Abstract
Like Cage, economists are inclined to attribute the failure to embrace new ideas to irrational fear. Standard approaches to growth and change assume that given new ideas, it is indeed the old ideas that should be the most frightening. To be sure, new ideas present uncertainty and risk — we might invest in the wrong idea at the wrong time, apply it in the wrong way, or fail to successfully implement a new idea. But with rational expectations, cash flows properly discounted, and investment suitably rewarded, risk should not present an obstacle to progress. As Schumpeter observed, the status quo is a false friend that lulls us into complacency and stagnation. It is only through the “creative destruction” of old ideas and the entrepreneurial implementation of new ideas that economies grow and societies prosper (SCHUMPETER, 1947).
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