www.equilibrium-economicum.net

Monthly articles (English and French) on the theme "Querying economic orthodoxy"

No. 24 - December 2007

Entrepreneurial Snobbery

ANGUS SIBLEY

In comparison with art, wealth and rank and power are not worth a straw. We are the only people who count. We give the world significance. You are only our raw material.
W Somerset Maugham, The Alien Corn (1931)

Enterprise is a new moral virtue, not found in the classical list of virtues....To exercise it must also be a duty. Not to exercise it appears to be a fault.
Michael Novak, This Hemisphere of Liberty (American Enterprise Institute Press, Washington DC, 1990), chap. 8 (page 92) and chap. 4 (page 29).

The glorification of entrepreneurs and their activities is a key feature of the free-market obsession. This attitude devalues all those of us who are not entrepreneurs.

Arrogant castes

In Somerset Maugham's fine short story The Alien Corn, the words quoted above are spoken by a brilliant musician, the fictional pianist Lea Makart. They satirise memorably an attitude that has been widely adopted by practitioners of the arts, ever since they ceased to see themselves as master craftsmen and began to give themselves the airs of demigods.

In earlier times, such arrogance was more often associated with the aristocracy. In imperial China and in British India, it could be found among élite civil servants, the Chinese mandarins and the Indian Civil Service; the burra sahibs of the ICS were known as 'the heaven-born'.

Today, one is most likely to find such attitudes among successful entrepreneurs. Every age has its pretentious caste of people who think they are the only ones who matter, and who look down on the rest. It is hard for them not to provoke resentment.

The glorification of entrepreneurs and their activities is a key feature of the free-market obsession which, though generally called Anglo-Saxon, sadly has also its victims on the Continent. This attitude devalues all those of us who are not entrepreneurs. It encourages the contempt for the public sector that has been rampant since the heyday of Reagan and Thatcher.

Well-gotten gains?

Entrepreneurial snobs sincerely believe that they, being the only people that count, deserve far fatter remuneration than everyone else. The cleverer entrepreneurs do indeed rack up huge incomes and capital gains, and they get very angry if the government doesn't let them keep almost all their loot. They are like pre-revolutionary French aristocrats, who didn't see why they should be taxed; taxes were for the lower orders, the despised peasantry and bourgeoisie. So, today, let the humdrum jobs of the civil servants be paid for by the humdrum people who don't have it in them to be God's chosen entrepreneurs.

Entrepreneurs and their acolytes, the financial journalists, love the cliché that only the private sector can create jobs; the public sector cannot. What a cheek they have! Free-market capitalist economies struggle to keep their published unemployment rates under 5%; most fail, the rest succeed largely by statistical manipulation. But in the former communist states where the public sector was all, it was rare for anyone not to have a job. There were, of course, many jobs that produced little or nothing of real value. But next time you are fleeced by an entrepreneurial cowboy of a builder, flooded with junk mail by a shoddy mail-order house, or sold a pup by a dodgy trader on the internet, ask yourself if the same is not true in the enterprise economy.

The great Railtrack fiasco

Should John Major (1) go to hell, it will surely be not on account of his adultery with the charming Edwina Currie, but rather because he privatised British Rail, thus perpetrating one of the greatest cock-ups in railway history. The management of Railtrack, the quoted company that took over the tracks, signals and stations, found the non-entrepreneurial routine of keeping the infrastructure in good shape too boring and thinly profitable to deserve much attention (2). It was far more exciting and value-adding to do property deals, selling off for redevelopment the spare land beside the running lines.

That land was originally occupied by sidings, disused now that most freight traffic has deserted the railways and moved to the roads, where it creates profits but also congestion, disturbance and pollution. By ripping up the sidings, Railtrack made it difficult, maybe impossible, for the railways ever to win back that traffic. But that was the least of its faults. We look elsewhere for the real sin of the people who thought entrepreneurial deals more praiseworthy than the tedious civil service-like task of maintaining the rails and signals. They failed to maintain them properly, and thus provoked catastrophic accidents.

Thereafter, of course, an outraged public saw to it that the government forced Railtrack to purge its negligence. For years, trains had to be slowed down to avoid more smashes, repair works further disrupted the schedules, and of course the whole job, done at a forced pace, cost far too much. Railtrack had already seen to it that much of the maintenance work was no longer done by its own contemptible, parasitical employees; it was farmed out to admirable independent contractors. Now, if you tell a contractor that you need something done yesterday, he may oblige; but he will make you pay top dollar. There was no cash left to spare for new developments or for any real upgrading of the system.

Dreaming of enterprise

Free-market economists, and the politicians seduced by them, never tire of telling us that we all have to be entrepreneurs now. Indeed they dream of a world in which there will, they hope, be practically no employment. In 1994 the American management consultant William Bridges published a book entitled Jobshift: How to prosper in a workplace without jobs (3). Its argument is that, in future, the world's big companies will employ very few people and delegate nearly all their work to freelance outsiders. These, needless to say, will not be menial employees; they will be proud, free, self-employed contractors, entrepreneurs in their own right; the good guys of the new age!

Bridges spoke, in a press interview in 1996 (4), of a 'transition' or 'dejobbing' in which big companies would become simply 'kernels' using the services of outsiders, who would not be employees. He argued that this transition could be completed in less than a decade in sectors such as telecommunications, electronics and multimedia. Ten years on, what has actually happened?

Total numbers at work in the USA (whether on employers' payrolls or self-employed) rose by 14% between 1996 and 2006. In 1996, 11.5% of the total were self-employed or 'incorporated self-employed' (5). In 2006, the percentage self-employed had fallen a little to 11.1% (6). So it seems that ordinary, old-fashioned employment - working for an employer, rather than being an independent entrepreneur - has, in fact, grown slightly faster than self-employment. This continues a long-standing American trend which we can trace back at least to the 1940s.

Bridges, and others like him, have argued that before the Industrial Revolution, nobody had a job; now, they say, we are going back to a similar situation. And they welcome it. What, nobody had a job in the eighteenth century? There were, of course, relatively more self-employed workers than we have today: craftsmen of all kinds, farmers, small traders and shopkeepers. But what of the tradesmen's assistants (journeymen and apprentices), the bankers' and lawyers' clerks, the staff of schools, churches, hospitals, town halls; the farmers' labourers and the huge numbers of domestic servants? Didn't they have jobs?

Here's to the non-entrepreneurs

The arguments of people like Bridges are so loosely connected with reality that one can only conclude that these alarmist economists and consultants are not really trying to tell us the truth; they are merely engaged in theorising and wishful thinking. They want to believe, and want us to believe, that employment is an obsolete relic of the pre-libertarian age. They despise employment and regard employees, not being entrepreneurs, as second-class citizens.

Well, many of us have little flair for entrepreneurship and do not want to be entrepreneurs. And, in truth, much valuable work that needs to be done is not entrepreneurial. It is repetitive and changes little from one year to the next; like the maintenance of railway track. A boring but very necessary routine. It may be tiresome, but it often calls for highly-developed skills, and it certainly isn't worthless.

It is time for us non-entrepreneurs to stand up for ourselves and our interests. We are tired of being denigrated and devalued by arrogant economists and self-serving consultants, endlessly told that we are merely a burden on the new enterprise society, which doesn't need us any more. It jolly well does, and we shouldn't let ourselves be intimidated by those mountebanks.

* * * * *

References

1 John Major was UK prime minister from 1990 till 1997, following Margaret Thatcher. Edwina Currie, junior health minister in Thatcher's government, revealed in her published diaries an affair with Major between 1984 and 1988. Major later admitted publicly that he was ashamed of this misbehaviour.

2 According to Lord Cullen's report on the Ladbroke Grove disaster of 5 October 1999, Railtrack had a dangerously complacent attitude to the problem of signals passed at danger. In this accident, a local train passed a red signal and collided with an express, causing 31 deaths and more than 500 injuries. Cullen's enquiry showed that the signal was not easily seen by train drivers because it was badly sited and obscured by other equipment.

Raltrack was, for a time, a highly profitable company. But its chief executive, Gerald Corbett, once admtted that the only way we can make profits is by not doing the things we should do to make the railways better. See Brendan Martin, British Rail Privatisation - What went wrong? (March 2002) on www.publicworld.org.

3 William Bridges, Jobshift: How to prosper in a workplace without jobs (Addison Wesley, Reading (Massachusetts), 1994)

4 See Le Nouvel Economiste (Paris, weekly; no. 1066 of 31 October 1996)

5 The 'incorporated self-employed' are owners of one-person or other very small businesses that are set up as companies 'employing' their owners.

6 Figures from the US Bureau of Labor Statistics. Those for the incorporated self-employed are not regularly published. Further details are available from the author (see email link above).