You may have never heard of Joseph Schumpeter, an eccentric Austrian economist who taught at Harvard in the 1930s and 40s. But to those of us who study the strategic and financial dynamics of innovation, he is far more influential than his peers John Maynard Keynes or Milton Friedman. Schumpeter is the guy who made the entrepreneur the engine of growth for an economy, and several Nobel Laureates since have suggested that he was right on most counts.
Schumpeter's most famous and controversial work is his disjointed and rambling classic, Capitalism, Socialism, and Democracy. In it, he warns that as capitalism advances, it becomes more efficient and seeks better and cheaper ways of getting the work done even if it means replacing jobs with machines or sending them abroad. In other words, corporations use innovation to do more with less. But he warns that capitalism is not sustainable because, in a democratic society, majorities vote for the creation of a planned economy where the wealth is distributed equitably by the state. You need only look to the current European economy as a whole to see what Schumpeter saw 75 years ago. No friend of socialism, Schumpeter cautioned that democracy taken too far will destroy meritocracy, where the best and brightest advance through personal initiative, resourcefulness, and innovation--the essential attributes of entrepreneurism. Schumpeter has a Darwinist view of innovation where only the fittest excel.
What if we are going about jumpstarting our own economy the wrong way? I'm not talking about any political party. I'm talking about our modest sensibilities: our belief that giving our best and brightest special consideration is elitist and wrong.
The good news is that many of our sons and daughters are indeed the best and brightest. The bad news is that we treat them the same as anyone else, and inevitably they leave for places where they are considered special.
Here's an oldie but goodie idea: Let's invite those who have proven themselves to be the best and brightest entrepreneurs and ask them to identify a dozen students from our top institutions of higher learning and other competitive venues where talent and ambition are rewarded: special innovation training, one-on-one mentoring with proven entrepreneurs, fast track funding and easy access and terms for business work space development. But before we develop any rewards, let's try something different this time and ask them what they need to succeed. Let's do our best to give it to them. Most importantly, let's make them feel special, because they are.
With time and a little luck, we will gain momentum and begin to re-establish our creative culture and become more inclusive. Who knows? Our best and brightest might just prove old Joe Schumpeter wrong and find a way to balance democracy and meritocracy here in America.