Introduction

As we saw in Chapter One, the latter Schumpeter (1942) had pessimistic prognoses about the future of capitalism, while the early Schumpeter (1911) did not articulate any social feedback problems. In this volume, we propose an American solution to the social feedback mechanism, one that is consistent with the work of the early Schumpeter. American capitalism differs from all other forms of industrial capitalism in its historical focus on both the creation of wealth (entrepreneurship) and the reconstitution of wealth (philanthropy). Philanthropy is part of the implicit social contract that continually nurtures and revitalizes economic prosperity (Schramm, 2005). Much of the new wealth created historically has been given back to the community to build up the great social institutions that have a positive feedback on future economic growth. This entrepreneurship-philanthropy nexus has not been fully explored by either economists or sociologists. We suggest that American philanthropists – especially those who have made their own fortunes – created foundations that, in turn, contributed to greater and more widespread economic prosperity through knowledge creation (Acs and Phillips, 2002).

In traditional industrial societies, wealth creation, wealth ownership, and wealth distribution were, in great part, left up to the state or to organized religion. However, in an entrepreneurial society, individual initiative plays a vital role in propelling the economy and the society forward.