Entrepreneurship Assignment: Obsolence of Entrepreneurial Function
Task: Read the book by Joseph A.Schumpeter and prepare an entrepreneurship assignment answering what does Schumpeter mean by the “obsolescence of the entrepreneurial function” and how is this linked to his view that capitalism cannot survive?
Schumpeter’s vision of entrepreneurship considered in the present context of entrepreneurship assignment has evolved through decades with a greater emphasis on the entrepreneur as well as his exceptional character that led to a greater analysis of the entrepreneurial function. Schumpeter has recognized the declining growth in the entrepreneurial function during the age of trust. Schumpeter has observed that the success of the capitalist industry was possible only when it followed a routine systematic activity (Schumpeter, 1943). This has degenerated into a dis-personalized, routine activity that is carried out on the business organizations by trained business managers. However, it has been found that Schumpeter did not renounce his opinion on entrepreneurs as he observed them from the perspective of a general economic scenario. This study will highlight the meaning of “obsolescence of entrepreneurial function” as highlighted by Schumpeter and its linkage with the view that has laid to the concept of the failure of capitalism.
The volitional aptitudes have opined that successful entrepreneurs of old age are important although they have much lesser scope. This can be considered to be a no chance case of coincidence where the epoch in which it has decreased can be regarded as an important entrepreneurial function. However, the epoch in which the political and the social position of this bourgeoise began to highlight the weakness and the symptoms cannot be tackled with success (Schumpeter, 1943). This observation can be considered to be a bridge which Schumpeter considered as the “obsolescence of entrepreneurial function”. According to this function, getting things done on time as well as the personal will of the individuals has lose its importance due to two crucial reasons (Schumpeter, 1943). This is because of the task of innovation that can be regarded as the activity of the trained individuals. Another crucial reason can be because of the social environment becoming accustomed to different types of economic changes where the resistance of change can be considered to be the opposite of the declining phase.
It has been found that the decline of this entrepreneurial function as well as the entrepreneurs according to Schumpeter has opened the doors to end capitalism. The economic progress can be considered to be automatized and depersonalized because the planning officers and the committees are trying to replace the individual actions. Further, Schumpeter has highlighted that through the evolution of capitalism, the operative effect of economic and social support is likely to disappear opening the way for the emergence of socialism (Dal Pont Legrand and Harald, 2017). Although Schumpeter cannot be considered as the first individual to predict the demise of capitalism, he was the first individual to claim the success that is the cause of fall and decline. This has led to the emergence of creative destruction based on which the future of capitalism generally depends. This survival of capitalism generally depends on the initiatives taken by the entrepreneurs thereby leading to the production process in the evolutionary and new directions (Schumpeter, 1943). Further, it has been found that technological progress according to Schumpeter generally strangles the entrepreneurial process thereby leading to the process of incessant change to a halt leading to the end of capitalism.
Schumpeter has also opined that the revolutionary and the rationalization of capitalism will make it easier to handle all other aspects in one single path because of the obsolete functions of the social institutions that emerged from the economic scene through creative destruction. In this case, the entrepreneurs can be considered as a man of genius who generally goes beyond the routine in handling the new methods of production driving the change process (Hagemann, 2019). On the other hand, according to the concepts of the social foundation of capitalism emphasized by Schumpeter private property and voluntary exchange can be considered to be the essential characteristics of the capitalist class that requires to be eliminated through the dominance of other economic institutions.
The entrepreneurs must try their best to reap the economic rewards thereby carrying out the production and thereby expanding into newer forms of economic organization to capture the economic activities. This will lead to the separation of the functions of ownership as well as control thereby leading to gradual separation. The size of the firm also leads to the development of bureaucracy so that it becomes easier for the owners to establish a crucial connection between the economic process and the knowledge (Langlois, 2003). On the other hand, the owners must also try to develop a connection between the voluntary contract and private ownership because of which there can be no such economic progress. This will assist in providing support to the institutions that form the basis of the capitalist system. Further, Schumpeter has also argued that unlike the other forms of capitalism, there should be improved focus laid on the change and the innovation process so that it becomes easier for the individuals to recognize the vital system thereby securing the standards of living (Riot, 2009).
Schumpeter has also eroded the social protection of capitalism as well as the feeling of grievance in the society that acts as the basis of assault on the capitalist class. This also highlights the varied groups whose interest is to organize and work on the intellectual capitalist class driving the force (Schumpeter, 1943). According to Schumpeter, capitalism can be considered as the means of gathering the intellectual capital making the innovation process disseminating as well as expensive. With the help of this capitalism, it will be easier to tackle the principle of freedom of expression that is necessary for the criticism of the social institution.
Thus, it can be said that the concept of intellectual opposition can be supplied and tackled with weapons. The capitalist system can be attacked by those whose occupations can be tackled through the efforts of the entrepreneurs and the capitalist class that drives the economy into a ceaseless process of improvement and innovation. There have been proper attempts made to reexamine the system that constitutes the greatest threats to the process of existence. Therefore, capitalism tries to focus on the hostile parties thereby providing social support to the institutions that form the basis in securing the standard of living.
Dal Pont Legrand, Muriel, and Harald Hagemann. "Retrospectives: Do Productive Recessions Show the Recuperative Powers of Capitalism? Schumpeter's Analysis of the Cleansing Effect." Journal of Economic Perspectives 31, no. 1 (2017): 245-56.
Hagemann, Harald. "Joseph Alois Schumpeter." In The Elgar Companion to John Maynard Keynes. Edward Elgar Publishing, 2019.
Langlois, Richard N. Schumpeter and the Obsolescence of the Entrepreneur. Emerald Group Publishing Limited, 2003.
Riot, Elen. "Patterns of intention: Oberkampf and Knoll as Schumpeterian entrepreneurs." Entrepreneurship & Regional Development 31, no. 7-8 (2019): 623-651.
Schumpeter, Joseph A. Capitalism, Socialism, and Democracy: Joseph A. Schumpeter. Allen and Unwin, 1943.