The impulse of his actions is that he appraises the factors of production and the future prices of the commodities which can be produced out of them in a different way from other people. If the present structure of prices renders very profitable the business of those who are today selling the articles concerned, their production will expand only to the extent that entrepreneurs believe that the favorable market constellation will last long enough to make new investments pay. If entrepreneurs do not expect this, even very high profits of the enterprises already operating will not bring about an expansion. It is exactly this reluctance of the capitalists and entrepreneurs to invest in lines which they consider unprofitable that is violently criticized by people who do not comprehend the operation of the market economy. Technocratically minded engineers complain that the supremacy of the profit motive prevents consumers from being amply supplied with all those goods with which technological knowledge could provide them.
Demagogues cry out against the greed of capitalists intent upon preserving scarcity.
William J. Baumol is professor of economics at NYU, Alan Blinder a professor at Princeton. Blinder was a member of President Clinton's Council of Economic Advisors in 1993 and was Vice Chairman of the Federal Reserve from 1994-96. Baumol and Blinder's discussion of entrepreneurship and risk-taking covers only several pages and is hardly satisfactory for a book of its size and pretensions. But they do a fair job on p.382 of citing the contribution of the entrepreneur as an innovator . Innovation is different from invention.