ABSTRACT
Economists have been studying the factors that improve people’s material well-being at least as far back as Adam Smith wrote his monumental treatise, The Wealth of Nations, in 1776, but the phenomenon of economic progress – or as it is often more narrowly studied, growth – barely predates Smith.1 Half a century before Smith wrote, economic progress would have been nearly imperceptible over a person’s lifetime. Since then, economic progress has accelerated with each generation, and has manifested itself partly in income growth, but even more in new methods of production and in new types of output. Entrepreneurship has played an indispensable role in the production of economic progress. The link between entrepreneurship and progress may seem obvious, yet the connection between the two in economic analysis is tenuous, partly because mainstream economics has not done a very good job of depicting either entrepreneurship or progress. Because neither entrepreneurship nor progress is accurately represented in the economic analysis of growth, mainstream economic analysis has overlooked the key factors that create economic progress, and the policy recommendations that have come from economic analysis regarding economic growth are often counterproductive.
