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13 October 2020updated 12 Oct 2023 10:58am

How the left can reclaim entrepreneurship

The Covid-19 pandemic has shown why we must transform an economy that too often rewards the safety of rent-seeking over truly creative enterprise. 

By Mathew Lawrence

As our long autumn of discontent began, Rishi Sunak used his Conservative conference speech to conjure an image of a heroic figure capable of dispelling the gloom: the entrepreneur, freed from the stifling constraints of the bureaucratic state. The Chancellor’s vision – of the individual stimulating economic dynamism – is central to the neoliberal politico-economic imagination. Powerfully ingrained in the minds of the public, it is a vision that is nonetheless profoundly distorted.

If we really are to “build back better”, we will need thriving entrepreneurship. But in contrast to the prevailing ideal, this must be rooted in a radically different vision of enterprise: democratic, pluralistic, inclusive, and centred on meeting the needs of people, communities and the environment.

The entrepreneur acts as a bridge between the past, present and future. Defined, as the political economist William Davies argues, by a capacity and willingness to operate outside of pre-existing rules, entrepreneurship is rooted in designing and bringing to life alternative visions. In Sunak’s framing, the entrepreneur is cast as an embattled but heroic figure, part of a small class of business-owners and innovators who are the job-creators and wealth-makers of the future. However, this is a deeply narrow, unequal vision of economic freedom, and of who can hold and exercise power – one reminiscent of John Galt, the protagonist of Ayn Rand’s Atlas Shrugged. His is a figure that exists solely in the private sector, constrained by the state, and which only a dose of deregulation and tax cuts can set free. 

This ideological vision ignores the reality that entrepreneurs don’t stand alone, nor are their plans brought to life solely by individual effort. Instead, the creation of wealth – and the institutional or organisational innovation at the heart of entrepreneurialism – is an inherently social endeavour. From the job of caring for and reproducing life – upon which all wealth is built – to the effort and ingenuity of ordinary workers, entrepreneurship is a collective process. However, it all too often ends in the appropriation and concentration of this commonly created wealth. 

The very tools that entrepreneurship depends upon – institutions of credit, property and business, of limited liability, legal contract and money – are inescapably public creations. Neither the firm nor the wider economy in which entrepreneurialism occurs is a fixed, “natural” or private institution; instead, it is constituted by politics and the law, where rights and powers are publicly granted, defined and capable of being changed by democratic intervention. And contrary to Boris Johnson’s claim in his Conservative conference speech, the state is often at the forefront of innovation; the challenge it currently faces is not innovative capacity, as so often assumed, but its ability to ensure the public sector reaps a fair share of rewards. To do so, we need to build the “state as entrepreneur”, taking strategic ownership stakes and expanding public wealth, to go alongside the market-shaping and directing “entrepreneurial state” that already exists.

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Perhaps most strikingly of all, the invocation of the entrepreneur as the driver of recovery masks the extent to which we now live in a rentier economy. As the economic geographer Brett Christophers makes clear in his forthcoming book, Rentier Capitalism, the rentierisation of the UK economy – aided and abetted by policymakers – has increasingly privileged business models that operate by controlling scarce assets under conditions of little to no competition. In the rentier economy, ownership and possession, not innovation and creation, are central to success. 

[see also: Why Covid-19 means there will never be a return to economic normality]

For evidence, we have only to look around at the vast fees charged by outsourcing giants such as Serco even as they struggle to deliver the track and trace infrastructure; the surging wealth of billionaires, which has reached record highs during the pandemic; or the outsized profits the major retail banks are making on delivery of the Bounce Back loans and other forms of Covid-19 business support. We have built an economy that too often rewards the safety of rent-seeking over creative enterprise and genuine risk-taking.

Yet the need for the inventive capacity of entrepreneurship has never been more urgent. Covid-19 has underscored and amplified the deep inequalities in our society and made the case for institutional reinvention the new common sense. The crisis currently faced by many businesses, workers and carers makes reimagining the purpose and logic of production and consumption in our economy all the more urgent. And the deepening climate emergency makes the design of an alternative future – one that is not overwhelmed by the environmental breakdown that fossil fuel capitalism is propelling us toward – an existential challenge.

A reclaimed entrepreneurialism would be anchored in a more pluralistic range of business models embedded in the communities they serve. It would recognise the creativity and tacit knowledge of the workforce by allowing employees to shape production and strategy through trade unions and democratised workplaces. And it would recognise that reimagining the future through enterprise requires challenging the dominant logic of investment in our economy, prioritising the needs of people and planet over the maximisation of shareholder returns.

This alternative exists. From digital co-operatives and “B corporations” that distribute decision-making, to the thriving social enterprise economy based on meeting underserved needs, to successful public banking networks, a transformed future is being incubated in the present. Yet these examples operate in a hostile economic environment, with the rules and institutions of our economy indifferent at best, and designed to serve the profit-maximising corporation. The challenge is in taking these examples from the margins to the mainstream, and in hardwiring the alternative they embody into the management of the economy as a whole.

[see also: Why the UK’s surging national debt does not mean austerity must follow]

Transformation of this scale will require purposeful public action. Just as the state under neoliberalism – from privatisation to taxation to monetary policy – actively created the conditions for the rise of the rentier economy and the marketisation of society, so will building an economy of genuine social and democratic entrepreneurialism require decisive policy intervention. If capitalism is rooted in the concentration of coordination rights among a narrow set of actors, the democratic economy – and democratised enterprise – must actively disperse economic control and association. 

Rewriting the rules of the company involves transforming it from an institution of oligarchic control toward an institution of the commons. A new network of public banks could invest in and bring to life the environmental and social outcomes we need. New forms of common ownership can transform who has the resources and security to act, and who benefits from collective success. Reimagining auditing and accounting requirements would support a wave of community businesses and underpin a new generation of community wealth-building. And a settlement at work – through new rights for all workers – matched to a social security system that provides a minimum income guarantee for all could permanently rebalance economic and social power. 

Reclaiming entrepreneurship as a force of collective and democratic invention is vital for progressives. As the cultural theorist Jeremy Gilbert has argued, the left’s moments of historic political success have occurred when it has responded to the challenges, crises and inequalities that capitalism generates with a modernising agenda, one capable of extending democracy and generating deeper forms of freedom. That should start with reimagining a fundamental institution of capitalism – the company – and grow outwards to secure a recovery rooted in democratic enterprise.

[see also: What would Keynes do?]

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