Joseph A. Schumpeter
I've been interested in Schumpter after a great
disappointment with neoclassical economics in dealing with innovation
and entrepreneurship. I am always driven by the temptation of being
innovative and being entrepreneur. Venturing innovation into sound
business has always been my challenge.
Theoretically, I've studied Porter and other mainstream
economists, arrived at the conclusion that innovation is what keeping
capitalism and market economy flourishing, it's at heart of creating
more value in order to sustain healthy economic competition. Without
innovation and entrepreneurship, market competition can be in great
danger due to the destructive competition that simply never really
create more value but rather allocating exisiting value, falling rate
of profit and so on.
As I believe the market economy to be the core of
human liberty as it builds human capability of exchange and live the
life of one's own value, hence, Innovation is crucial to the sustainable
growth of human liberty. I've been looking into books after books,
in frustration, of works done by the neoclassical, I have not find
enough explanation on the dynamics of entrepreneurship and innovation
in the economy.
I've turned to the literature of general business
written about the issues, there are plenty of books on the issue but
too few systematic study on the subject. Both are guru-type or 10
steps to innovation style, rather than a true systematic and theoretical
works except for few such as Peter Drucker that is excellent. I've,
however, seeing the names of Schumpeter everywhere in this literature
as an economist who addressed this issue long time ago.
So, I've turned my study back to the economics of
Schumpeter, it is very rewarding as it fit very well into my initial
theoretical development jigsaw. He illustrated the role of entrepreneurs
in innovating new technologies that sustainably increase the prosperity
of capitalism. He provided me with sensible economic framework of
the growth resulted from the international development, especially
by the entrepreneurs in searching for new opportunity and internalized
it into the market.
This is very consistant with my idea on self-suffiency
economic development. It allows me to back up the idea that we should
seek the element of growth internally with the integration of external
elements as an improvement of internal capabilities. That way, the
system of growth will always remain self-sufficient to a degree that
it can hedge against the risk of external shock. It must be noted
here that I'm not against the idea of export-oriented growth or growth
as an exogeneous factor but rather try to say dialectically that we
should internalized those external elements properly to be compatible
with the internal sources of growth within the system itself.
I'm still a believer of the free market and not
to close the economy down to external factor like many self-sufficiency
economics friends seem to think. In all, Schumpeter taught me that
the nature of economic development is evolutionary based upon endogenous
growth of many factors, among them innovation, entrepreneurs and bank-credit.
The key is to seek the balance of entreprenurial environment (such
as Bank credit and market process) to allow the entrepreneurs to truely
internalized the innovation into the market properly for the growth.
Perhaps because of his Marxian root, he tried to
predict the defeat of capitalism into the arm of socialism. That never
happen, and yet, his thought on the interdependent of things in the
socio-economic systems allow me to reappreciate the holistic attitude
once again after a long dry journey of Newtonian optimization, Ricardian
reductionism and Walra's general eqilibrium in main stream neoclassical
economics.
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