In a recent column, I noted that our tribal ancestors viewed entrepreneurs with suspicion. In their view, entrepreneurs were too willing to violate well-accepted social norms. They were too greedy, careless, and foolhardy, and too ready to reject their duty to their fellow men. In this column, I build on that idea, drawing on the work of Deirdre McCloskey, the winner of this year’s Julian Simon Memorial Award, presented by my organization, the Competitive Enterprise Institute.
Over the last decade, McCloskey has explored the roots of the Industrial Revolution and the 16-fold increase in per capita wealth it produced—a magnificent result she calls the “Great Fact.” The magnitude of these gains, she notes, cannot be explained solely by the causes generally advanced—trade, capital accumulation, natural resources.
Rather, the Great Fact, she believes, was made possible by the greater social acceptance of the rising bourgeois commercial class, and how that acceptance was expressed in the changed language, rhetoric, and dialogue of the industrial era. Society shifted from a blanket condemnation of the entrepreneurial Scrooges of the world, as dramatic economic gains caused many to recognize the virtues of the entrepreneurs who produced those gains.
In her latest book, Bourgeois Dignity, McCloskey further elaborates on this theme, arguing that the slowly growing esteem accorded to entrepreneurs liberated mankind’s creative spirit, by raising the social esteem of the dynamic entrepreneurial virtues of hope, courage, love, and faith, to stand alongside the traditional, less dynamic virtues of prudence, temperance, and justice.
McCloskey comments further on the two different sets of virtues raised in Adam Smith’s two major works—the virtues that make capitalism a moral enterprise, as articulated in The Theory of Moral Sentiments, and the prudential efficiency virtues that make capitalism possible, explored in The Wealth of Nations. In both books, McCloskey argues, Smith gave too little attention to the critical virtues needed for a dynamic economy. Smith, she notes, admired the cool and public virtues of temperance, prudence, and justice; acknowledged (if only partially) the significance of the virtues of love and courage; and largely excluded the “incense-smelling virtues of faith and hope.” Yet, it is those virtues that were vital to the Great Fact:
“[A] vastly fuller complement of riches came from bourgeois and liberty inspiriting innovations in machines, both physical and social. The supply and demand curves whizzed out, making the classical and modern economist’s obsession with moving from nonequilibrium to equilibrium along fixed curves look beside the point. The cool and calculative virtues of prudence and temperance and justice were not the virtues most called for—hope and courage were, with supports in love and faith.” (Bourgeois Dignity, p. 195)
In my earlier piece, I took a more utilitarian path, but my argument is readily expanded to include McCloskey’s points. Both Dickens’s Scrooge and my own Mr. Singletary displayed the unappreciated virtues that McCloskey emphasized: a willingness to break ranks with the cultural tribal norms of their community (courage), confidence that this course was needed (faith), and belief that their actions would eventually be vindicated (hope). Both contented themselves with the love and appreciation of their inner circle of business associates, friends, and family.
Entrepreneurs go beyond emulating competitors. They seek totally new ways of meeting some existing human need, and even visualizing “new” needs for which they then provide. As CEI’s Wayne Crews has noted, “Most of the wealth that the world will need hasn’t yet even been imagined.” Yet, the revolutionary changes needed to create that wealth are rarely prudent or temperate and the dislocations they create seem unjust to many.
Most businessmen, of course, aren’t entrepreneurial. Holding prudence and temperance in high regard, they emphasize incremental improvements, rather than the creative destruction that made the Great Fact possible. In contrast, entrepreneurs pursue dynamic change and place greater weight on the virtues of courage, faith, and hope. And, while the Scrooges and Singletarys of the world lose—at least temporarily—the love of their community, they persist and create the wealth and knowledge that we now enjoy.
Our challenge is to increase public recognition of the morality and virtuous nature of a dynamic economy and entrepreneurial culture. The entrepreneur flourishes when her culture comes to accept the mundane morality of the market as superior to the magnanimous morality of the tribe.
This acceptance need not be total. We need only to create the cultural legitimacy needed to liberate the entrepreneurial forces that drive innovation and growth. Over the last century, more and more people around the world have come to realize this, but the acceptance of entrepreneurial change remains slow and halting.
Entrenched vested interests are always reluctant to accept the pains of dislocation. They are skillful at emphasizing the destructive over the creative aspects of change, and are more powerful politically than tomorrow’s innovators.
These economic conservative forces are buttressed by intellectuals who favor change in principle but believe it is best achieved via centralized political planning, that magnanimous morality can be readily accommodated in a dynamic economy, and that society’s goal should be capitalism “with a human face.”
Intellectuals focus on the failures of markets to achieve utopian goals (prudence), the risks they introduce (temperance), and the pain caused to third parties (justice to the displaced workers). They emphasize fear rather than courage, resentment rather than love, timidity rather than faith, despair rather than hope. In other words, they are obsessed with clinging to a traditional world based on the older tribal values of justice, prudence, and temperance. These are values to be honored, for sure, but not to the exclusion of the values critical to the dynamism essential to create a better world tomorrow.
We’re in a cultural war between the forces of dynamism and stasis. Can it be won? Do today’s potential entrepreneurs have the courage to resist the forces of stagnation? Perhaps.
The fight for economic liberty is a moral and virtuous struggle—one I believe we can win. Just as a small amount of yeast raises a whole loaf of bread, victory does not require that we gain majorities, only that our cultures provide enough respect and support for the bourgeois virtues to ensure that entrepreneurs retain the freedom necessary to strive, and by so doing make the world better. As McCloskey notes, that will take the full array of virtues—courage, prudence, temperance, and justice together with love, faith, and hope.