The Wealth of Nations

This chapter examines wealth creation as a defining feature of capitalism. Since the beginning of the twentieth century, American research universities have increasingly moved to the forefront of innovation, playing a more critical role in developing new technologies used by large companies and entrepreneurs. In recent decades, one university and one region in particular have become almost synonymous with knowledge creation and the high-tech industry: Stanford University and Silicon Valley. The chapter shows how Leland Stanford and his contemporaries helped forge the relationship between creative destruction in the American economy and the institutions that promote opportunity. It considers how the economic openness that allowed entrepreneurs to accumulate fortunes has also nurtured social institutions, such as universities and foundations. It also discusses the issue of income inequality, the dilemma of what to do with wealth, the distinction between charity and philanthropy.