Institutions, entrepreneurship, and the rationale of government: an outline of the Schumpeterian theory of the state

In: Essays on fiscal sociology, S. 77-101

Abstract

"The Schumpeterian theory of the state, based on the conceptual framework of fiscal sociology, parallels the theory of entrepreneurship in its concern with the institutional dynamism of capitalist development. Schumpeterian entrepreneurship denotes the capability for carrying out innovations by means of leadership. It may be executed by diverse agents, whose capabilities are embedded in a variety of institutional forms. This institutional variety is an indispensable condition of capitalist development, due to its role in the behavioural articulation of entrepreneurship which is basically driven by atavistic motives. These are also relevant in other domains of socio-cultural evolution, even affecting the genesis of the modern state which is perceived as an equivalent to the entrepreneurial features of competitive capitalism. Its rationale mirrors the emergence of a distinct sphere of self-interested economic activity in a private sector. While the state is concerned with the provision of common goods, its economic impact needs to be assessed with regard to the social interests that mark its relationship with the private sector. This holds for the evolution of the fiscal system as well as for other domains of government activity. Indeed, Schumpeter pointed out that the state could temporarily carry out the entrepreneurial function in capitalist development, quite in accordance with the notion of entrepreneurship as institutional leadership." (author's abstract)