Why our Society is Entrepreneurial, and not Capitalist, and Why it Matters

We commonly refer to our society as “capitalist”. But that term misdescribes its nature. It’s not capitalist, it’s entrepreneurial, and that’s an important distinction.

In the annals of economic thought, the term “capitalism” was birthed by economist Werner Sombart to label the emergent European society of the 17th century onward – a label that carried a pejorative undertone. Sombart deemed this society “capitalist” due to its perceived fixation on capital accumulation, viewing it as both the means and the end. Yet, the innate desire for accumulation spans through time, transcending this period. From the nomadic tribes’ plunder during the Roman Empire’s twilight to the Spanish conquistadors’ lust for gold, history illuminates our inherent inclination to amass. The crux of our modern era doesn’t hinge on accumulation, nor does it solely rest on trade – both have existed across ages and cultures. Rather, the defining characteristic centers on an entrepreneurial spirit, an unwavering commitment to innovation that has revolutionized societies.

Economist and historian Deirdre McCloskey shatters the conventional characterization, asserting that our society post-17th century isn’t exclusively capitalist or mercantilist, but rather bourgeois. This society shifts its values, embracing the dignity earned through work and talent, shifting from the medieval notion of birthright dignity. Yet, “bourgeois” falls short of fully encapsulating this new social fabric, as it doesn’t encompass the dynamic interplay between innovation and conservatism.

What truly distinguishes this epoch is its innovation-driven ethos, a relentless pursuit of improving our surroundings. This contrasts starkly with earlier paradigms where stability held paramount importance, and change was met with trepidation. The shift to a society that esteems innovation denotes a fundamental transformation in the fabric of our thoughts. Pre-17th century society upheld the notion that the world was perfect, a creation of the divine. Anything that questioned this order was deemed perilous. Curiously, the term “innovation” bore a pejorative connotation. It encapsulated a force challenging the natural order and stability. The very essence of innovation went against this perspective.

Accumulation? (Photo by Pixabay on Pexels.com)

Joseph Schumpeter, in his seminal work “Capitalism, Socialism and Democracy,” reiterates this transformative dynamic. Our society, he contends, thrives on an evolutionary process – the evolution of markets, technologies, tastes, and habits. The system embraces dynamism and perpetual renewal, epitomizing Schumpeter’s renowned concept of “creative destruction,” where the old is cast aside for the new. Accumulation, once perceived as the end goal, now becomes a prerequisite, a stepping stone to innovation, primarily relevant in sectors necessitating high initial investments. Notably, this paradigm shift is less prevalent in service sectors.

In essence, our society is not driven by mere capital accumulation but thrives on entrepreneurial innovation. Innovation and trade share an inseparable bond. Modern society engages in trade to innovate and innovates to trade. This places change – whether technical, moral, or social – at the epicenter of the entrepreneurial landscape.

However, the integration of change into our societal ethos remains contentious. A “fear of change” echoes through time, often amplifying apprehensions over potential losses rather than highlighting potential gains. In particular, the development of technologies such as Chat-GPT is clouded by fears that overshadow its potential and value.

From the German Romantic movement’s yearning for a pre-technological world to contemporary arguments against innovation in favor of lifestyle changes, a strain of hostility towards innovation persists. This resistance dates back centuries, as elites sought control over the inherent subversive energy of entrepreneurship. This hostility endures today, manifested in calls for degrowth and moral-guided innovation, with some clamoring for a return to archaic paradigms.

In conclusion, the canvas of our society extends beyond the limitations of “capitalism.” It is an entrepreneurial revolution, an age characterized not by mere accumulation but by innovation’s indomitable spirit. The evolving journey from pre-17th century stability to today’s embrace of change marks the path toward progress, challenging old schools of thought and heralding a new era of transformative dynamism.

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🇫🇷French version of this article here.

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