Elgar original reference
Edited by David B. Audretsch, Oliver Falck, Stephan Heblich and Adam Lederer
Chapter 1: Invention and Social Entrepreneurship: Social Good and Social Evil
William J. Baumol1 The fault, dear Brutus, is not in our stars, but in ourselves . . . (Julius Caesar, Act 1, Scene 2) The words ‘inventor’ and ‘entrepreneur’ are often used in a manner implying the unassailable virtues of such an occupational choice. Indeed, inventors and entrepreneurs are hailed as the hope of the future and as indispensable contributors helping to eliminate the world’s remaining ills. Many also are regarded as self-sacrificing individuals, surrendering their leisure time and often family in pursuit of their goals. A moment’s reflection, however, reveals that these issues are more complex. Indeed, inventors and entrepreneurs pursuing their inventions can damage society, sometimes severely. I shall argue here, following Douhan and Henrekson (2008), that some of the activities that appear to damage social welfare actually have (second-best) beneficial consequences that mitigate other shortcomings in current economic arrangements. At the same time, there are other apparently beneficial acts of invention and entrepreneurship that are ultimately counterproductive. I shall conclude that, despite these important complications, the work of the inventor and his entrepreneurial partner is, on balance, enormously beneficial to the community. As such, both activities fully merit encouragement. Readers concerned with policy design will also note that the instances in which invention and entrepreneurship prove damaging underscore the idea that one size does not fit all. In other words, any encouragement of invention and entrepreneurship adopted in accord with our general conclusion should be circumscribed, or at least nuanced, so as not to promote the detrimental along with the...
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