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Dogma Premise # 35

Entrepreneurs provide more value to society than unskilled laborers.

The most sacred of the Dogma Premises for capitalists is the belief that entrepreneurs create more value than any other participants in the economy.

The word "entrepreneur" was coined by French economist Jean-Baptist Say, who described an entrepreneur as one who undertakes an enterprise by acting as an intermediary between labor and capital.

A thousand workers may slave to build a dam, but there would be no dam without the entrepreneur to realize that a dam is needed, to gather the funds and the expertise necessary to move the project forward, and, perhaps most important, to determine that the dam has a higher social utility, and therefore a greater economic value, than anything else that might compete for the same resources. Once that hard work is done, actually building the dam becomes a mere delegable task. Or so the story goes.

It's not immediately intuitive why one element of a deeply interconnected and interdependent economy gets elevated over the others. It's true that without anyone determining the project and aligning the resources, the project would not get done. But it is equally true that without engineers to design it, workers to build it, and people to want it the dam also would not get built. No one builds a large project by themselves; instead, it is the entire economic ecosystem that makes the dam possible, including the local community, the construction equipment, and the availability of raw materials made possible by other areas of the economy.

Entrepreneurs bring special skills and hard work to the project, but so do others.

If the entrepreneur is indeed an intermediary between capital and labor, then the entrepreneur, like any broker, essentially saves the capitalist the time and effort of having to find the best opportunities to deploy capital to most effectively further enrich the capitalist. Moreover, the entrepreneur offers something like a turnkey solution: all the capitalist must do is to make the capital available, and the entrepreneur will then organize and manage the project as a general contractor might, hiring managers or subcontractors as necessary.

Ayn Rand is perhaps the most famous and ardent worshipper of the entrepreneur. Her novel Atlas Shrugged presents entrepreneurs as society's most productive citizens, and attempts to show how desperately the world needs prime movers, and how the motor of the world would stop if the entrepreneurs went on strike and removed their driving minds from production.

There are three major problems with the exalting of entrepreneurship in a way that entitles them to a disproportionate share of society's wealth and substantially frees them from society's claims to a portion of the wealth they help create.

First, the actual contribution of the entrepreneur is overstated. For example, entrepreneurs have visions, but they are not always good visions, and much capital is wasted on their follies (see, e.g., Biosphere 2). Also, entrepreneurship involves both aptitudes (like extroversion, risk-taking and creativity) as well as skills (like leadership and strategic vision). But entrepreneurs do not have a monopoly these aptitudes, and the skills may learned by many others, given the chance. Third, entrepreneurs rely on all kinds of other professionals and experts in the course of doing their work. Even if entrepreneurs play an important role, it does not appear to be the single keystone of society, but rather one of many important pillars.

Second, the empirical evidence does not bear out the idea that entrepreneurs have any sort of magic touch with economic organizations. If anything, it appears that the leaders of business organizations switch roles constantly with no adverse affect on the business. And for every brilliant Steve Jobs who leads the creation of a new industry, there appear to be several less competent business leaders who manage to drive their company or even an entire industry into the ground.

However, the motor of the world really does stop when workers go on strike. By contrast, entrepreneurs routinely come and go without much noticeable effect. Or, as they like to say of senior executives in the business world, "Nobody is indispensable."

Finally, the idea that only entrepreneurs are capable of exerting the initiative and vision to "make things happen" and become "first movers" is not at all obvious. For example, great leaders appear in all contexts, including government and the military, and are not limited to the business context where "entrepreneurship" organizes endeavors. More important, individualism is not the only environment in which visions may emerge and be brought to fruition. Communities small and large are endlessly concocting and executing schemes to enhance the general welfare, which may be as simple as building libraries, utilities, festivals, and public transportation, or as grand as the rural electrification project, the interstate highway system, National Parks, or the Apollo program. There are a many ways for people to come together and collectively debate and decide how to pool their resources to improve the general welfare.

The idea the only private entrepreneurs can devise and manage great projects is foolish, and the notion that society would stop if the entrepreneurs went on strike is entirely unsupported by the evidence.

Viewed in their proper light, as indicated by their actual role, entrepreneurs are merely another servant of the capitalist, relieving the capitalist of their only potential contribution to society, which is determining how to invest their wealth. The entrepreneur provides an extremely valuable service for capitalists, allowing them to become wealthier without doing any work at all besides choosing a competent entrepreneur.

The entrepreneur allows capitalists to make money while they eat, sleep, bathe, and vacation. You can imagine how grateful are the capitalists for this particular service, which funds all the others. And if you bet that they were willing to compensate entrepreneurs well for this service, you'd be right. Part of that compensation is a big share of the wealth that they manage to extract from the workers, suppliers, and customers of the enterprises they build and manage. Another part of that compensation is the mystique, lore, and glory surrounding the office of entrepreneur, cloaked with the suggestion that they provide some service to society other than simplifying the process of making the rich richer.

Dogma Premise 36

All Dogma Premises

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