Rise of Entrepreneurship May Increase Wealth Disparities
An ever-increasing emphasis on rewarding entrepreneurial skill could increase global wealth disparities and generate discontent over the medium-term, according to Oxford Analytica. This is despite the fact that, in the past, entrepreneurialism has driven social mobility.
In a new analysis, An ‘entrepreneurial society’ has costs OxAn concludes that innovation and entrepreneurialism will continue to be the main generators of wealth and prosperity in the global knowledge-based economy. “Entrepreneurialism is fundamental to capitalist development, economic growth and renewal. However, some innovations created by entrepreneurial activity can have destructive consequences, as the financial engineering that contributed to the global credit crunch demonstrated.”
The period of intense financial innovation that accelerated in the present decade — fostered by entrepreneurial employees at all levels in the financial industry — ultimately generated vast profits. Yet many of these gains have been at least partially swallowed by the pernicious counterparty risk they created.
Some social scientists now believe that an ‘entrepreneurial society’ is essential to long-term economic development along Western-style free market capitalist lines.
“However, there is a dark side to entrepreneurial innovation. It facilitates ‘creative destruction’ in the marketplace, which an influential school of economists deems essential to long-term growth. Yet this disruption can, over the short-term, lead to volatility and hinder economic expansion.”
According to OxAn, entrepreneurial society looks well-entrenched in the developed world, but certain aspects could change:
1. Exaggerated entrepreneurialism?. It may be that this picture of a vastly intensified entrepreneurialism and spread of innovation will ultimately be seen to exaggerate relatively modest developments. Most work, even in high technology sectors, requires what amounts to routine clerical labour. Mundane work is mundane work whatever the industrial sector, and the experience of entrepreneurial innovation may still pass most workers by.
2. New value chain. However, even with this caveat it is the case that ideas and those with the ability to use them will increasingly dominate society in the West. ‘Knowledge products’ now sit at the top of the global value chain, and continued growth may depend on exploiting them.
3. Debate over entrepreneurial value. Yet some innovations, such as the system of distributed financial risk that developed over the past two decades, are bound to be attacked for destroying more value than they create.
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