How Entrepreneurs are Made

What makes entrepreneurship possible? Volume after volume of business literature has been devoted to answering that very question for the individual. Some focus on developing the right mindset, some point to the importance of networking with consumers and investors, and still others discuss emerging trends onto which new businesses should capitalize. While all of this information is important to the person embarking on the perilous journey of starting a company, each guide takes conditions such as open markets, secure property rights, and an honest legal system for granted. In reality, these norms are relatively new in the context of history, and, like every other norm that has been questioned recently, must be maintained in order to stay strong.

The free market system we take for granted today emerged in the early modern era of Western society. After numerous revolutions and mass distribution of ideas hot off the printing press, entire countries made the transition from an aristocratic deal (best summarized as “do what I say and I’ll let you work”) to a bourgeois deal (“leave me alone and I’ll make you rich”). Traditional bourgeois folk, a social class composed of shopkeepers, merchants, and innovators, went from being suspect to driving progress. Working in one’s own interest changed from being a sign of poor character to a standard expectation of anyone who sought to make it commercially.

What effect did this shift have on the world? It sharply increased global wealth and living standards. 85% of the globe in 1800 lived on less than $2 per day, but only 9% did in 2017. That change comes in spite of the unprecedented increase in global population from the same time period. In the US specifically and recently, the national poverty line went from including 22.4% of the population in 1959 to 10.5% in 2019. That change in wealth is reflected in living standards; 90% of modern American households have air conditioners. The average household owns nearly 2 cars. Things that would have been made exclusively for the rich decades ago are commonplace today thanks to the work of entrepreneurs.

Liberty and dignity for every potential entrepreneur (that is, everyone) make societies rich. Higher national incomes occur when people are encouraged to innovate. Innovators can only reap the profits they desire in an environment that lets them keep the results of their blood, sweat, and tears. Government controlled economies that allow monopolies to prosper and stifle innovation stop would-be innovators from pursuing their aspirations. Certain regulations on the free market can reverse society’s trajectory and return the world to the aristocratic deal.

Free markets are important for prosperity, but they aren’t enough by themselves. Recognizing individuals’ right to self-author requires society to extend liberty and dignity to everyone. Women and people of color must be able to find liberation in creating in ways once barred to them. They too must be able to embrace the maxim of our entrepreneurial culture: “we are rich because we are free.”

Source: EdSmart.org