Keywords for the Age of Austerity 4: The Entrepreneur

“Have entrepreneurs lost the will to innovate?”

—Sir Richard Branson

“Entrepreneur” is the austerity keyword par excellence. It combines the pixie dust of innovation, the social conscience of stakeholderism, the versatile vagueness of nimble, and, with its French derivation, a touch of the glamour that “businessman,” “capitalist,” or “manager” can never quite approach. It exemplifies the elevation of “leaders” as opposed to labor, of individualism over solidarity. It is no surprise that in an age of austerity, when most people’s sense of control over their lives is contracting—due to indebtedness, precarious employment, or lack of employment altogether—that there should emerge a hero who stands for agency, material success, and moral determination all at once.

Derived from the French verb entreprendre, “to undertake,” the “entrepreneur” is the masculine noun form of the verb—literally “one who undertakes something.” It’s critical that the word is a third-person verb derivation, since an individualized action is always implied, even as “entrepreneurial activities” has come to include the workings of ever-more complex bureaucracies.

This points to an important distinction in how the word has been defined since the 1930s. (Not that it has ever really been defined too clearly, which is a recurring theme in my cursory reading of management scholarship and business journalism.) The most famous theorist of “entrepreneurship” was the Austrian economist Joseph Schumpeter, who emphasized the difference between the “capitalist” and the “entrepreneur.” His definition of the latter, often quoted in management textbooks, comes from his 1934 The Theory of Economic Development:

The carrying out of new combinations we call ‘enterprise’; the individuals whose function it is to carry them out we call ‘entrepreneurs.’

By “combinations,” Schumpeter means production processes. Transforming these is what he defined in the same text as “innovation,” which, in turn, he described in Capitalism, Socialism, and Democracy as “the entrepreneurial function.” Entrepreneurs are thus the agents of innovation. But because entrepreneurship is a function and not a social class or a profession,Schumpeter emphasized that an “entrepreneur” is not the same as the “capitalist” or the “manager.” The journalist Walter Lippman described the entrepreneur as the “man on the make,” the aspirant capitalist. Marxists seem to have had little to say about entrepreneurs as such (although E.P. Thompson, in The Making of The English Working Class, uses the word synonymously with “middlemen”), which is unsurprising, given the virtuous patina the word gives to capitalist enterprise.

The Harvard psychological theorist David McClelland celebrated entrepreneurs in his 1967 book The Achieving Society, which argued that “developed” societies are distinguished by a heightened “need for achievement,” which entrepreneurs of course have in spades. Others have defined the entrepreneur as the “risk-taker,” but this is pure mystification, and an obviously flattering one, given the romance attached to the bold, the fearless, the gambling man.

Schumpeter himself opposed defining the entrepreneur this way—the ultimate risk, he wrote, obviously belongs to the owner of the means of production, who may not be an “entrepreneur” at all. So the entrepreneur, in these different accounts, expresses 1) a kind of attitude, a psychology, or a social function. There is also 2) a distinction between the energetic, hustling, creative “entrepreneur” and the passive rentier capitalist.

While “entrepreneur” is often used promiscuously for anyone who owns a business, something of this functional and moral distinction between the capitalist/manager and the entrepreneur persists in the term’s popular usage. A Wall Street banker is rarely an entrepreneur; a tech mogul always is. Clearly, part of this has to do with “entrepreneur’s” association with commerce—an entrepreneur sells a product or a service. Yet one can certainly argue that bankers sell services, and one can hardly accuse Wall Street of failing to innovate sophisticated processes of doing whatever it is they do.

More important than the commercial meaning of “entrepreneur” is the moral one. The entrepreneur pursues a calling, while the capitalist merely makes money. This is the difference, as well, between “entrepreneurship” and “business.” As you can see from the Google ngram figures below, “entrereneurship” has skyrocketed in the last decade but only began to appear in earnest around mid-century, making it a much newer concept than “entrepreneur.” “Entrepreneurship” is more than business— it is a way of life.

In The Protestant Ethic and the Spirit of Capitalism Max Weber famously described the fabrication of an “ethical orientation towards profit” that gave that formerly suspect impulse the virtue of a “calling.” But has that calling ever been embodied in such a a single figure as “the entrepreneur” of today? Earlier eras lionized “self-made men” and captains of industry, but the cult of the entrepreneur seems new. Henry Ford may have been a capitalist role model, but whatever social good he was said to have done came from the particular product he built, not from his impulse to build anything. Moreover, meeting some higher social goal (eg, preserving old barns or advancing the cause of fascism) was an eccentric side project, rather than the main goal of his enterprise.

Its moralism sometimes makes “entrepreneurship” sound almost monastic, as we can see in The Complete Small Business Guidebook, a how-to guide produced by the Wall Street Journal. It advises novices entering the faith that

It’s unwise to start down the path of entrepreneurship unless you’ve got a zeal that will get you through rough patches and keep you interested long after the initial enthusiasm has faded.

Read this story of a man who set off unprepared upon the lonely path of righteousness, who was tested, and then finally (sort of) redeemed:

Working seven days a week, losing touch with friends, abandoning old hobbies and interests and not making time for loved ones can quickly lead to burnout in the midst of starting up— and ultimately to business failure. That’s what happened to James Zimbardi, an entrepreneur in Orlando, Florida, who…started his first company in 1997 and worked as hard as possible, for as long as possible, until his creativity, enthusiasm and energy were sapped. By 2002, he was a broken man— the business took a downturn, and so did his personal life. Now Zimbardi is at work on his second company, Allgen Financial Services, and sticking to better habits to maintain work/life balance, such as not working on Sundays, making time for hobbies such as sailing and salsa dancing, and building close ties with other business owners through a faith-based support network.

Note, here, that even the Wall Street Journal doesn’t hold out material rewards for the new, no-longer broken James Zimbardi. He didn’t go into business for Cadillacs or a college fund. He did it for the zeal.

The CBS Evening news reports that there is a man building a submarine for “Virgin Airlines entrepreneur Richard Branson.” Branson might be most accurately described as “investor,” but “entrepreneur” is more than a mere professional function—it is Branson’s personal brand. Everything he does, from direct music sales to founding an airline, is an expression of his “values” and desire to “disrupt” and “innovate,” seemingly for the inherent satisfaction these desires provide.

Entrepreneurship’s moral content lends itself to “social entrepreneurship,” which the Charles Schwab Foundation for Social Entrepreneurship defines in part as the drive to “pursue poverty alleviation…with entrepreneurial zeal” (that word again). Have a look at the Schwab Foundation’s website. Note the final bullet point.


Richard Branson is the British founder of Virgin, of course. Look at Virgin’s executive roster, and after a long series of middle-aged white men in open-collared shirts tucked into blue jeans—this is a super-hip company, remember—you will find the firm’s only female executive, Jean Oelwang, who runs the company’s non-profit arm, “Virgin Unite.” Virgin Unite is the company’s “entrepreneurial foundation,” entrepreneurial filling in where “charitable” might once have sufficed. It’s not entirely clear what this means. There’s talk of developing “new approaches to social and environmental issues,” approaches which include…the “Branson Centres of Entrepreneurship.” So Virgin’s entrepreneurship yields its foundation for entrepreneurship, which addresses environmental crisis, through its own brand of entrepreneurship. And thus the circle is complete.

Oelwang’s bio lists among her qualifications her work as a “VISTA volunteer where she worked with—and learned from—homeless teens in Chicago.” No telling what she learned from them, but the turn to youth here signals one of the cult of entrepreneurship’s key growth areas, education. “Entrepreneurship camps” promise to teach business success to children as young as 5. While some offer practical lessons on things like writing a business plan, their real emphasis is cultivating the elusive “entrepreneurial spirit,” as this recent Wall Street Journal article put it. “Children are born imaginative, energetic, and willing to take risks,” the reporter noted, “but lose this entrepreneurial spirit.” Children’s innate imagination and creativity, as it turns out, are merely unrefined pre-professional skills.

One nation-wide program, called “SuperCamp,” includes as part of its entrepreneurship curriculum special lessons on “stress management,” which should not be necessary at summer camp. These kids’ll need it, though, since the camp ends with a reality-show style competition with other campers for seed capital. The losers presumably go back to skipping rocks and using their imaginations for little to no profit.

Entrepreneurship education is not just for the comfortable children of the suburban middle class. From suburban Pittsburgh to inner-city Cleveland, where the Entrepreneurship Preparatory School opened in 2006, entire charter schools are built around the concept. Forget the notion that some children might not want to grow up to run a business, that some might rather be teachers, or astronomers, or mechanics, or even nothing in particular; forget that imagination and creativity might be something other than a source of profit.

The cult of entrepreneurship’s commodification of imagination, its celebration of self-sacrifice, and its bootstraps individualism makes it a perfect ethic for social disinvestment masquerading as reform and profiteering disguised as charity. Entrepreneurship means that now you’re on your own, kid.

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