Schumpeter’s Nightmare

By February 8, 2011

Joseph Schumpeter, 20th-century Austrian economist and progenitor of the notion of “creative destruction”, noted in a 1942 paper that “the function of entrepreneurs is to reform or revolutionize the pattern of production.” Schumpeter proposed they do this by disregarding existing bureaucratic systems and, in short, just go for it. The kinds of bureaucratic structures he was talking about were the plodding, labyrinthine corporate and government organizations cropping up everywhere in the first bits of the 20th century.

Now, I understand that I’ve emphasized time and again why it is difficult for students in college to start companies. I’ve established that students are faced with a compound problem: lack of credentials and time constraints. I’ve also noted that there is a disconnect in many universities’ rhetoric around entrepreneurship and the extent to which they support it. These comprise a whole herd of dead horses which I’ve gleefully beaten for a while now. But the point is this: the numerous failings of higher education are a result of structural constraints, not students or faculties’ desire for change.

Well, it seems as though I’ve got another sacred cow to kill. Universities, over the past thirty or so years, have made an effort to support a vibrant campus community, with varsity sports and extracurricular activities at its center. Any recent college graduates, students, or parents of college-aged children will remember the process of touring campuses, and will recall that tour guides and admissions staff spent only a tiny fraction of their time talking about the school’s academic merits. No, almost every college focuses on Student Life. But, reader, rest assured, I’m not here to critique all student clubs. It doesn’t really matter if, for example, the Harvard Tiddlywinks Club (I kid you not) is run as efficiently as possible.

No, I’ve got bigger fish to fry, and, with luck, some hypocrisy to call out. What I’m concerned with here aren’t the Tiddlywinks clubs or Quidditch teams (again, I kid you not) of the world, but the student organizations whose main objective is fostering leadership, a spirit of entrepreneurial bonhomie, or in some way seek to “change the world”. I say this as a student leader within a couple of organizations, one of which, The Kairos Society, is a formidable player in the student entrepreneurship scene, especially after receiving funds from the US Chamber of Commerce. Kairos and others, fledgling or failing, prestigious or not, all share one thing in common: most would leave Joseph Schumpeter turning in his grave. They putatively promote entrepreneurship, leadership, and “disruptive changemaking” (!!!) all while using the lumbering, top-heavy bureaucratic structures Professor Schumpeter said entrepreneurs, young or old, should flout. In the coming weeks, I’ll profile student organizations, and hope to gain some insights into what it means to be an entrepreneurial group, what it takes to run such groups, and along the way give recommendations on structure, leadership, etc. which extends far beyond the ivy-covered walls. To quote Carl Schmitt: “Politics is destiny.” We shall see.