Since the mid-1700s, humanity has experienced a dramatic and continuous rise in living standards. From longer life expectancy to broader educational access and better technologies, prosperity has steadily improved. But what truly explains this sustained growth? Traditional economics credits capital accumulation or institutions, but Per Bylund, professor at Oklahoma State University, argues we've been looking in the wrong place.
Bylund's work reframes entrepreneurship not as a side effect of economic growth, but as its primary engine. In redefining how value is created—not just discovered—he challenges the core assumptions of mainstream economics and pushes us to rethink how innovation really happens.
The Missing Driver of Progress
Mainstream economics tends to view markets as stable, equilibrium-seeking systems. But these models, according to Bylund, overlook the evolutionary, open-ended nature of real-world economies. As Bylund explains, entrepreneurship was systematically pushed out of economics as the field turned toward mathematical modeling: "Economics, in order to become scientific, had to throw out these ideas... which means that the driving force of the whole market economy is not part of the study of economics anymore."
Entrepreneurs don't just respond to market signals—they imagine entirely new ways to serve human needs. They create new products, new models, even new industries.
In his book Entrepreneurship and Evolutionary Economics, Bylund introduces a conceptual framework he developed to better understand economic evolution:
Arbitrage – reallocating resources for efficiency
Adaptation – responding to external changes
Innovation – creating new forms of value through imaginative leaps
The third model introduces two critical sources of uncertainty that better reflect real-world economics: entrepreneurs face uncertainty about whether their innovations will create value, and all market participants face uncertainty from potential disruption. This dual uncertainty drives constant evolution, as entrepreneurs must either actively create the future or passively endure disruption from those who do.
Implications Beyond Academia
Bylund's insights extend far beyond the classroom.
In business, his work suggests that true growth doesn't come from market analysis, but from imagining value that doesn't yet exist. The most successful companies don't follow market trends; they set them. As Bylund notes, "You need to figure out how to maximize the value for the consumer... your job as an entrepreneur is only to figure out how can I produce this thing at a cost that is lower than the price I can sell it at."
In education, we need to stop treating entrepreneurship like a checklist of funding rounds and pitch decks. Instead, we should be preparing students to deal with uncertainty, use judgment, and develop imaginative insight.
In policy, Bylund warns that regulation doesn't just restrict behavior—it narrows the field of the imaginable. "What a regulation does is limit the scope of what you can imagine, or what you're allowed to imagine," Bylund explains. The consequences compound over generations as entrepreneurs redirect their efforts to less valuable applications, placing society "on a lower trajectory in terms of prosperity."
This insight connects directly to my observation that when government pays, innovation decays. As government becomes a primary customer, resources shift toward compliance rather than creation. Together, these mechanisms reshape incentives throughout the economy, redirecting talent away from genuine innovation toward bureaucratic maneuvering.
A Future Fueled by Imagination
Despite these challenges, Bylund is optimistic. Advances in AI, logistics, and remote work have dramatically lowered the barriers to entrepreneurship. "What we're seeing now is really that the threshold to do these things and actually realize these ideas that we have are so low... this is where the future of work is. It's in the human ingenuity in imagining how to serve one another."
True prosperity includes more than GDP—it encompasses better health, more leisure time, and greater autonomy. As Bylund observes, "What we have created over the past 300 years or so is just so fantastic... we're living longer lives, healthier lives, we have more spare time, more choices, more purchasing power."
What We're Missing, and Why It Matters
If we want to preserve and accelerate prosperity, we must stop treating entrepreneurship as peripheral and recognize it as central infrastructure for progress. The prosperity we've experienced wasn't automatic or inevitable—it emerged from countless entrepreneurs bearing uncertainty to create new value.
For educators, business leaders, and policymakers, this requires rethinking how we teach, support, and measure value creation. Instead of optimizing existing systems, we must create space for the imaginative leaps that drive genuine progress.
Prosperity isn't guaranteed—it must be imagined, built, and constantly re-earned through entrepreneurial action. Understanding this process is the first step toward ensuring its continuation for generations to come.
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