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October 25, 2002

A Conspiracy of Silence


As an entrepreneur I am always kind of bemused by discussions of capitalism, since by my reckoning relatively few people are properly credentialed to talk about it. Yes, yes, I know, 84% percent of Americans in the non-farm labor force work for capitalists, but that’s not the same as being a capitalist.

Now I’m going to go out on a limb and define true capitalists as entrepreneurs. Obviously, many other definitions are possible, and I doubt this is the standard definition, but I think for experiencing the full, gut-wrenching excitement and terror of capitalism, you really need to own and operate a business. (I once overheard a conversation between two business owners where one of them said, "Yeah, employees just don't get it...they're, like, you know...civilians.")

However, there is a sort of conspiracy of silence about entrepreneurship. Believe it or not, there is very little exact data on exactly how many people are currently owner-operators of businesses. As Andrew Zacharakis, Paul D. Reynolds and William D. Bygrave put it in their “National Entrepreneurial Assessment: United States of America 1999 Executive Report”:

The United States has one of the highest levels of entrepreneurial activity in the world. Yet there has been little serious attention—either by the national government or other research institutions—to developing a reliable means for measuring and describing the level of entrepreneurial activity. In addition, scholars lack a general understanding of the cultural, social and economic factors that determine the level of activity. The result is a glaring knowledge gap.

Lacking exact information, what kinds of estimates can we make? Well, there are around 6.2 million businesses with employees in the United States, and the great majority of those are small (under 500 employees) owner-operator businesses. Assuming that each of those businesses has two owner-operators, that would imply around 13.5 million such individuals. Since the U.S. workforce is roughly 131 million, that would mean around ten percent of the workforce is a business owner-operator. And, of course, that means 90% of the workforce isn’t.

Of course, businesses come and go (around 14-16% are new every year, and 12-14% go away every year.) So it’s possible that more people have been business owner-operators at some point in their lives than are currently engaged in that capacity. According to Mssrs. Zacharakis, Reynolds and Bygrave, around one in 150 adults in the U.S. becomes a business owner-operator each year. Over a 40 year working career that would imply roughly a quarter of the adult population may have taken a hand in this game, although this estimate may be high (I’m guessing that people who start one business may well start another.) Nonetheless, even this high estimate implies that 75% of the adult population hasn't been the owner-operator of a business.

For a variety of reasons, this level of ignorance is bad. Small businesses are an important part of the economy, employing 53% of the private workforce, accounting for 47% percent of sales and 51% of private sector GDP, and yet you see hardly any press coverage of this sector. While movies occasionally feature small businesspeople as characters, I can’t remember a film or even a book that has really struck home with me as capturing the realities of operating a small business. (Although "Used Cars" showed some definite moments of insight.) I also think that owning and operating a business is an important aid in developing one’s full potential as a human being: I don’t see how you can achieve your fullest development as an individual without maximally exposing yourself to the economic consequences of your own decisions.

Kurt Russell Developing His Human Potential in "Used Cars"

In short, I believe that everyone should be an entrepreneur and work for themselves. (If we can’t get society organized on a purely self-employment basis, I’m willing to work for you if you’ll work for me.) You may or may not like it, but at least we should all try it. That way, at a minimum, we would all understand what we mean when we talk about “capitalism.”



posted by Friedrich at October 25, 2002


While I laud your admiration of and cheerleading for the entrepreneur, have you considered what the consequences of "studying" this particular creature would be? It seems to me that this is exactly the kind of information some well-meaning economic planner (a.k.a. statist) would employ in the cause for bettering the small business environment in America. Maybe part of the reason that these sorts of capitalists thrive so well here in the USA is precisely because of this lack of attention. Having had to navigate the bureaucracy of the Small Business Administration more than once, I can tell you that the less that entrepreneurs have to endure being "studied" the better off we all will be.

Posted by: Michael J. Wade on October 25, 2002 7:01 PM

Oh, dear sweet Lord, NO! No studies! I am no entrepreneur, but I am a small business owner (VERY small-me, basically). The last thing I need is someone from the government or academia poking around. There aren't enough hours in the day as it is.

So, basically, "what Mr. Wade said." Let's keep that conspiracy going, whaddya say?

Posted by: Scott Chaffin on October 25, 2002 10:40 PM

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