent venture can move towards being discontinued or towards emerging successfully as an operating entity. The distinction between

9715-617: The actual and expected trajectory of performance improvement and cost reduction. Schumpeter identified innovation as the critical dimension of economic change. He argued that economic change revolves around innovation, entrepreneurial activities, and market power. He sought to prove that innovation-originated market power can provide better results than the invisible hand and price competition. He argued that technological innovation often creates temporary monopolies, allowing abnormal profits that would soon be competed away by rivals and imitators. These temporary monopolies were necessary to provide

9860-483: The aggregate, not a specific price of a particular good or service in a given circumstance. Theories in either class allow for deviations when a particular price is struck in a real-world market transaction, or when a price is set in some price fixing regime. Critics of traditional Marxian economics , especially those associated with the Neue Marx-Lektüre (New Readings of Marx) such as Michael Heinrich , emphasize

10005-421: The amount of labor necessary for the production of a marketable commodity , including the labor necessary for the development of any capital used in the production process. Both David Ricardo and Karl Marx attempted to quantify and embody all labor components in order to develop a theory of the real, or natural, price of a commodity. In either case, what is being addressed are general prices—i.e., prices in

10150-422: The barriers to entry for entrepreneurs are the economy, debt from schooling, and the challenges of regulatory compliance. A nascent entrepreneur is someone in the process of establishing a business venture. In this observation, the nascent entrepreneur can be seen as pursuing an opportunity , i.e. a possibility to introduce new services or products, serve new markets, or develop more efficient production methods in

10295-401: The book Schumpeter's Vision: Capitalism, Socialism and Democracy After 40 Years , noted that Schumpeter saw any political system in which the power was fully monopolized as fascist. In the same book, Schumpeter expounded on a theory of democracy that sought to challenge what he called the "classical doctrine". He disputed the idea that democracy was a process by which the electorate identified

10440-542: The changes and "dynamic economic equilibrium brought on by the innovating entrepreneur [were] the norm of a healthy economy". While entrepreneurship is often associated with new, small, for-profit start-ups, entrepreneurial behavior can be seen in small-, medium- and large-sized firms, new and established firms and in for-profit and not-for-profit organizations, including voluntary-sector groups, charitable organizations and government . Entrepreneurship may operate within an entrepreneurship ecosystem which often includes: In

10585-509: The collective nature of entrepreneurship. She mentions that in modern organizations, human resources need to be combined to better capture and create business opportunities. The sociologist Paul DiMaggio (1988:14) has expanded this view to say that "new institutions arise when organized actors with sufficient resources [institutional entrepreneurs] see in them an opportunity to realize interests that they value highly". The notion has been widely applied. The term "millennial entrepreneur" refers to

10730-446: The common good, and politicians carried this out for them. He argued this was unrealistic, and that people's ignorance and superficiality meant that they were largely manipulated by politicians, who set the agenda. Furthermore, he claimed that even if the common good was possible to find, it would still not make clear the means needed to reach its end, since citizens do not have the requisite knowledge to design government policy. This made

10875-544: The competing schools of economic theory there are differing metrics for value assessment and the metrics are the subject of a theory of value . Value theories are a large part of the differences and disagreements between the various schools of economic theory. Value for money forms part of the "economic dimension" of the five "cases" required to validate a UK government investment or spending proposal. UK government guidance in this context speaks of "assessing" and of "maximising" value for money. In neoclassical economics ,

11020-437: The concepts value in use and value in exchange . Value is linked to price through the mechanism of exchange . When an economist observes an exchange, two important value functions are revealed: those of the buyer and seller. Just as the buyer reveals what he is willing to pay for a certain amount of a good, so too does the seller reveal what it costs him to give up the good. Additional information about market value

11165-443: The consequence of external laws—whether natural or historical—but entirely internal to society. In capitalism , power is the governing principle as rooted in the centrality of private ownership. Private ownership is wholly and only an act of institutionalized exclusion, and institutionalized exclusion is a matter of organized power. And since the power behind private ownership is denominated in prices, Nitzan and Bichler argue, there

11310-431: The construction of a drinking straw – that require no special qualities. For Schumpeter, entrepreneurship resulted in new industries and in new combinations of currently existing inputs. Schumpeter's initial example of this was the combination of a steam engine and then current wagon-making technologies to produce the horseless carriage . In this case, the innovation (i.e. the car) was transformational but did not require

11455-476: The consumer and the market price is called " consumer surplus ". It is easy to see situations where the actual value is considerably larger than the market price: purchase of drinking water is one example. The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods that can be exchanged. From this analysis came

11600-410: The creation of a new venture: locating the right opportunity to launch the project venture and assembling the most appropriate team to exploit that opportunity. Resolving the first challenge requires project-entrepreneurs to access an extensive range of information needed to seize new investment opportunities. Resolving the second challenge requires assembling a collaborative team that has to fit well with

11745-527: The demands of the consumer revolution that helped drive the Industrial Revolution in Great Britain, Josiah Wedgwood , the 18th-century potter and entrepreneur and pioneer of modern marketing, which includes devising direct mail , money back guarantees , travelling salesmen and "buy one get one free" , was named by the historian Judith Flanders as "among the greatest and most innovative retailers

11890-451: The development of dramatic new technology. It did not immediately replace the horse-drawn carriage, but in time incremental improvements reduced the cost and improved the technology, leading to the modern auto industry . Despite Schumpeter's early 20th-century contributions, traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead of assuming that resources would find each other through

12035-467: The economists Nicholas Georgescu-Roegen and Hyman Minsky and John Kenneth Galbraith and former chairman of the Federal Reserve, Alan Greenspan . Future Nobel Laureate Robert Solow was his student at Harvard, and he expanded on Schumpeter's theory. Today, Schumpeter has a following outside standard textbook economics, in areas such as economic policy, management studies, industrial policy, and

12180-534: The eighteenth and nineteenth centuries AD, the appellation "Abirempon" had formalized and politicized to embrace those who conducted trade from which the whole state benefited. The state rewarded entrepreneurs who attained such accomplishments with Mena(elephant tail) which was the "heraldic badge" In the 20th century, entrepreneurship was studied by Joseph Schumpeter in the 1930s and by other Austrian economists such as Carl Menger (1840–1921), Ludwig von Mises (1881–1973) and Friedrich von Hayek (1899–1992). While

12325-741: The end of his career, and in 1939 obtained American citizenship . Schumpeter was one of the most influential economists of the early 20th century, and popularized the term " creative destruction ", coined by Werner Sombart . His magnum opus is considered Capitalism, Socialism and Democracy . Schumpeter was born in 1883 in Triesch , Habsburg Moravia (now Třešť in the Czech Republic , then part of Austria-Hungary ), to German-speaking Catholic parents. Both of his grandmothers were Czech . Schumpeter did not acknowledge his Czech ancestry; he considered himself an ethnic German . His father, who owned

12470-405: The entrepreneur . These scholars tend to focus on what the entrepreneur does and what traits an entrepreneur has. This is sometimes referred to as the functionalistic approach to entrepreneurship. Others deviate from the individualistic perspective to turn the spotlight on the entrepreneurial process and immerse in the interplay between agency and context. This approach is sometimes referred to as

12615-451: The entrepreneur as a multi-tasking capitalist and observed that in the equilibrium of a completely competitive market there was no spot for "entrepreneurs" as economic-activity creators. Changes in politics and society in Russia and China in the late 20th century saw a flowering of entrepreneurial activity, producing Russian oligarchs and Chinese millionaires . In the 2000s, entrepreneurship

12760-484: The entrepreneur typically aims to scale up the company by adding employees, seeking international sales and so on, a process which is financed by venture capital and angel investments . In this way, the term "entrepreneur" may be more closely associated with the term "startup". Successful entrepreneurs have the ability to lead a business in a positive direction by proper planning, to adapt to changing environments and understand their own strengths and weaknesses. Meeting

12905-568: The experiences and strategies of ethnic entrepreneurs as they strive to integrate economically into mainstream U.S. or European society. Classic cases include Jewish merchants and tradespeople in both regions, South Asians in the UK, Koreans, Japanese, and Chinese in the U.S. and the Turks and North Africans in France. The fish and chip industry in the UK was initiated by Jewish entrepreneurs, with Joseph Malin opening

13050-490: The faculty advisor of the Graduate Economics Club and organized private seminars and discussion groups. Some colleagues thought his views were outdated by Keynesianism , which was fashionable; others resented his criticisms, particularly of their failure to offer an assistant professorship to Paul Samuelson , but recanted when they thought him likely to accept a position at Yale University . This period of his life

13195-417: The firm size, big or small, it can take part in entrepreneurship opportunities. There are four criteria for becoming an entrepreneur. First, there must be opportunities or situations to recombine resources to generate profit. Second, entrepreneurship requires differences between people, such as preferential access to certain individuals or the ability to recognize information about opportunities. Third, taking on

13340-722: The first mail order business, with the BBC summing up his legacy as "The mail order pioneer who started a billion-pound industry". A 2002 survey of 58 business history professors gave the top spots in American business history to Henry Ford , followed by Bill Gates ; John D. Rockefeller ; Andrew Carnegie , and Thomas Edison . They were followed by Sam Walton ; J. P. Morgan ; Alfred P. Sloan ; Walt Disney ; Ray Kroc ; Thomas J. Watson ; Alexander Graham Bell ; Eli Whitney ; James J. Hill ; Jack Welch ; Cyrus McCormick ; David Packard ; Bill Hewlett ; Cornelius Vanderbilt ; and George Westinghouse . A 1977 survey of management scholars reported

13485-451: The first fish and chip shop in London in the 1860s, while Samuel Isaacs opened the first sit-down fish restaurant in 1896 which he expanded into a chain comprising 22 restaurants. In 1882, Jewish brothers Ralph and Albert Slazenger founded Slazenger , one of the world's oldest sport brands, which has the longest-running sporting sponsorship in providing tennis balls to Wimbledon since 1902. In

13630-506: The following: "An 'automatic' gold currency is part and parcel of a laissez-faire and free-trade economy. It links every nation's money rates and price levels with the money rates and price levels of all the other nations that are 'on gold.' However, gold is extremely sensitive to government expenditure and even to attitudes or policies that do not involve expenditure directly, for example, in foreign policy, certain policies of taxation, and, in general, precisely all those policies that violate

13775-462: The goal of improving the quality of life and well-being of girls and women. Many are doing so by creating "for women, by women" enterprises. Feminist entrepreneurs are motivated to enter commercial markets by desire to create wealth and social change, based on the ethics of cooperation, equality and mutual respect. These endeavours can have the effect of both empowerment and emancipation. The American-born British economist Edith Penrose has highlighted

13920-454: The government can take to be a democracy. Schumpeter faced pushback on his theory from other democratic theorists, such as Robert Dahl , who argued that there is more to democracy than simply the formation of government through competitive elections. Schumpeter's view of democracy has been described as " elitist ", as he criticizes the rationality and knowledge of voters, and expresses a preference for politicians making decisions. Democracy

14065-503: The greatest economist in the world, to be the best horseman in all of Austria, and the greatest lover in all of Vienna . He said he had reached two of his goals, but he never said which two, although he is reported to have said that there were too many fine horsemen in Austria for him to succeed in all his aspirations. Schumpeter died in his home in Taconic, Connecticut , at the age of 66, on

14210-409: The homeless people. Economic value Among the competing schools of economic theory there are differing theories of value . Economic value is not the same as market price , nor is economic value the same thing as market value . If a consumer is willing to buy a good, it implies that the customer places a higher value on the good than the market price. The difference between the value to

14355-455: The incentive for firms to develop new products and processes. The World Bank 's "Doing Business" report was influenced by Schumpeter's focus on removing impediments to creative destruction . The creation of the report is credited in part to his work. Schumpeter was married three times. His first wife was Gladys Ricarde Seaver, an Englishwoman nearly 12 years his senior (married 1907, separated 1913, divorced 1925). His best man at his wedding

14500-565: The individual items in which progress was most conspicuous, the trail leads not to the doors of those firms that work under conditions of comparatively free competition but precisely to the door of the large concerns – which, as in the case of agricultural machinery, also account for much of the progress in the competitive sector – and a shocking suspicion dawns upon us that big business may have had more to do with creating that standard of life than with keeping it down. As of 2017 Mark I and Mark II arguments are considered complementary. Schumpeter

14645-408: The influence of Francis Galton 's work. According to Christopher Freeman (2009), "the central point of his whole life work [is]: that capitalism can only be understood as an evolutionary process of continuous innovation and ' creative destruction '". Schumpeter's scholarship is apparent in his posthumous History of Economic Analysis , Schumpeter thought that the greatest 18th-century economist

14790-471: The intellectual and social climate needed for thriving entrepreneurship will be replaced by some form of " laborism ". This will exacerbate " creative destruction " (a borrowed phrase to denote an endogenous replacement of old ways of doing things by new ways), which will ultimately undermine and destroy the capitalist structure. Schumpeter emphasizes throughout this book that he is analyzing trends, not engaging in political advocacy . William Fellner, in

14935-458: The inter-relationships between activities, between an activity (or sequence of activities) and an individual's motivation to form an opportunity belief, and between an activity (or sequence of activities) and the knowledge needed to form an opportunity belief. With this research, scholars will be able to begin constructing a theory of the micro-foundations of entrepreneurial action. Scholars interested in nascent entrepreneurship tend to focus less on

15080-703: The interests of other classes. Intellectuals tend to have a negative outlook on capitalism, even while relying on it for prestige because their professions rely on antagonism toward it. The growing number of people with higher education is a great advantage of capitalism, according to Schumpeter. Yet, unemployment and a lack of fulfilling work will lead to intellectual critique, discontent, and protests. Parliaments will increasingly elect social democratic parties, and democratic majorities will vote for restrictions on entrepreneurship. Increasing workers' self-management , industrial democracy and regulatory institutions would evolve non-politically into " liberal capitalism ". Thus,

15225-418: The kind of products that consumers will value in turn. In such a case, market value has both objective and subjective components. Economy, efficiency and effectiveness , often referred to as the "Three Es", may be used as complementary factors contributing to an assessment of the value for money provided by a purchase, project or activity. The UK National Audit Office uses the following summaries to explain

15370-404: The late 19th century. These theories contradicted earlier labour theories of values proposed by classical economists which emphasize the role of socially necessary labour in producing value. The subjective theory of value helped answer the " diamond–water paradox ," which many believed to be unsolvable. The diamond–water paradox questions why diamonds are so much more valuable than water when water

15515-521: The least exertion this is the lowest amount for which a similar thing can otherwise be obtained." In another classical tradition, Marx distinguished between the "value in use" ( use-value , what a commodity provides to its buyer), labor cost which he calls "value" (the socially-necessary labour time it embodies), and " exchange value " (how much labor-time the sale of the commodity can claim, Smith's "labor commanded" value). By most interpretations of his labor theory of value , Marx, like Ricardo, developed

15660-628: The loan from French of the English-language word "entrepreneur" dates to 1762, the word "entrepreneurism" dates from 1902 and the term "entrepreneurship" also first appeared in 1902. According to Schumpeter, an entrepreneur is willing and able to convert a new idea or invention into a successful innovation . Entrepreneurship employs what Schumpeter called the "gale of creative destruction " to replace in whole or in part inferior offerings across markets and industries, simultaneously creating new products and new business models , thus creative destruction

15805-697: The long-cycles hypothesis, stressing the initiating role of innovations, commands the widest attention today. In Schumpeter's view, technological innovation is the cause of both cyclical instability and economic growth. Fluctuations in innovation cause fluctuations in investment and those cause cycles in economic growth. Schumpeter sees innovations as clustering around certain points in time that he refers to as "neighborhoods of equilibrium" when entrepreneurs perceive that risk and returns warrant innovative commitments. These clusters lead to long cycles by generating periods of acceleration in aggregate growth. The technological view of change needs to demonstrate that changes in

15950-491: The majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the making of drinking straws . The exploitation of entrepreneurial opportunities may include: The economist Joseph Schumpeter (1883–1950) saw the role of the entrepreneur in the economy as " creative destruction ", Which he defined as launching innovations that simultaneously destroy old industries while ushering in new industries and approaches. For Schumpeter,

16095-496: The meaning of each term: Sometimes a fourth 'E', equity , is also added. In philosophy, economic value is a subcategory of a more general philosophical value , as defined in goodness and value theory or in the science of value . Adam Smith agreed with certain aspects of labor theory of value , but believed it did not fully explain price and profit. Instead, he proposed a cost-of-production theory of value (to later develop into exchange value theory) that explained value

16240-486: The night of January 7, 1950. For some time after his death, Schumpeter's views were most influential among various heterodox economists , especially Europeans, who were interested in industrial organization, evolutionary theory, and economic development, and who tended to be on the other end of the political spectrum from Schumpeter and were also often influenced by Keynes, Karl Marx, and Thorstein Veblen . Robert Heilbroner

16385-429: The novice, serial and portfolio entrepreneurs is an example of behavior-based categorization. Other examples are the (related) studies by, on start-up event sequences. Nascent entrepreneurship that emphasizes the series of activities involved in new venture emergence, rather than the solitary act of exploiting an opportunity. Such research will help separate entrepreneurial action into its basic sub-activities and elucidate

16530-432: The optimum allocation of resources to enhance profitability. Some individuals acquire the new information before others and recombine the resources to gain an entrepreneurial profit . Schumpeter was of the opinion that entrepreneurs shift the production-possibility curve to a higher level using innovations. Initially, economists made the first attempt to study the entrepreneurship concept in depth. Alfred Marshall viewed

16675-590: The part of both established firms and new businesses. In the 21st century the governments of nation states have tried to promote entrepreneurship, as well as enterprise culture , in the hope that it would improve or stimulate economic growth and competition . After the end of supply-side economics , entrepreneurship was supposed to boost the economy. As an academic field, entrepreneurship accommodates different schools of thought. It has been studied within disciplines such as management, economics, sociology, and economic history. Some view entrepreneurship as allocated to

16820-616: The participatory role of individuals is usually severely limited. Schumpeter defined democracy as the method by which people elect representatives in competitive elections to carry out their will. This definition has been described as simple, elegant and parsimonious, making it clearer to distinguish political systems that either fulfill or fail these characteristics. This minimalist definition stands in contrast to broader definitions of democracy, which may emphasize aspects such as "representation, accountability, equality, participation, justice, dignity, rationality, security, freedom". Within such

16965-493: The particular challenges of the project and has to function almost immediately to reduce the risk that performance might be adversely affected. Another type of project entrepreneurship involves entrepreneurs working with business students to get analytical work done on their ideas. Social entrepreneurship is the use of the by start up companies and other entrepreneurs to develop, fund and implement solutions to social, cultural, or environmental issues. This concept may be applied to

17110-443: The physiocrats. Dating back to the time of the medieval guilds in Germany, a craftsperson required special permission to operate as an entrepreneur, the small proof of competence ( Kleiner Befähigungsnachweis ), which restricted training of apprentices to craftspeople who held a Meister certificate. This institution was introduced in 1908 after a period of so-called freedom of trade ( Gewerbefreiheit , introduced in 1871) in

17255-490: The principles of [classical] liberalism. This is the reason why gold is so unpopular now and also why it was so popular in a bourgeois era." Schumpeter's relationships with the ideas of other economists were quite complex in his most important contributions to economic analysis – the theory of business cycles and development. Following neither Walras nor Keynes, Schumpeter starts in The Theory of Economic Development with

17400-506: The process by which either an individual or a team identifies a business opportunity and acquires and deploys the necessary resources required for its exploitation. In the early 19th century, the French economist Jean-Baptiste Say provided a broad definition of entrepreneurship, saying that it "shifts economic resources out of an area of lower and into an area of higher productivity and greater yield". Entrepreneurs create something new and unique—they change or transmute value. Regardless of

17545-399: The processual approach, or the contextual turn/approach to entrepreneurship. Entrepreneurship includes the creation or extraction of economic value . It is the act of being an entrepreneur, or the owner or manager of a business enterprise who, by risk and initiative, attempts to make profits. Entrepreneurs act as managers and oversee the launch and growth of an enterprise. Entrepreneurship is

17690-420: The rate of innovation govern changes in the rate of new investments and that the combined impact of innovation clusters takes the form of fluctuation in aggregate output or employment. The process of technological innovation involves extremely complex relations among a set of key variables: inventions, innovations, diffusion paths, and investment activities. The impact of technological innovation on aggregate output

17835-452: The repeated assembly or creation of temporary organizations. These are organizations that have limited lifespans which are devoted to producing a singular objective or goal and get disbanded rapidly when the project ends. Industries where project-based enterprises are widespread include: sound recording , film production, software development , television production, new media and construction. What makes project-entrepreneurs distinctive from

17980-400: The rewards. The process of setting up a business is known as "entrepreneurship". The entrepreneur is commonly seen as an innovator , a source of new ideas, goods , services, and business/or procedures. More narrow definitions have described entrepreneurship as the process of designing, launching and running a new business, often similar to a small business , or (per Business Dictionary ) as

18125-455: The role of supply and demand in determining price. Joseph Schumpeter Joseph Alois Schumpeter ( German: [ˈʃʊmpeːtɐ] ; February 8, 1883 – January 8, 1950) was an Austrian political economist . He served briefly as Finance Minister of Austria in 1919. In 1932, he emigrated to the United States to become a professor at Harvard University , where he remained until

18270-487: The short-term. These driving characteristics allude to the presence of serial entrepreneurship in the region. It has been argued, that creative destruction is largely responsible for the dynamism of industries and long-run economic growth. The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such is debated in academic economics. An alternative description posited by Israel Kirzner suggests that

18415-546: The single act of opportunity exploitation and more on the series of actions in new venture emergence, Indeed, nascent entrepreneurs undertake numerous entrepreneurial activities, including actions that make their businesses more concrete to themselves and others. For instance, nascent entrepreneurs often look for and purchase facilities and equipment; seek and obtain financial backing, form legal entities , organize teams; and dedicate all their time and energy to their business Project entrepreneurs are individuals who are engaged in

18560-632: The study of innovation . Schumpeter was probably the first scholar to develop theories about entrepreneurship . For instance, the European Union's innovation program, and its main development plan, the Lisbon Strategy , are influenced by Schumpeter. The International Joseph A. Schumpeter Society awards the Schumpeter Prize. The Schumpeter School of Business and Economics opened in October 2008 at

18705-534: The term "adventurer" was often used to denote the same meaning. The study of entrepreneurship reaches back to the work in the late 17th and early 18th centuries of Irish-French economist Richard Cantillon , which was foundational to classical economics . Cantillon defined the term first in his Essai sur la Nature du Commerce en Général , or Essay on the Nature of Trade in General , a book William Stanley Jevons considered

18850-661: The top five pioneers in management ideas were: Frederick Winslow Taylor ; Chester Barnard ; Frank Bunker Gilbreth Sr. ; Elton Mayo ; and Lillian Moller Gilbreth . According to Christopher Rea and Nicolai Volland, cultural entrepreneurship is "practices of individual and collective agency characterized by mobility between cultural professions and modes of cultural production", which refers to creative industry activities and sectors. In their book The Business of Culture (2015), Rea and Volland identify three types of cultural entrepreneur: "cultural personalities", defined as "individuals who buil[d] their own personal brand of creativity as

18995-698: The traits of an entrepreneur using various data sets and techniques. Looking at data from the Global Entrepreneurship Monitor (GEM), entrepreneurial traits specific to the Association of Southeast Asian Nations (ASEAN) are: experience in managing or owning a business, pursuit of an opportunity while being employed, and self-employment. In the decision to establish a new business, the ASEAN entrepreneur depends especially on their own long-term mental model of their enterprise, while scanning for new opportunities in

19140-530: The type of organization and creativity involved. Entrepreneurship ranges in scale from solo, part-time projects to large-scale undertakings that involve a team and which may create many jobs. Many "high value" entrepreneurial ventures seek venture capital or angel funding ( seed money ) to raise capital for building and expanding the business. Many organizations exist to support would-be entrepreneurs, including specialized government agencies, business incubators (which may be for-profit, non-profit, or operated by

19285-421: The value of an object or service is often seen as nothing but the price it would bring in an open and competitive market. This is determined primarily by the demand for the object relative to supply in a perfectly competitive market . Many neoclassical economic theories equate the value of a commodity with its price, whether the market is competitive or not. As such, everything is seen as a commodity and if there

19430-538: The willingness of the entrepreneur to assume the risk and to deal with uncertainty, thus he drew attention to the function of the entrepreneur and distinguished between the function of the entrepreneur and the owner who provided the money. Jean-Baptiste Say also identified entrepreneurs as a driver for economic development, emphasizing their role as one of the collecting factors of production allocating resources from less to fields that are more productive. Both Say and Cantillon belonged to French school of thought and known as

19575-407: The work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries. However, entrepreneurship was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics since the late 1970s. In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in

19720-408: The world has ever seen". Another historian Tristram Hunt called Wedgwood a "difficult, brilliant, creative entrepreneur whose personal drive and extraordinary gifts changed the way we work and live." Victorian-era Welsh entrepreneur Pryce Pryce-Jones , who would capitalise on the railway network created during the Industrial Revolution and the modern postal system that also developed in the UK, formed

19865-444: Was Turgot rather than Adam Smith , and he considered Léon Walras to be the "greatest of all economists", beside whom other economists' theories were "like inadequate attempts to catch some particular aspects of Walrasian truth". Schumpeter criticized John Maynard Keynes and David Ricardo for the "Ricardian vice". According to Schumpeter, both Ricardo and Keynes reasoned in terms of abstract models, where they would freeze all but

20010-452: Was characterized by hard work and comparatively little recognition of his massive two-volume book Business Cycles. However, Schumpeter persevered, and in 1942 published what became the most popular of all his works, Capitalism, Socialism and Democracy , reprinted many times and in many languages in the following decades, as well as cited thousands of times. The source of Schumpeter's dynamic, change-oriented, and innovation-based economics

20155-411: Was determined by several different factors, including wages and rents. This theory of value, according to Smith, best explained the natural prices in the market. While an underdeveloped theory at the time, it did offer an alternative to another popular value theory of the time. The utility theory of value was the belief that price and value were solely based on how much "use" an individual received from

20300-679: Was extended from its origins in for-profit businesses to include social entrepreneurship , in which business goals are sought alongside social, environmental or humanitarian goals and even the concept of the political entrepreneur . Entrepreneurship within an existing firm or large organization has been referred to as intrapreneurship and may include corporate ventures where large entities "spin-off" subsidiary organizations. Entrepreneurs are leaders willing to take risk and exercise initiative, taking advantage of market opportunities by planning, organizing and deploying resources, often by innovating to create new or improving existing products or services. In

20445-424: Was his friend and Austrian jurist Hans Kelsen . His second was Anna Reisinger, 20 years his junior and daughter of the concierge of the apartment where he grew up. As a divorced man, he and his bride converted to Lutheranism to marry. They married in 1925, but within a year, she died in childbirth. The loss of his wife and newborn son came only weeks after Schumpeter's mother had died. Five years after arriving in

20590-603: Was launched. The term "entrepreneur" is often conflated with the term " small business " or used interchangeably with this term. While most entrepreneurial ventures start out as a small business, not all small businesses are entrepreneurial in the strict sense of the term. Many small businesses are sole proprietor operations consisting solely of the owner—or they have a small number of employees—and many of these small businesses offer an existing product, process or service and they do not aim at growth. In contrast, entrepreneurial ventures offer an innovative product, process or service and

20735-517: Was one of Schumpeter's most renowned pupils, who wrote extensively about him in The Worldly Philosophers . In the journal Monthly Review , John Bellamy Foster wrote of that journal's founder Paul Sweezy , one of the leading Marxist economists in the United States and a graduate assistant of Schumpeter's at Harvard, that Schumpeter "played a formative role in his development as a thinker". Other outstanding students of Schumpeter's include

20880-439: Was the historical school of economics . Although his writings could be critical of that perspective, Schumpeter's work on the role of innovation and entrepreneurship can be seen as a continuation of ideas originated by the historical school, especially the work of Gustav von Schmoller and Werner Sombart . Despite being born in Austria and having trained with many of the same economists, some argue he cannot be categorized with

21025-482: Was the most influential thinker to argue that long cycles are caused by innovation and are an incident of it. His treatise on how business cycles developed was based on Kondratiev's ideas which attributed the causes very differently. Schumpeter's treatise brought Kondratiev's ideas to the attention of English-speaking economists. Kondratiev fused important elements that Schumpeter missed. Yet, the Schumpeterian variant of

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