Capitalism from a Schumpeterian Perspective as a Basic Stochastic Process

Risk is inherent in the investment process. The investor has no guarantee that a productive opportunity will be realized, that a potential product will find a market niche or a potential technique will lead to the production of a product with a market niche. We build an economy-wide model of this notion as a basic stochastic branching process. Sample histories are generated yielding limiting long run wealth distributions. Inspiration is drawn from Schumpeter's idea of "creative destruction".