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Schumpeter, the entrepreneurial state and China

IIPP Working Paper 2020-15 Schumpeter, the entrepreneurial state and China

28 October 2020

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UCL Institute for Innovation and Public Purpose (IIPP) Working Paper Series: IIPP WP 2020-15

Author

  • Leonardo Burlamaqui | Research Fellow, Levy Economics Institute of Bard College,Professor, Department of Economic Evolution, State University of Rio de Janeiro, Brasil

Reference

Burlamaqui, L. (2020). Schumpeter, the entrepreneurial state and China. UCL Institute for Innovation and Public Purpose, Working Paper Series (IIPP WP 2020-15). Available at: https://www.ucl.ac.uk/bartlett/public-purpose/wp2020-15

Abstract

The paper aims to show that Schumpeter’s unsystematic, and unexplored, reflections on “state action” constitute a hidden and unexploited gem in his work. Their reconstruction points toward an institution that, through history, exercised the functions of market maker, macro-strategist, venture capitalist in chief (forging and funding industries, and crafting innovation and technology policies) and creative destruction manager (stimulating the creative part of the process in order to speed productivity enhancement and innovation diffusion and acting as a buffer to its destructive dimension). The main claim then, is that these traces constitute the building blocks of a proper economic theory of the State as an “entrepreneur”, and they are all in Schumpeter. Additionally, the paper submits that their contemporary relevance shows up in many developmental trajectories, but especially in China today. It closes with the proposition that bringing the State into Schumpeter’s creative destruction paradigm doesn’t harm or violate it. It’s a needed improvement.