A crucial factor in economic growth - the supply of entrepreneurship - is largely neglected in modern economic theory. The main reason is that the theory is dominated by the model of perfect competition, which logically excludes any function for the entrepreneur. The standard model is also inconsistent with several obvious facts. Instead, the author proposes two alternative models of 'entrepreneurial competition', one for conditions of near-perfect competition in product markets and the other for imperfect competition in those markets.

Modern neoclassical economics is a theory of general equilibrium. It is based on highly unrealistic assumptions and yields a number of false predictions. The alternative model, presented in this book, uses a wider definition of technology, and emphasises the role of the entrepreneur as the primary agent of change. Because it takes time for firms to improve their technology, and to acquire the necessary finance for expansion, there are wide differences in firm sizes, and in their profitability. The competitive struggle to develop better technology raises the level of productivity of the whole...