Joseph Schumpeter long ago provided those seeking an understanding of modern capitalist economic growth with a dynamic model. The central engine that made capitalism run, Schumpeter explained, was the entrepreneur, the innovator, the unusual businessman who combined capital, labor, and natural resources to develop a new product, a new service, a new source of raw materials or a new form of business organization (Schumpeter, 1934; Stolper, 1994). Schumpeter rounded out his theory in 1942, when he published Capitalism, Socialism, and Democracy, which added a political and social superstructure to the original, unchanged model of economic growth.

At that time, most governments were so fully engaged with World War II and, later, with the serious problems of rebuilding their economies that they paid no attention to Schumpeter's ideas, and even the economics profession was largely oblivious to his concepts. In the postwar years Keynesian analysis was on the throne, securely established, it appeared, by the remarkable recovery of the American economy from the Great Depression of the 1930s. Forced to use the powerful tool of large-scale deficit financing, the United States had emerged from the war as the most powerful and successful economy in the world (Abramovitz and David, 2000; Maddison, 1995). The American economy was so successful that there seemed to be little need to reflect on the quality of the nation's entrepreneurship during what came to be called “the American century” (Stein, 1969; Collins, 1981; Zelizer, 1998; Galambos and Pratt, 1988).