Chapter 1 focuses on the narratological strategies that turned a set of mathematical equations into an economic model in Robert Solow’s “Contribution to the Theory of Economic Growth,” the article behind the classic reference “Solow 1956.” In the first place, the paper was all about the setup of a smoothly working neoclassical growing economy, which consisted in the interplay of algebraic equations, diagrammatic visualizations, and verbal accounts. The article revolved around this artifact, made (up) by the narrator figure and, at the same time, to be used and experimented with by others, independently of its construction history. While denoting the artifact “a model” throughout, references to a world beyond its narrow boundaries were vague. Straightforward was its function as an exemplar for how proper economic reasoning should look. The text presented its model as improving a so-called precursor, the “Harrod–Domar model.” In this way, it contributed to canonizing earlier dynamic theory with its focus on instability and crisis and set the course for an angled historiography of growth theory that downplays the differences in approaches and objects until the present day.

This chapter starts with the argument that the greatest benefit of the market is to make the best use of everyone’s enthusiasm and creativity, instead of making efficient allocation of given resources, as proposed by mainstream economics. The chapter analyzes the traditional theories (neoclassical growth theory and Keynesian economics) that economists use to explain economic growth. Their common shortcoming is ignoring the role of entrepreneurs. The chapter then outlines the entrepreneur-centric “Smith–Schumpeterian growth model” and the two functions of entrepreneurs (i.e. arbitrage and innovation). Arbitrage is the discovery of disequilibrium and exploitation of lucrative opportunities in markets under existing technological conditions and resources. Innovation creates or commercializes new things that did not exist, or breaks away from routines. With this perspective, it also gives a brief analysis of China’s economic growth over the last few decades.