The Entrepreneur in Society

Its generally conceived that the entrepreneur is the lone economic wolf in the economy, bringing together the morass of labour, capital and resources and placing it under his/her will. This picture of rugged individualism usually serves little purpose than to justify large expansions of wealth by corporate CEOs and ignores the actual picture of entrepreneurs, that of hard-working, small-scale individuals within networks and communities where wealth and knowledge are shared. To take the entrepreneur outside of the societal context, where they gain their education and skills, is to simply assert the false idea that entrepreneurs are the Ubermensch, the lone individual walking on the tide of the masses. However, the reality is that the ability to be an entrepreneur is limited due to capital constraints and entry barriers, which limit entrepreneurialism to those who have capital[1], which usually means control of the economy by venture capitalists or the established rich, and thus the expropriation of wealth away from both the individual and the community.

Where do entrepreneurs gain their skill and wealth? Well invariably from the wider community and institutions that ground the economy in some form of reality. The provision of education and welfare, as well as the grounding of local knowledge and culture, lead to the ability of entrepreneurialism and wider business activity[2]. This kind of idea can be seen in anthropological explorations into tribal societies and the position of Big Men within them. As Church says “My own fieldwork in the Eastern Highlands of Papua New Guinea (PNG) provides a good example of these dynamics. The highlands are famous for “competitive gift-exchange” between “big men”. Competitive gift-exchange involves people or groups attempting to outdo each other by giving away more than the other party. Big men are not institutionalized chiefs, but rather respected members of a community with a knack for public speaking, (historically) fighting, and pulling together resources for these types of competitions”[3] and that “unlike commodity exchange, where actors maximize individual profit, big men attempt to maximize social relations (there are lots of debates about the gift/commodity distinction, but that is a story for another time). In part, big men gain influence giving away more than others. Not just big men exchange—everyone is constantly giving and receiving goods. They just give more than others”[4].

What this shows is that the dynamics of decentralised societies lead to different forms of value maximisation. Instead of profit maximisation we see the maximisation of social networks instead. Now it may be that this is difficult to extrapolate to Western societies, due to the scale of our modern economies and their complexity. Well these complexities and scale are due to state coercion. Modern economies of scale are created by a combination of structural monopolies (the monopolies of land, money, tariffs, patents and transport subsidies) and entry barriers that flow from these in the form of regulatory webs such as employment laws, contract laws and licensing which limit the accessibility of entrepreneurialism to a huge amount of people[5], making the overhead and capital costs massively expensive. In fact Blanchflower and Oswald have noted that “Childhood personality measurements and psychological test scores are of almost no help in predicting who runs their own business later in life. It is access to start-up capital that matters”[6]. Further, on the point of patents and intellectual property, “The evidence is clear that the patent system taken as a whole does not does not play an important role in spurring innovation”[7] and that “its primary effect is to encourage large but stagnant incumbent firms to block innovation and inhibit competition”[8]. Thus the claim that patents encourage entrepreneurial activity or innovation is very much thin on the ground. Rather, in natural economies of scale and freed markets, other values come into play, such as those previously noted by Church. Social networks and with it social entrepreneurialism become an important factor in encouraging general entrepreneurialism. In fact they may be much better at encouraging entrepreneurial activity than current capitalism where “on average, the payoffs to innovation have been small”[9], suggesting “innovation has come despite the profit motive, not because of it”[10].

There are two models that, when grounded in the wider context of freed markets and multiplicitous forms of economic organisation, seem best at encouraging these varied forms of value maximisation, allowing for some form of profit accrual but at the same time grounding entrepreneurialism in its community-based origins. The first is Devine’s idea of participatory planning, which I’ll view in comparison to my own ideas of adhoc democracy. The second is that of the sharing or gig economy.

The main idea of participatory planning is that every individual has a say in the planning of an economy. Rather than the interests of capital planning the economy based on capital accumulation and profit maximisation, civil society and labour would have more of the say on the businesses developed and contracts created. Businesses and entrepreneurialism would be grounded in the values and norms of the community it wanted to do business in[11]. Now there are basic criticisms that would suggest that in this model the ability for businesses to develop spontaneously is limited. Thus my idea of adhoc democracy I think is more feasible, particularly with the idea of freed markets. Instead of permanent planning boards that take decisions on the minutiae of economic activity, in adhoc democracy you could simply have civil society groups pop up that challenge the power of businesses and entrepreneurs who are using communities to accrue profit. In fact they already do this in a global context, through things like social regulations and Fairtrade contracts[12]. Further, under conditions of freed markets in an anarchist society, the strength of local banking networks and universities can act as anchor institutions that anchor an economy in a multitude of different value structures[13]. These types of institutions allow for local input and the organisation of civil society organisations that can challenge the methods and practices of firms.

The second model I want to look into is the burgeoning gig or sharing economy. Much hype has been made about how it encourages self-employment and decentralises entrepreneurial activity. In a recent blog I read of the idea of this economy creating rebels and misfits who can act as entrepreneurs, creating value from their own ideas and thoughts, and allow for the development of new social networks and forms of individuality[14]. I personally love this optimism, but there are issues. Carson elucidates the problems I have with the sharing economy excellently. “The problem is not the sharing economy, or self-employment, or work on a per-gig basis, as such. It’s that the wrong people set the terms and reap the benefits. The platforms are owned and controlled by a capitalist corporation that extracts profit for itself, to the disadvantage of an increasingly underpaid, powerless and precarious workforce”[15]. The corporate capture involved allows for the maintenance of the overarching wage labour monopoly[16]. It may be being reconceptualised, but it’s still there. However, I’m not writing off the idea of the sharing economy. It helps reduce the overhead and capital costs which limit widespread entrepreneurialism through accessibility to apps and decentralised technology. What I’d prefer to see is more in the way of decentralised distribution platforms, such as those of La’Zooz and Arcade City (both alternatives to the corporate Uber) which use things like the Blockchain and alternative currencies. The peer economy also gives some idea of what direction these firms and individuals could take. Wealth and knowledge are shared in the social networks created, thus bridging the ideas of profit and sociality. This would allow for more types of contracts which give power back to the creator, and allow for the diversification of the misfits and rebels.

The entrepreneur in society cannot be separated from that society/community. While modern capitalism has certainly tried, it has relied on taxpayer money to do so. Under decentralised, anarchic conditions, I believe that things like participatory planning, nested adhoc democracy and a distributed internet economy would destroy this artificial distinction. It could bridge the dichotomy of individual and collective, which till now have remained separate via the separation of the economic and political realms. All forms of value maximisation would occur. Some social, some economic, some political. We’re already seeing it on the peripheries of capitalism. The task now is to take it out of the peripheries.

[1] Devine, P. Participatory Planning Through Negotiated Coordination, Science & Society 2002

[2] It may be at this point asserted that the state can only provide this. This is complete nonsense. Without the artificial economies of scale, entrepreneurialism would be grounded in the community of either locality or internet technology. The state has simply expropriated the means of education and welfare to allow for the maintenance of corporate scale economies of scale.

[3] Church, W. http://anarchistalternative.com/2016/02/18/redistribution-without-the-state-economic-leveling-in-anarchic-societies/

[4] Church, W. http://anarchistalternative.com/2016/02/18/redistribution-without-the-state-economic-leveling-in-anarchic-societies/

[5] I’ve gone into this in large detail here: https://c4ss.org/content/41340

[6] Dillow, C. http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2015/12/capitalism-socialism-innovation.html

[7] Boldrin, M. & Levine, D. The Case Against Patents, 2013, 14

[8] Boldrin, M. & Levine, D. The Case Against Patents, 2013, 20

[9] Dillow, C. http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2015/12/capitalism-socialism-innovation.html

[10] Dillow, C. http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2015/12/capitalism-socialism-innovation.html

[11] Devine, P. Participatory Planning Through Negotiated Coordination, Science & Society 2002

[12] Shaw, C. https://c4ss.org/content/42632

[13] Democracy Collaborative, Policies for Community Wealth Building: Leveraging State and Local Resources, 2014, 7-8

[14] http://outsiderolympics.com/2016/02/28/heres-to-the-crazy-ones-the-misfits-the-rebels/

[15] Carson, K. https://c4ss.org/content/43397

[16] Shaw, C. https://c4ss.org/content/41340

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7 thoughts on “The Entrepreneur in Society

  1. I have a couple problems with this. First of all, I think the way you see capital as a driving force in the economy (the maximization of profit) is flawed. Profit is maximized when the business in question continues to satisfy it’s customers’ wants and needs. Demand is more primary that supply; it is the driving force in a free market (which is why I have such faith in free markets and thus libertarianism as a political ideology). The concept of a shared economy is brilliant because it brings this concept into the realm of labor as well.

    “The platforms are owned and controlled by a capitalist corporation that extracts profit for itself, to the disadvantage of an increasingly underpaid, powerless and precarious workforce.”
    –> The corporations you are referring to were started by the entrepreneurs in question and of course they need to set their own terms. They are completely entitled to that. It’s their business. The people working for them effectively pay them a percentage of their profits for their services, including advertising, use of their software, use of their help services in case something goes wrong, etc. There are far less contracts and regulations with Uber than there are with traditional taxi services. Your complaints seem to be better directed toward the traditional system. With AirBNB, hosts set their own prices. They pay fees and have to abide by the terms, but they do so in exchange for the advertising. They are free to do the same exact thing on their own, but it’s much more difficult and time consuming. They consider their time to be worth the fees and such.

    The problems doesn’t lie in the companies, it’s with the government and whether they choose to place restrictions and create laws that inhibit the masses from profiting from the shared economy.

    And I am not sure what you mean by ‘an increasingly underpaid, powerless and precarious workforce’… startups are widely considered to be the best places to work, with an enthusiastic, creative, and young workforce. You’ll have to cite evidence if you are going to claim that these workers are underpaid.

    Also, of course the need for capital is limiting. That’s what makes it hard to make it in the world! The extent to which you can make it easier and more accessible has already been met with platforms such as crowdfunding and angel investment networks.

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    • Currently businesses rely massively on subsidised inputs for continued profit maximisation. Fossil fuel subsidies, intellectual property laws, transport subsidies and the like. Thus we see large scale overproduction, which in recent years has relied on combination of financialised assets to maintain value and government deficit to soak up said overproduction. This is the case in China and the United States.

      On the point of the corporations, without subsidised inputs (particularly intellectual property law and entry barriers to worker-owned firms) they wouldn’t exist. I agree the problem is government as via subsidisation things like worker-owned firms and distributed platforms (like the Blockchain and linux-type systems) would be much more capital-intensive and widely available. As I’ve said I don’t really care about the platform, I just don’t see how things like Uber and AirBNB would exist in truly free markets with reduced economies of scale and major labour independence. Within different economies of scale, individual taxi-drivers could networks with others as well as with distributed platform providers in a peer-economy.

      On the point of an underpaid workforce, wages have consistently stagnated (evidence by Solow shows productivity gains haven’t been equalled with increased wages or reduced work-time) and there has been an increasing reliance on consumer debt instruments to meet living costs (what Crouch has called privatised Keynesianism). It may well be that start-ups in the sharing economy are better, but my point would be without entry barriers the benefits would even larger and better spread. You’d see more equal capital-labour relations. This article by Carson explains in greater detail the type of ideas I’m referring to:https://c4ss.org/content/13018

      Also, the reason capital is limited is again due to entry barriers. Legal tender laws, reserve requirements and taxes on things like gold limit the capability of new forms of capital. Cryptocurrencies, local currencies and new types of banks and banking systems would allow for more capital creation and distribution and fit into radically different economies of scale which would occur under a free market.

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      • As I understand it, the minimum wage has tripled since 2003, growing faster than the rate of inflation over this period. I am not sure what you mean by stagnation. Are you talking about just the recent years? I do understand where you are coming from. I actually had a business idea that would be more or less based on the peer-economy idea with labor entering the free market alongside capital. If you’re interested, I’d love to hear what you think about it.

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      • In general I mean stagnation relative to overall productivity increases. While the minimum wage has been kept above inflation, it doesn’t meet either productivity increases or living costs and more or less serves as another entry barrier for big business.

        Yeah I’d be happy to take a look and give feedback. Have you got any more info on the idea?

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      • Well the thing about living costs is a matter of choice and circumstance, cell phones, internet bills, etc. didn’t exist before. Our standard of living is increasing rapidly and it isn’t any wonder that wages can’t keep up, with the fast development of technology. Yeah but I wouldn’t want to write about it on here. Does wordpress have private messaging?

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