Wednesday, April 02, 2008

The Cult of Entrepreneurship

by John Médaille



A few days ago, I was asked to serve on a panel discussion at the University of Dallas concerning a film produced by The Acton Institute. The title of the film was The Call of the Entrepreneur, and its central question is, "Is the entrepreneur virtuous or vicious?" Like most of the products of The Acton Institute, it was media slick and intellectually shallow. Here are the comments I gave to the group:

One reason that this film is important to me is that the social justice class which I teach emphasizes the role of the entrepreneur in shaping the business world, and hence the moral and economic universe in which we live. The book we use, which I had the honor to write, is called The Vocation of Business: Social Justice in the Marketplace. It's point is that business, in my view, is not merely a job, but a vocation, a calling to change the world, that is, to apply our moral imagination to the problems of the world. The proper understanding of entrepreneurship is crucial, in my opinion, to the proper understanding of the connection between human development and economics. And since entrepreneurship is so crucial, it is crucial to get it right. When we have an incorrect or incomplete understanding, we end up distorting the meaning of entrepreneurship; we end up limiting it by converting it from a call to a cult, one limited to the few, rather than extended to the many, as it should be. All are called to invest their talents, and not to hide them. And indeed, all people want to do so, or nearly all. It is usually cultural and institutional bars to creativity that limit us, not something lacking in the human person, or limited to only a few. For the person is, or so we believe, the very image of God, the creator of all, the first worker, and the first to earn his day of rest.

The strengths of this movie, aside from its excellent production values, are two. The first is the engaging personal stories, especially of Jimmy Lai and the Compost King. Entrepreneurship is essentially a narrative, a story whose end cannot be known in advance, but it always an adventure, possibly a romance, and more than occasionally a tragedy. We cannot know, we can only do, and do our best. And so personal history is perhaps the best way to convey the point, rather than abstract demonstration. The second, and even more important point, is the strong connection the film makes between entrepreneurship and personal virtue. Indeed, virtue is the foundation of all human action, and every successful action requires at least some degree of personal virtue. Even robbing a bank requires virtues of courage, planning, perseverance, and so forth.

And therein lies the problem; for if virtue in some degree is required even to rob a bank, then personal virtue alone cannot determine the virtue of an act, or of an enterprise. Something else is required. Or rather, two other things are required: the ends, the purpose of the act, or in this case, the purpose of the firm, must tend towards the common good, and the means must themselves be good. A failure in either the means or the ends makes an act—or an enterprise—vicious, even when virtuously performed. Extolling entrepreneurship without directing it towards the common good gives us an incomplete understanding.

The point is this: Entrepreneurship by itself is neither good nor bad. Rather, it is the field of human action in the social and economic order. But the direction we choose to go on that field is another matter.

We can illustrate the range of human actions that are “entrepreneurial” by two activities that lie at opposite poles of that range: at one pole we have motherhood. The mother “produces” (if I may put it that way) a unique human product (if I may put it that way), that is, the human being, the active agent, end, and purpose of all human production. She injects a value into the world, and into the world of business, whose value can never be known, and for which a price can never be set. And although the family is the basic economic unit, her recompense is never in money. She takes on a long-term commitment whose course she cannot know, but which most women find difficult to repudiate, even in the most dire of circumstances. At the other end of the pole, we have the bank robber, who creates no wealth of his own, but merely appropriates the wealth of others. His actions are purely for profit, without adding anything to the stock of society. At one end of the scale, we have a pure self-giving; at the other, only a self-interested taking.

Therefore, we can never judge entrepreneurship to be good per se. Rather, we must judge it by the contribution it makes, or fails to make, to the common good. For many enterprises fail to make such a contribution. Certainly, we know that harmful products find a market, no less than good ones, products such as drugs, pornography, and sub-prime loans. I have little business experience with the first two, but a great deal of experience with the last. For the last five years, I have seen increasing corruption in the mortgage markets, aided by an army of entrepreneurs working from the highest levels of finance down to brokers working out of their spare bedrooms. The deals given to buyers got to be so dirty, that after each closing you just wanted to go home and take a shower. This was entrepreneurship that more resembled bank robbery, even though it was the bank pulling off the robbery.

We should also be aware of the institutional barriers to entrepreneurship. The film did a good job of pointing out the barriers in a communist tyranny. Indeed, raising such barriers is part and parcel of any tyranny, and tyranny can be judged, at least in part, precisely by the barriers it raises to such human development. We know that entrepreneurship tends to die in socialist collectives; however, when production is gathered into gargantuan corporate collectives, with immense private bureacracies, does entrepreneurship suffer a similar fate? In other words, in our society, is the corporation the place where entrepreneurship goes to die? My own experience of 17 years in large corporations would lead me to believe this.

Finally, there are cultural barriers to entrepreneurship, to the full development of the human person in the business world. Most of us, alas, are culturally conditioned to seeking a “good” job rather than following a real vocation. We tend to believe, unconsciously perhaps, that our well-being depends on being in the good graces of ruling bureaucracies. We are losing—or have already lost—the habit of entrepreneurship, or that creativity that is part and parcel, to a greater or lesser degree, of every human being. Indeed, entrepreneurship is viewed, to often, as something “special,” something reserved to a group set apart from the rest. At this point, it becomes not the call, but the cult of the entrepreneur. And the cult of the entrepreneur is very like the romantic “cult of the artiste.” This cult, we know, limits art to a few rarefied individuals; it results in both less art and worse art. Both art and entrepreneurship are part and parcel of what it means to be human. One applies to the aesthetic realm, and the other to the moral realm. But both apply to all men and women.

In short, then, entrepreneurship is basic to human development and creativity, and raising barriers to it, whether public or “private” barriers, is part of the essence of tyranny. But we need to see it as the field of moral action in the world, and judge it by its contribution to the common good, and human development.


The Distributist Review

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On Cooperative Ownership

John Médaille Interview in Romania

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