Winter is Coming: A Tale of Two Futures – Entrepreneurial State or Creative Destruction?

Gustavo Morales-Alonso

doi:10.36923/iefrontiers.v27i2.256

Open Access Article Economics Macroeconomics

Gustavo Morales-Alonso ⁽¹⁾

(1) Department of Industrial Engineering, Business Administration and Statistics, Universidad Politécnica de Madrid, Spain, Spain

https://doi.org/10.36923/iefrontiers.v27i2.256

Issue
Vol. 27 No. 2 (2024): Continuous

Submitted
July 26, 2024

Published
October 4, 2024

Keywords:

COVID-19, economic growth, entrepreneurship, fiscal expansion, free markets, great recession, unconventional monetary policies

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Abstract

This paper aims to explore the fundamental principles of sound monetary policy, fiscal prudence, and entrepreneurial innovation, which have historically supported the economic prosperity of nations. It seeks to identify the factors leading to an impending financial crisis and proposes countermeasures based on market liberalization and individual entrepreneurial resilience. Using a critical analysis of prevailing economic conditions, this paper evaluates the unchecked expansion of the monetary supply, fiscal policies, and government interventions. The methodology includes a review of historical economic trends and the application of theoretical frameworks concerning monetary policy, fiscal responsibility, and market innovation. The research identifies that the unchecked expansion of the monetary supply has contributed to inflationary pressures, diminished savings incentives, and led to the misallocation of capital. In addition, fiscal looseness and increased government intervention have exacerbated these economic vulnerabilities, creating conditions ripe for an economic crisis of substantial magnitude, possibly surpassing previous crises such as the Great Recession and the COVID-19 pandemic. The paper concludes that this impending crisis is not an unforeseeable "black swan" event but rather one with clear warning signs that require immediate action. The findings advocate for a departure from interventionist policies and emphasize the importance of returning to foundational economic principles, including market liberalization and fostering individual creativity and entrepreneurial innovation. This paper serves as a timely call for policymakers to address these challenges before the full impact of the crisis is realized.

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Authors

Gustavo Morales-Alonso

Department of Industrial Engineering, Business Administration and Statistics, Universidad Politécnica de Madrid, Spain

https://orcid.org/0000-0001-5753-495X

gustavo.morales@upm.es (Primary Contact)

Author Biography

Gustavo Morales-Alonso, Department of Industrial Engineering, Business Administration and Statistics, Universidad Politécnica de Madrid, Spain

Associate professor in economics, entrepreneurship & innovation at Universidad Politécnica de Madrid (UPM). With a sound interest in the drivers of economic development, the sharing economy and sustainability, has published on the determinants of technological entrepreneurship and on the response of consumers to sustainable initiatives. Published in SCI-indexed journals such as Technological Forecasting and Social Change and Journal of Business Research and Sustainability. Belongs to the Editorial Advisory Board of the European Journal of Innovation Management. Recipient of the “Rosalind and Pei Chi Chou Award” (2011), “Agustín de Betancourt Grant” (2011 & 2012), and “Premio Extraordinario de Doctorado UPM” (2013). Has formerly held positions as a project engineer in Madrid and Moscow, as well as a research scholar in Madrid (UPM) and Munich (TUM). Has also been a visiting professor at KTH (Stockholm, Sweden), Università degli studi di Cassino e del Lazio Meridionale (Italy), Università degli studi di Roma Tor Vergata (Italy), and Free University of Bolzano (Italy).

Morales-Alonso, G. (2024). Winter is Coming: A Tale of Two Futures – Entrepreneurial State or Creative Destruction?. Innovation Economics Frontiers, 27(2), 86–97. https://doi.org/10.36923/iefrontiers.v27i2.256

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