Industrial Insight

Innovation | January 27, 2014

http://www.forbes.com/sites/jerrybowyer/2014/01/20/schumpeter-got-innovation-wrong-and-other-myth-busting-ideas-from-a-nobel-prize-economist/

Jerry Bowyer, Contributor

1/20/2014 @ 10:27AM

Schumpeter Got Innovation Wrong, And Other Myth-Busting Ideas From A Nobel Prize Economist

One of my missions in the book has been to try to get economists to stop thinking of innovation – not all economists do it but a lot of them do – as a kind of routine, deterministic, commercial application of whatever advances scientists make. This is an idea that got going in the German Historical School before Schumpeter; they said outright that the discoveries of scientists and navigators propel the whole thing. And Schumpeter, for 30 or 40 years of his career beginning with his first great book, did not deny it; he simply added a new wrinkle. He said, “Yes, that’s true, but it does take entrepreneurs to make those commercial applications, and there’s a lot of effort and hustle and know-how in that.” I think between the lines he was saying that some countries have it and other countries don’t have it. You know, though, he was writing at a time that he didn’t have the whole 20th century under his belt. We understand a lot more about a lot of things now than Schumpeter could have understood in 1911. My position is that that’s all wrong. It is the business sector that generates most of the new ideas, and these new ideas might come from anybody working in a business, maybe while walking home from work, looking up and noticing something.

…economists have been shaking their heads and wondering how it is that so many of the country’s important innovators turned out to have less than the average education, or at least they didn’t have nearly the education of the CEOs running the big companies. They were relatively uneducated. And that reminds me that in Paul Johnson’s great book, called The Birth of the Modern, which precisely is about the economies that I open with in my book. He says that many of these important innovators from 1815 to 1830 like George Stevenson and some others couldn’t read or write, but they did extraordinarily novel, imaginative things.”

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About author

I'm the executive vice president for a steel casting trade association, the Steel Founders' Society of America. I've got a crazy wife, five crazy children, three crazy people that married into the family, and two crazy fun little grandsons.

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