Privileged people love to talk about entrepreneurship, but how does a progressive vision of the topic look like? We first discuss the difference between a traditional and progressive appropriation of the concept, before introducing a policy that is both social and encourages young entrepreneurs.
The word ‘entrepreneur’ is of crucial ideological importance to modern society. The discourse surrounding this word breathes fresh life into the status of the capitalist class, supplying it with associations of creativity and aspiration. This is especially true in contexts that openly celebrates and identifies with the concept, such as the Mexican North and in particular Nuevo León. In what sense could the Left be relevant discussions on entrepreneurship? I will first briefly discuss the current ideological functioning of the concept, before answering how the Left could appropriate it. The text ends with defending a proposal for a localized adaptation of a policy known in the United Kingdom as the Child Trust Fund. In this social policy the state provides investment accounts to newborns, in order to guarantee they have a minimum of assets to start out with as adolescents.
An entrepreneur is somebody who starts a venture, typically but not exclusively in a market. Since the word carries an overall positive connotations, the capitalist class has appropriated it as a practical synonym. This is of course misguided, as economist Thomas Piketty shows in his 2014 instant-classic Capital in the 21st century, most wealth was either inherited or obtained via rent seeking activities. In this context today’s increasing deification of entrepreneurs has multiple ideological functions.
The first is that it turns the capitalist class into saints and leaders, associated with innovation and in possession of a ‘risky’ edge. Although our experience with CEO’s as actual leaders (Fox, Trump, etc.) is sobering, whole generations grew up seeing space-bros like Musk or Branson as heroes (the third bald one lacks the charisma). The rich urgently needed this face lift, as a April 2021 poll of CELAG shows that only 21% of Mexicans think the rich earned their money through capacity, with 55.5% assuming corruption and almost 18% family inheritance, amongst others.
As second ideological function of the cult of the entrepreneur is the spread of aspirational thinking, part of a broader cultural shift towards aspirational and motivational philosophy. This helps people identify with ‘those who made it’ and perceive themselves as ‘climbing the hill’ rather than being conscious of their actual circumstances and class.
A third ideological function is that entrepreneurship provides a business-friendly lens through with social issues can be viewed and a ready solution to those problems. Entrepreneurship courses in school, micro-credits for poor woman, and inspirational talks are all part of the toolbox. If life gives you lemons, sell lemonade.
Confronted with this ideological charge of entrepreneurship, many on the Left would be tempted to either be intimidated by it (‘I’m kind of an entrepreneur too’) or abandon the concept altogether. This is unfortunate, as the real challenge is to re-appropriate the concept – for there is much to be gained here.
To start with, entrepreneurship can be appreciated as an alternative to exploitation under capitalist wage labor. People who work in their own small family businesses are neither exploited nor exploiters, a position that should be celebrated by socialists. They could position themselves as championing small companies. This is easier said than done of course, as this is historically a particularly hard demographic to win for the Left, who should come with concrete proposals to support and favor them over big capital. After all, these is a clear distributional problem to politicize here: In the 2014 census, 89% of companies in Nuevo Leon were micro companies (0.7% large ones), while in income statistics of 2019, they only accounted for 11% of income – but 50% for the large ones!
A second angle is to challenge the individualistic ‘star’ image of entrepreneurship, and replace it with a more social notion of something that is achieved together. Social entrepreneurship can refer to ventures that try to pursue both social and private outcomes (for example a restaurant that employs handicapped people). It can also refer to starting economic activities together in a cooperative format, where the investors and the workers are the same people, for example in a babysitter or home-nurse collective where the income is shared amongst the members. Giving more visibility to this path of entrepreneurship should be a priority for progressives.
A third angle has to with politicizing the issue of assets, and ask what it would really take for young people to take a chance at starting a business venture. Having taught one of those mandatory government entrepreneurship courses myself multiple times, it is clear to me that young people are not lacking ideas. People who did not receive money from their parents on the golf course primarily lack financial assets, as even starting out small is an unreasonable risk to the working and lower-middle class compared to just trying to find a job. But how would a genuine progressive solution to this look like?
The idea is based on a British social innovation called the Child Trust Fund, which was introduced in 2001 by the Labour party and (like most good things) cut in 2011 by the Conservatives. In this concept, the state offered the families of newborn children to open investment accounts on the name of the child. It will then deposit a certain sum of money in this account (for example, 10.000 peso), and will again deposit a smaller sum at the age of seven (for example, 2.000 peso). In line with the principle of progressive universalism, children of vulnerable families and orphans were given double the amount. The amount would grow naturally over time, but Family members can also add money to the account, but it can only be accessed by the child itself when it turns eighteen. My proposal is a localization of this idea, which for a state like Nuevo León I will unoriginally name the New Lions Fund – people from other states will have to come up with their own names; ‘Vamos Veracruz’ and ‘Activos Aguascalientes’ are on discount. This has the following benefits:
1. It will guarantee a certain amount of assets that young people will have to use when becoming adults, for example to buy a small vehicle, to buy an inventory or rent a store space.
2. It gives young people something to look forward to, which especially in case of the most disadvantaged can create positive attitudes and self esteem
3. The use of the money is unrestricted, but to access the account, young people need to complete a short course in financial literacy.
4. If we make the fund consist of stocks in local companies, it creates a bond between individuals and the economy of the state.
5. The fund will double as investment in those local companies. We should guarantee at least partial investment in small companies, thus encouraging entrepreneurship.
6. It can change social relationships within the family, with parents being encouraged to save. Additionally, grandparents can directly support grandchildren regardless of their trust relationship with the parents.
7. The ‘pay out’ is delayed eighteen years and is for the child, which cancels any fears conservatives might have regarding irresponsible family planning, but it helps to give young people confidence to start a family.
Such a program would not be terribly expensive, as this is a once time investment, compared to monthly payments in other social programs. I will offer a short calculation for Nuevo León, a state well suited for a pilot. Using the amounts I gave as example and assuming a constant of 71.815 births (2019 number) per year, filtered by a take-up rate of 75% (following the British example), we can make the following calculation. The cost would mainly depend on who classifies for the double rates (for simplicities sake assuming births are evenly spread), we could either go for a strict income poverty line (7809 babies) or CONEVALS vulnerability line (18.528 babies). In the strict scenario the annual cost would be (7809 x 24000) + (46052 x 12000) = 740 million peso (37 million dollar). In the generous variant it would cost: (18528 x 24000) + (35333 x 12000) = 868.6 million peso (43 million dollar). Or less than 1% of the 107.649 million peso budget. Given this will be invested in stocks of local companies, it could if needed justify a small tax. Also keep in mind that this is the cost for the program at mature capacity, the take up rate would start out much lower, and the extra 2000 only kicks in after the 7th year.
It is of course always cheaper to just talk about entrepreneurship and making young people believe the secret is to get up early (spoiler: many already do). Yet this only serves to stroke the ego of those who give the talk, rather than actually open up entrepreneurship as a realistic path for all. For that young people need and deserve minimal assets. We live in a divided society, and policies like this could bring people together. Socialists, liberals and conservatives should find some aspect of this policy attractive, unless they both hate families, local business or young people. And unless you really believe that your ‘share this image for financial success’ post is going to work, you should be in favor of it to!