Entrepreneur Hatred

When faced with the failure of centralized methods of economic planning and distribution, the socialist never gives up his scheme of socialism entirely, but often, retreats to a diluted version of his original ideal. This fallback is often one that is seen by most left-wing advocates as an viable alternative to capitalism: that of Syndicalism. The Syndicalist system posits that all businesses and firms throughout the economy are not to be owned by the despicable capitalists, but rather, by the workers who actually perform the work for them. In such enterprises, there is not one figurehead who oversees all operations, but rather, ownership is split among all laborers evenly. Each worker receives his share of the business, and would have an equal say to everyone else in the direction and decisions of the company at large.

The fact that the socialist views the Syndicalist idea as an acceptable compromise between pure socialism and capitalism should raise our attention. Why specifically this form of socialism? Why is it that Syndicalism specifically is seen as the minimum acceptable state of affairs? We can find our answer by asking another question: what is it that principally separates Syndicalism from laissez-faire capitalism? The core difference between the two is the presence of the entrepreneur. The principal feature of Syndicalism is that the entrepreneur does not exist as he would in a capitalist economy. We can infer, then, that the socialists’ acceptance of the Syndicalist position, then, is motivated precisely because they desire to see the entrepreneur removed from his position in the market economy. This base impulse is that of “Entrepreneur Hatred”.

Why does the entrepreneur attract their ire? What is it about him that incites so much anger within them? The socialist does not believe that the entrepreneur is deserving of the incomes that he receives. The profits that he brings in as a result of his business ventures are, in their eyes, unjustified and unacceptable. He does not deserve them, and he has no just title to them. But even this explanation only pushes the question back further: why is it that the socialist views the entrepreneur’s income as illegitimate? Many grand theories and ideas have been spun to explain why this is the case. The grand intellectual façade of Marxism is perhaps the best example. Even so, these are all disguises for the foundational reason for this impulse, which is that the entrepreneur does not do what the workers do.

The workers labor away in the fields, the manufacturing line, the mines, the workshop, in the cold, and in the heat all day to earn their income. The entrepreneur, on the other hand, does none of these things. From an outsider’s perspective, he sits in his office all day, contributing nothing at all to the collaborative effort of his firm. Even despite his chronic inaction, however, he still earns a profit from the business! Moreover, the ownership stake he has in his business has the potential to make him very rich if others wish to purchase shares of his company. His wealth grows into an unimaginable mountain, while the workers toil away. Why does he have any right to the wealth he accrues?

In other words, they hate what they do not understand. They lack any comprehension of the entrepreneurial function in the market, and because of this intellectual deficit, they see the entrepreneur as a malicious actor. Because of this, they spew unending streams of rhetoric about the exploitative ways of the capitalist and the impending need for a glorious revolution to overthrow him. Workers, you have nothing to lose but your chains! The capitalist is an easy figure to direct one’s hatred towards, doubly so when the object of this hatred isn’t understood.

Even so, I find the socialist’s failure to grasp the nature of the entrepreneur as both expected and understandable. After all, the mainstream economic profession, who have ostensibly devoted their lives to understanding the market, are commonly in a similar state of ignorance. Within the mainstream literature, there is no clear consensus on the subject of the entrepreneur. There have their models and their theories, but without any clear agreement on the entrepreneur’s role and importance. Perhaps all of this is unsurprising. In a world dictated by production functions and mathematical models, all economic decisions involve nothing more than optimization problems. In such a quantifiably bounded world, there is no room for the entrepreneur. Economists have a vague notion that the entrepreneur is still important somehow, but they lack any concrete explanation for why is this the case.

But how can it be that even the professional and revered economists fail at the same place as the socialists? They do not condemn the entrepreneur as the socialists do, but they have little to serve as a foundation for their views. Why is the nature of the entrepreneur so elusive for even those who study the market economy? A concealing mist clouds the entrepreneur, and for the sake of comprehending and defending the market economy, we should endeavor to dispel it as best we can.

The apparent imprecision surrounding the entrepreneur is a result of the conditions that he acts under: an uncertain and indeterminate future. The market is always moving, always evolving, and always changing. Moreover, our society and world are in constant flux as well. In short, the future is uncertain. Despite this fact, the entrepreneur must see to this future. It is his task to make decision in the present concerning his firm, resources, and employees to best meet the future market situation. He cannot know what the consumer demand, costs of production, or intensity of competition will be in the future, but regardless, he must act now in preparation for it.

Thus, the entrepreneur acts according to his view of what the future will hold. He believes that in the time to come, a certain state of affairs will come about and he works to act in accordance with it. However, this objective that he holds, the goal towards which he works, is not something that can be objectively observed. The labor of the worker and the productivity of capital are both clear and visible phenomenon. The subjective vision and foresight of the entrepreneur, on the other hand, exists only in his own mind. Its effects and impact cannot be seen directly in the outside world. It is a product of his mind, which he builds and organizes his firm around.

This is precisely the reason why so many miss the importance of the entrepreneur. His work is not directly seen, and his role can only be truly grasped through an understanding of the conditions that he operates under. The market is not a static construct, but a dynamic process. If one’s foundational understanding is built on the former rather than the latter, than the resulting picture has no room for the entrepreneur. In a world without movement and without change, why would there need to be an agent to respond to future changes? It is only in a world where the future is uncertain that the entrepreneur has a role, and only in a dynamic mindset that one can appreciate his importance.

Entrepreneur Hatred is not an isolated problem, but indicative of a much larger ignorance of the meaning of the entrepreneurial function. For all defenders of liberty and markets, this should cause no lack of discomfort. A failure to understand the entrepreneur leads to a lack of clarity regarding his purpose and role in the economy. Without this understanding, we implicitly leave the door open for socialism. If the entrepreneur has no substantial function, or at best a vague importance, then why does he earn an income at all? All the sophistry that socialists of all stripes have levied against the entrepreneur then begins to seem more and more attractive. If the entrepreneur doesn’t need to exist, why not hate him? Why shouldn’t you feel a deep resentment at the unjust income that he enjoys?

Good economic theory leads to good economic policy which leads to good economic outcomes. As powerful as this is, the inverse is equally true. If we lack economic understanding, we have no guidance to direct us in economic policy, which in turn leads to regrettable economic outcomes. The hatred leveled against the entrepreneur is a product of ignorance, but of an ignorance that is in no short supply. The cure to such rhetoric is sound economic theory. However, as the saying goes, you can take a socialist to the waters of knowledge, but you cannot make them drink.

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JW Rich

JW Rich

Alleviating uneasiness one end at a time.