speri.comment: the political economy blog

Why entrepreneurs will not save the world

Governments have championed ‘entrepreneurs’ as figures capable of reviving stagnant economies and alleviating social problems. But who are they, and are they worth celebrating?

Owen Parker, Lecturer in Politics, University of Sheffield

Owen Parker

Forbes Magazine recently published an article entitled ‘Why entrepreneurs will save the world’ which was written by the author of a book with the sub-title, ‘Embrace Uncertainty and Create the Future’.  Celebratory pro-entrepreneurship language of this sort is widespread and pervades contemporary society, politics and popular culture (think Dragons’ Den).

In the context of the financial, economic and social crisis that has enveloped much of the western world and beyond since 2007, governments have placed a heavy burden on the figure of the entrepreneur. Entrepreneurs are frequently presented as a cure-all for our economic and social woes. On the economic front they are tasked with delivering an elusive growth and on the social they are asked to fill those functions of state that are being withdrawn in the context of austerity.

This explains the turn in many member-states of the EU to strategies aimed at teaching entrepreneurship, not only in business schools, but also in primary and secondary education. Learning in this context involves not so much knowledge acquisition as the development of competences facilitating adaptation in changing real-world contexts.  Such competences include such things as resilience, creativity, problem-solving, risk-taking, networking, self-confidence and independent learning.

The stubborn problem for those seeking to promote such policies for economic purposes is that learning of this sort, while perhaps enriching for individuals in certain respects, does not necessarily make them successful entrepreneurs in the terms that government would like – which are people able to generate an ‘entrepreneurial’ profit and contribute to GDP.

We might of course bestow upon this successful entrepreneur the virtues mentioned above that governments are increasingly inclined to inculcate in us.  But, actually, the success of the entrepreneur seems, at the very least, to contain a significant element of luck. As Robert Frank has put it, ‘talent and hard work are neither necessary nor sufficient for economic success’.

In this assertion he finds some degree of backing from a supposed intellectual icon of the ‘enterprise culture’, Friedrich von Hayek, who said that ‘few circumstances will do more to make a person energetic and efficient than the belief that it depends chiefly on him whether he will reach the goals he has set for himself… but it leads no doubt to an exaggerated confidence in the truth of this generalization which to those who regard themselves (and perhaps are) equally able but have failed must appear as a bitter and severe provocation’.  He goes on: ‘it is … a real dilemma to what extent we ought to encourage in the young the belief that when they try they will really succeed, or should rather emphasise that inevitably some unworthy will succeed and some worthy will fail’.

Hayek seeks to resolve this dilemma in favour of the ‘noble lie’ which in many respects encapsulates the contemporary enterprise culture.  But he here acknowledges, to put it bluntly, that it is a lie: that getting rich and contributing to growth involves in some (quite large) part the execution of a lucky gamble.

Of course, if a combination of wealth and luck is so important, we might begin to wonder more generally why the entrepreneur is so valued – in both monetary and cultural terms – vis-à-vis, say, the wage labourer whose devaluation – even abject poverty, if we think globally – may in many concrete cases be the very condition for the wealth of this celebrated figure.

What’s more, given the slim chances of success at an individual level, we might also begin to question a crisis management strategy based on a policy of making entrepreneurs of us all at a time when the social safety net is simultaneously being removed. Perhaps in the end those of us not wealthy enough to take the gamble can only really endeavour to become entrepreneurs if we know that this state-provided safety net exists.

What of the social function given to entrepreneurs today? In this context, the goal is clearly not – or not primarily – commercial success, but rather the tackling of a particular social problem with, as one among many definitions has it, ‘entrepreneurial zeal [and] business methods’.

But we might wonder whether our judgement of those working for social purpose is best measured in terms of the exigencies of enterprise (rather than, say, in terms of a judgement of ‘quality of care’).  If measurements do operate in this way, social entrepreneurship may create incentives for particular social entrepreneurs to exclude or sanction the most disadvantaged when the delivery of services to them clashes with broader ‘efficiency’ metrics which may be relevant for attracting funding.

More generally, this turn to social entrepreneurship might be understood as part of a broader process of forgetting the reasons for the creation of public services as corrective to market failures in the first place. As the state is de-legitimised, even its capacity to provide the financial means for social ‘enterprise’ – essentially its capacity to tax and spend – is undermined, and thus its financing too is privatised.  Individual charity and philanthropy become the order of the day, even though the beneficence of ‘Secret Millionaires’ or a ‘Big Society’ can hardly fill the gap left by government. The neo-Victorian implications of this hardly need elaboration.

This is not to disparage the work of actual entrepreneurs in either the economic or (especially) social senses described. Nor is it to suggest that the skills associated with entrepreneurship will not be valuable for those living in an ‘enterprise culture’.  It is, however, to suggest that our celebration of the great figure of the entrepreneur has come too far, that other values, skills and cultures may also be important. It is also to suggest that the consequences of this overblown celebratory discourse may actually be rather bleak in some respects, particularly in terms of the de-legitimation of the public or the welfare state.

If entrepreneurship is to work (for us all), it may rely upon the state and what it represents to a much greater extent than the champions of enterprise would have us believe.  Entrepreneurs (alone) will not save the world.

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Categories: Business, SPERI Comment | 4 comments

Articles and comments posted on this blog reflect the views of the author(s) and not the position of SPERI or the University of Sheffield.

Comments (4)

  1. I think the whole story about entrepreneurs is partly just a fake feelgood story for people that are living through difficult times, without a safe job. We are told that we are now all adventuruous hero’s and entrepreneurs, and we are allowed to have dreams about the future. But in the meantime what we get is austerity and cuts. The lucky ones get permission to thump on their chests, be proud, and look down on those that didn’t succeed.

  2. Really agree with the article and the comment posted by Nichol. It is similar to an article I read a while ago by Aditya Chakrabortty, about the myth of the successful young “app-maker”. In reality only a fraction of these app-making entrepeneurs break through, leaving the rest by the wayside.

    The myth is that entrepeneurs are the ones who create wealth, which ignores all the systems that need to be in place for them to succeed.

  3. Alex, who does create wealth if not entrepreneurs? The state?

  4. Wealth is created by a combination of state investment and free enterprise. The challenge is getting the balance right. Neither pure Libertarianism or Socialism is the way to go.

    Have “app makers” really created the wealth? In reality they relied on software stacks (many, interestingly, which are open source) and previous government investment (ARPANET).

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