Introduction
The concept of entrepreneurship has long been associated with innovation, risk-taking, and economic transformation. Two seminal thinkers, Jean-Baptiste Say and Joseph Schumpeter, have provided enduring yet unconventional descriptions of the entrepreneur’s role. Say, in the early 19th century, characterised the entrepreneur as someone who “upsets and disorganizes” (Say, 1803), implying a disruptive force within the market. Similarly, Schumpeter, writing in the early 20th century, introduced the term “creative destruction” to describe the entrepreneur’s task of dismantling outdated structures to make way for novel ideas and systems (Schumpeter, 1942). These seemingly peculiar titles reflect the dual nature of entrepreneurship as both a destabilising and innovative force. This essay explores why entrepreneurs are attributed such labels by examining the historical and theoretical contexts of these definitions, their relevance to economic progress, and their application through real-world examples. By doing so, it aims to illuminate the transformative power of entrepreneurship and the inherent tension it creates within economic systems.
The Historical Context of Say’s and Schumpeter’s Views
Jean-Baptiste Say, a French economist writing during the Industrial Revolution, viewed the entrepreneur as a central figure in the coordination of economic resources. In his work, *A Treatise on Political Economy*, Say described the entrepreneur as one who combines factors of production—land, labour, and capital—in innovative ways, often unsettling existing market structures (Say, 1803). The phrase “upsets and disorganizes” captures the idea that entrepreneurs challenge the status quo by identifying inefficiencies or untapped opportunities. This disruption, though chaotic in the short term, often leads to greater efficiency and value creation.
Similarly, Joseph Schumpeter, a German economist, built on this notion in the early 20th century amidst rapid technological advancements and industrial shifts. In Capitalism, Socialism and Democracy, Schumpeter (1942) introduced the concept of “creative destruction,” arguing that entrepreneurs drive economic progress by replacing obsolete industries and practices with innovative ones. For Schumpeter, this process was not merely disruptive but essential for capitalism’s survival, as it prevents stagnation. These descriptions, though seemingly negative, highlight the entrepreneur’s role as a catalyst for change, even if such change initially appears unsettling or destructive.
Entrepreneurship as Disruption and Innovation
The terms “upsets and disorganizes” and “creative destruction” underscore the dual nature of entrepreneurship: disruption paired with innovation. Entrepreneurs often challenge entrenched systems by introducing new products, services, or business models that render existing ones obsolete. This process can be uncomfortable for established players and industries, as it disrupts market equilibria and forces adaptation. However, it is precisely this disturbance that fosters economic growth. For instance, the rise of digital streaming services such as Netflix exemplifies Schumpeter’s creative destruction. By offering on-demand content, Netflix disrupted the traditional video rental industry, epitomised by companies like Blockbuster, which struggled to adapt and ultimately collapsed (Christensen, Raynor and McDonald, 2015). While this shift caused short-term losses for some, it created a more accessible and consumer-friendly entertainment model, arguably benefiting society as a whole.
Similarly, Say’s focus on upsetting and disorganising can be seen in the actions of entrepreneurs who identify and exploit market inefficiencies. Consider the case of Uber, which revolutionised the transportation industry by using technology to connect drivers with passengers directly. This innovation unsettled traditional taxi services, which often operated under rigid regulatory frameworks and pricing structures. Uber’s entry into the market caused significant backlash from established taxi operators and regulators, yet it also addressed consumer pain points such as availability and pricing transparency (Cramer and Krueger, 2016). These examples illustrate why entrepreneurs are described in such unconventional terms: their actions inherently challenge norms, creating friction before yielding progress.
The Economic Necessity of Disruption
Entrepreneurial disruption, though often viewed negatively in the immediate term, is a necessary mechanism for economic evolution. Schumpeter (1942) argued that without creative destruction, economies would stagnate, as outdated technologies and practices would persist, hindering innovation. This perspective is particularly relevant in fast-paced industries such as technology, where constant innovation is required to remain competitive. The transition from analogue to digital photography, driven by companies like Kodak pivoting to digital solutions (albeit after initial resistance), exemplifies this principle. Kodak’s early failure to fully embrace digital photography led to its decline, while competitors who adapted thrived, demonstrating the destructive yet creative force of entrepreneurial innovation (Lucas and Goh, 2009).
Furthermore, Say’s notion of upsetting and disorganising highlights the entrepreneur’s role in reallocating resources more effectively. By identifying market gaps, entrepreneurs redirect capital and labour to areas of higher demand, thus enhancing productivity. However, this reallocation often involves short-term losses, such as job displacement or firm closures, which can fuel resistance to entrepreneurial activities. Such tension is inevitable, yet it is through this process that economies achieve long-term growth and resilience.
Critiques and Limitations of These Perspectives
While Say’s and Schumpeter’s descriptions capture the transformative essence of entrepreneurship, they are not without critique. Both perspectives can be seen as overly focused on the destructive aspects of entrepreneurial activity, potentially overlooking the collaborative or incremental innovations that also drive progress. Not all entrepreneurs aim to disrupt entire industries; many operate within existing frameworks, refining processes or enhancing customer experiences without causing significant upheaval. Additionally, the societal costs of creative destruction, such as unemployment or inequality, are sometimes underrepresented in these theories. For instance, the advent of automation in manufacturing has displaced many workers, raising questions about the broader implications of entrepreneurial innovation (Frey and Osborne, 2017). These critiques suggest that while the labels of “upsetting” and “creative destruction” are fitting in many contexts, they do not encompass the full spectrum of entrepreneurial contributions.
Conclusion
In conclusion, the unconventional “titles” bestowed upon entrepreneurs by J.B. Say and Joseph Schumpeter reflect the inherently disruptive yet vital role they play in economic systems. Say’s description of the entrepreneur as one who “upsets and disorganizes” captures the initial chaos and reallocation of resources that entrepreneurship entails, while Schumpeter’s concept of “creative destruction” highlights the necessity of dismantling outdated structures to pave the way for innovation. Through examples such as Netflix, Uber, and the digital photography revolution, it is evident that entrepreneurial activity often involves unsettling established norms before delivering long-term benefits. However, these perspectives are not without limitations, as they may overemphasise disruption while underplaying collaborative or incremental change. Nevertheless, the labels remain apt for describing the transformative power of entrepreneurs. Indeed, their ability to challenge the status quo, though sometimes controversial, is fundamental to driving economic progress and societal advancement. Understanding this dual nature of entrepreneurship is crucial for policymakers, businesses, and aspiring entrepreneurs alike, as it underscores both the challenges and opportunities inherent in fostering innovation.
References
- Christensen, C.M., Raynor, M.E. and McDonald, R. (2015) What is disruptive innovation? Harvard Business Review, 93(12), pp. 44-53.
- Cramer, J. and Krueger, A.B. (2016) Disruptive change in the taxi business: The case of Uber. American Economic Review, 106(5), pp. 177-182.
- Frey, C.B. and Osborne, M.A. (2017) The future of employment: How susceptible are jobs to computerisation? Technological Forecasting and Social Change, 114, pp. 254-280.
- Lucas, H.C. and Goh, J.M. (2009) Disruptive technology: How Kodak missed the digital photography revolution. Journal of Strategic Information Systems, 18(1), pp. 46-55.
- Say, J.B. (1803) A Treatise on Political Economy. Translated by C.R. Prinsep, 1834. London: Longman.
- Schumpeter, J.A. (1942) Capitalism, Socialism and Democracy. New York: Harper & Brothers.
