Economists Begin Embracing Entrepreneurs

From comes a good piece about entrepreneurs and econcomics.

William Baumol, who holds positions at both Princeton and NYU, has been labouring for years to create more space for entrepreneurship and innovation in economic theory. At this year's annual meeting of the American Economics Association, three special sessions on entrepreneurship were held in his name*. Mr Baumol's work in turn pays homage to the insights of Joseph Schumpeter, for whom the settled equilibria and smooth adjustments of microeconomics held little interest.

Schumpeter wanted to dislodge the price mechanism from its "dominant position" in "the sacred precincts of theory". In the real world, he said, the competitive weapon that counts is not lower prices, but new commodities and techniques. These weapons are much deadlier, striking "not at the margins of…the existing firms but at their foundations and their very lives."