Many successful entrepreneurs of the moment inspire fear and anger. The litany of their sins is long: They sell our personal information to people who use it to manipulate us. They create dangerous products, like e-cigarettes, and market them to minors. They devastate worthy industries, such as the newspaper business and independent book selling, and invent repugnant industries, such as internet porn. And as ten thousand years of entrepreneurial history shows, they are incapable of regulating themselves. But try this thought experiment: what would the world be like if entrepreneurs had never existed?
The picture isn’t pretty. Although some societies have resisted entrepreneurs, virtually no civilization greater than a few thousand people has actually operated for long without them.
Nevertheless, rulers have always been wary of entrepreneurs—and with good reason. The willingness of entrepreneurs to ignore social norms and existing ways of doing business really can screw things up for leaders that want to dictate how their citizens live. It’s not for nothing that China’s leaders fear social media—witness its role in the recent protests in Hong Kong.
Letting entrepreneurs entice citizens with objects and services that the leader can’t or won’t provide can create dissension. That’s why Soviet-era communists, unable to provide their citizens with much in the way of material goods, insistently characterized the West’s cornucopia of things as decadent.
Many societies (at least until the emergence of modern democracy in the U.S.) began as command and control economies. But they eventually loosened the reins on entrepreneurs because the ruler had other, more pressing priorities such as fighting wars or building bigger monuments. As long as entrepreneurs understood what was unacceptable to the ruler, they were usually tolerated. Even the god-like pharaohs of ancient Egypt turned a blind eye to their entrepreneurs.
If there had never been entrepreneurs or entrepreneurship, civilization as we know it would be very different even where there are relatively few entrepreneurs.That’s because advances made by entrepreneurs have ultimately been replicable. So societies with few entrepreneurs, like North Korea today, adopt the product designs and productive processes pioneered in countries where entrepreneurs are allowed to operate more freely.
Takeaway everything entrepreneurs have introduced and provided to us and our forebears and you would be left with only what governments were able to produce: government–built buildings, government–issued clothing, government-produced food. We would have only government developed technology, which tends to be long on weaponry—see Iran, China, North Korea, Russia—and short on everything else.
The world would be bleak and undeveloped indeed—no lights, no cars, planes, or even bicycles. No entertainment—only government sanctioned communications and none of it electronic.However, as rulers have always been interested in their own health, we would have holistic medicine and folk remedies, but nothing that required sophisticated processing.
We wouldn’t have much trade either. History shows that trade without entrepreneurs would be cumbersome and involve only government trading of critical materials on a quid pro quo basis, with a great deal of formality and care to ensure neither side felt dishonored.
On the positive side, the world would have virtually no obesity (we’d get our sweetness from natural honey not processed sugar) and no problems with addictions. Most types of pollution would not exist and massive waves of deforestation that began when entrepreneurs figured out how to produce iron in large quantities would not have occurred.
The point is that the cumulative impact of entrepreneurs has been to deliver to all of us, even the citizens of North Korea, most of what we recognize as civilization. Trace it back and virtually every big business has its origins in an entrepreneur. So does every factory in the world, no matter where it is. Our health, our fun, our lives are totally dependent upon entrepreneurial activity. Even most government services could not be delivered without products and services that were created by entrepreneurs. We significantly underplay the impact of entrepreneurs when we say that this year they’ve been responsible for, say, two million jobs, or that their companies represent a large fraction of the capitalization of the stock market. (That figure heavily depends on the age of the companies included in the entrepreneurial pool).
We do need to take action to prevent entrepreneurs from hurting our health, taking away our privacy, polluting the world. But the more fundamental challenge is to motivate entrepreneurs to focus on the overall well-being of the world instead of on their personal wealth and status. It’s a tall order. The fundamental principle of entrepreneurship—providing something that makes people so happy that they’re willing to hand over money for it—naturally entices entrepreneurs to provide pleasure-producing products and services rather than harder-to-develop and market products that improve overall well-being. To persuade entrepreneurs to behave otherwise requires that we swim against powerful tides of history and human nature.
But the bottom line is that we cannot live without entrepreneurs—and never have.
And with the clock ticking on threats like catastrophic climate change, we need to find a much better way to live with them.