Everyday economics and Joseph Schumpeter's entrepreneurs

Joseph Schumpeter: Economic Models and Eileen Ford

Jul 18, 2014 • 319 Views
EST. TIME TO READ: 2 minutes

Eileen Ford died this week. An entrepreneur who transformed the business of beauty, Eileen Ford’s talent was pairing a face with a camera. During its earlier years, the women her modeling agency represented included Martha Stewart, Ali MacGraw, Suzy Parker, Candice Bergen, and Jane Fonda.

This is Martha Stewart. She says that she modeled to help pay for tuition at Barnard College.

Entrepreneur Eileen Ford represented Martha Stewart when she was a model.

From: Businessinsider

Candice Bergen, in 1967, soon after she left the University of Pennsylvania.

Entrepreneur Eileen Ford has Candice Bergen as a model.

From: mylusciouslife

 

Eileen Ford and her husband Jerry changed what it meant to be a model. Upending the prevailing standard, their agency insisted on a fee structure and moral standards. Initiating the 5-day workweek and organized scheduling, they based a model’s pay scale on how her picture was used. To be sure that a cancelled shoot would not mean a cancelled check, they implemented a pay-in-advance system. By 1978, top models were earning $3500 a week (equal to $13,740 today) and the supermodel market evolved. Put it all together and you get a business that, by generating respect for beauty, started an industry.

Eileen Ford reminded me of Joseph Schumpeter.

An academic superstar, an Austrian finance minister, and a Harvard professor, economist Joseph Schumpeter once proclaimed that he aspired to become the world’s greatest economist, horseman and lover. His biographer said he then said, “Things are not going well with the horses.”

In 1883, Joseph Schumpeter was born in Austria. After working in government, business and academia, he went to Harvard in 1932–a perfectly timed departure from Europe. Explaining the evolution of capitalism, he attributed its growth to entrepreneurs and its eventual demise to the resentment that would build against its elite.

Schumpeter tells us that entrepreneurs are the source of “creative destruction” because their businesses render others obsolete. With their new products and processes, entrepreneurs create jobs, progress and productivity. They change consumer habits, develop new means of production and new forms of economic organization. Not necessarily concerned with risk, they are unusually focused on making a difference in the world.

Our bottom line: As the person who brought a new form of economic organization to the modeling industry, who had a passionate single-minded focus, and who built a massive enterprise with her husband, Eileen Ford was indeed a Schumpeter entrepreneur.

 

 

Sources and more: H/T to marketplace.org for alerting me to Eileen Ford's unique impact which the NY Times expanded in its obituary. For more on Schumpeter, a brief bio is at econlib while the detail in Prophet of Innovation displayed that this gentleman was not dull.    

« »