Entrepreneurs should seek unique knowledge, make a unique benefit promise to customers, identify a niche that no-one else has identified, and generally be comfortable with being the only occupier of a commercial space. Initially they might be viewed as crazy or taking excessive risk or out on a limb.
Economists use the term uncertainty in reference to future conditions that are unknown and unknowable. The economic system consists of trillions of interactions between individuals, and, in each one, both buyers and sellers are making a creative choice. Shall I buy this or that? At what price? Shall I sell this or that? At what price? If I modify my offer slightly, will there be a different result? I felt good about this possible purchase yesterday, but now I am not so sure. Should I check out this new competitor first? I didn’t expect it to rain, so maybe now I should buy an umbrella instead of lunch. I didn’t expect electric cars. I didn’t expect artificial intelligence.
Bearing The Weight Of Uncertainty.
Those same economists say that the people who bear the weight of this future uncertainty the most in the economy are the entrepreneurs. They bear it eagerly on behalf of the rest of us. Entrepreneurs have a special relationship with the future. They make a deal with the future. It is their domain. They imagine a future that is better than today, and they believe that they can bring it about. They sacrifice in order to do so, because while they are assembling and deploying their resources, they are not earning current rewards. Rather, they are hoping for future rewards – and those future rewards are uncertain. They may bet wrong. Some competitor may be imagining the same future and doing a better job of investing and implementing.
For the consumer, the uncertainty of the future is a positive sum. They are going to be offered something new and better. For the entrepreneur, it could be positive or negative.
The Psychic Rewards Of Sacrifice.
Importantly, however, the entrepreneur’s incentive for bearing uncertainty is not only financial. There is considerable psychic reward on offer. Different entrepreneurial personalities may experience the psychic reward in different ways – the exhilaration of taking on the unknown, the joy of self-reliant action, the fulfillment of pursuing one’s own intuition, the sense of achievement in assembling resources in a new and unique way.
In his book 12 Rules For Life: An Antidote To Chaos, Dr. Jordan B. Peterson spends a lot of time talking about entrepreneurial sacrifice: the proposition “that something better might be attained in the future by giving up something of value in the present”. In other words, sacrifice now to gain later. The difference between successful people and unsuccessful people is the successful sacrifice. The courage to undertake this sacrifice gives you more security and strength than any short-sighted concentration on your own safety. It’s living properly, it’s discovering meaning. Meaning, for Dr. Peterson, is the antidote for chaos and suffering.
Honesty And Authenticity.
Another take on the importance of entrepreneurial uncertainty comes from Nassim Nicholas Taleb in his book, Skin In The Game. Taking responsibility, including moral and ethical responsibility as well as financial responsibility, for the downside risk of one’s entrepreneurial efforts (Taleb would call these “trades”) is what holds society together. It is transparency and honesty and authenticity. It is the honorable life, the only one worth living.
Beware Of Those Who Don’t Have Skin In The Game.
According to Taleb, those who don’t have skin in the game include:
Bureaucrats: Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.
Governments: government interference in general tends to remove skin in the game.
Academics: in academia, there is no difference between academia and the real world; in the real world, there is.
Administrators: Administrators, everywhere on the planet, in all businesses and pursuits, and at all times in history, have been the plague.
Take Action. Do Something Heroic.
The people with skin in the game are doers. They act. They take risks. And they are prepared to accept the consequences if they take the wrong risk, or the risk does not work out. Taleb includes entrepreneurs in this group: Entrepreneurs are heroes in our society. They fail for the rest of us.
For economists, the market is a process of learning and discovery in the context of uncertainty. For Dr Peterson, entrepreneurial sacrifice is courage and meaning. For Nassim Nicholas Taleb, skin in the game is authenticity and an honorable life.
In all cases, the entrepreneurial life is the one that reaps the greatest rewards, both psychic and (potentially) financial.
In his 12 Rules For Life, Dr. Jordan Peterson observes that our current world is “dividing and polarizing and drifting towards chaos”. He advises that, to avoid catastrophe, we each bring forward the truth as we see it, and reveal it for others to see, so that we can find common ground and proceed together. This is the paradox of Individualism. It is the only way to find common ground.
1 Everyone Follows Their Own Individual Conscience.
Individualists avoid the lure of collectives, who cloak their vice in expressions of virtue, promising to protect your interests, when, really, they have only their special interests in mind. Individualists divorce themselves from government, school districts, political parties, unions, identity groups, organized religion, and any collective that requires an individual to align his or her thinking with that of the group. It doesn’t mean that we refuse to pay taxes or fail to stop at red lights or keep our children out of school. It does mean that we examine our own conscience to find the truth as we see it, not as groupthink tells us to see it.
2 All property is private property, so I know what’s mine and respect what’s yours.
Following your conscience is philosophy of individual life. Private property is economics, which Ludwig von Mises described as the philosophy of human life and action, the essential part of civilization. Civilization requires just a few general rules to make it work. Don’t kill, don’t steal, don’t initiate violence against a fellow human being. Distinguishing between what’s mine and what’s yours, and thereby differentiating our spheres of individual responsibility, is one of those standing rules to live by, expressed in private property and property rights.
3 Everyone is free to try their best, to see what they can achieve.
When we know what is ours individually, including our body and mind as well as our private property, we can orient ourselves properly and set ourselves towards success. It turns out that in a free market based on property rights, success is tied to serving others. We succeed via empathy with others’ needs, and taking action to address those needs with our services. We try to find a different and better way to deliver our services via what Adam Smith called the division of labor and David Hume called the partition of employments. We all find our specialty and our niche. We cultivate unique knowledge. We do what we do better than anyone else can do it. We take pride in our differentiation, and meaning in the responsibility of developing it.
4 Each individual contribution is tested and corrected by others.
How do we know if our efforts to serve others actually create value in those others’ eyes? We get market feedback. Others tell us, by buying or not buying, demonstrating customer loyalty or not, paying the price we ask or bargaining it down. The feedback can take different forms – attendance at our church, likes on our Facebook page, invitations to social events. All of this feedback falls under the heading of testing and correcting our best efforts. Individualists embrace the data; we’re glad the market is free enough to provide it. We use it as a means to improve and to help us reach our goal. If we are not able to get individual feedback – if the data that’s reaching us is filtered through someone else’s lens, or is “positioned” to us by some collective ideology – we are not fully participating and we are unable to achieve our highest purpose and meaning.
5 No-one is qualified to pass final judgment on others’ capacities or what they can do.
Should we all be equal? Certainly not in what we can achieve, because, in the division of labor, we each want to demonstrate that we can provide better service to others and be worthy of our hire. This is how individuals find their own level. To quote Dr. Jordan Peterson again, there is “a brutal principle of unequal distribution” anywhere that creative production is required. A handful of authors sell all the books. Four classical composers (Bach, Beethoven, Mozart and Tchaikovsky) wrote virtually all the music played by modern orchestras. Equality of outcomes is not available to us. But each of us can strive to be the best at what we do, to contribute as much as we can to the need of all others, and thereby achieve as much as we can, without anyone else telling us when to stop, or how far we can go. Individualism is opposed to all privilege, and on all limits to what able individuals can achieve.
6 The individual’s reward corresponds to the value of the service rendered to others.
When market feedback indicates approval of the individual’s efforts, it’s a signal for further entrepreneurial action. Do more, reach more customers, treat more patients, raise more money for your non-profit, add new features to make the service even better. If the signal remains strong, keep adding. That signal is profit, both monetary and psychic. If the marketplace perceives a continuing value in the entrepreneur’s service offering, there’s potential for a long-lasting profit stream. Most of that profit is typically ploughed into further investment to enhance service quality; or, alternatively, competitors invest in new improvements. In all cases, the customer – and society – wins.
Individualism does not refer to the existence of isolated or self-contained or selfish individuals. Social order is the result of individual actions, because each of us follows incentives to contribute as much as possible to the needs of others. The way we take part in the more extended and complex social process is through the market for our services. Individualism is an entrepreneurial order that creates a thriving society for all.
Entrepreneurial order is the social system of self-organization that F.A. Hayek described, and we summarize in Center For Individual’s 10-point manifesto for individualism.
- Everyone follows his or her own individual conscience.
- All property is private property, so I know what’s mine and respect what’s yours.
- Everyone is free to try their best, to see what they can achieve.
- Each individual contribution is tested and corrected by others.
- No-one is qualified to pass final judgment on others’ capacities or what they can do.
- The remunerations of the efforts of the individual correspond to the value of the result of his or her effort to others.
A free market satisfies these conditions. In the market, the individual takes the risk to find out if the results of his or her efforts create value for others. Everyone does their best, and the preferences of consumers tell producers what to produce more of and less of.
Entrepreneurial order is decentralized and networked to distribute power, influence and opportunity among people who find each other. The new order does not depend on hierarchy, centralized institutions, or giant global corporations mass marketing, mass distributing, and mass adverting. It is dynamic and self-organizing.
Today, as a result of new technologies such as mobile devices for universal access, platforms and apps, both entrepreneur and customer have a universal network on which to find each other and respond to each other directly. There is more scope for peer-to-peer exchange: more speed, lower, transaction costs, and higher quality of continuous, direct communication.
The Three Technologies Of Entrepreneurial Order
The first type of new technology is those the augmentation of the capabilities of the individual via greater access to knowledge, learning and intelligence. This augmentation technology – sometimes called artificial intelligence – can be applied vertically within professions and occupations to make individuals smarter in their specialty, and horizontally across the agile attributes of individuals in multiple skills, collaboration and teaming. Entrepreneur and customer will both be augmented, enabling individualized and personal responsiveness.
The second type is disintermediation – people serving people better, faster and at lower cost by cutting out middlemen, back rooms and intermediate process steps and replacing these with peer-to-peer exchange. Blockchain is the leading emergent technology here. It promises a big advance for service systems, eliminating the bias and discrimination of mediators such as banks and financial institutions.
The third type is represented by global market exchange platforms, where multiple parties on multiple sides of a platform can exchange, create and collaborate.
New Organizational Forms, New Entrepreneurial Styles.
These new technologies will change how we organize business and society. A new form of augmented self-reliance will emerge, as will new forms of social and economic structures, such as boundary-less commercial organizations and functionally independent political structures, such as prosperity zones.
A new definition of entrepreneurship will also emerge. The new entrepreneurship lies in interconnecting people, knowledge, technology, ideas and actions so that new innovations emerge. It is the interconnecting that constitutes entrepreneurship.
Research conducted by Dr Cristina Mele and Dr. Tiziana Russo Spena (both of University of Naples Federico II, Department of Economics, Management and Institutions, Napoli, Italy) points to interconnectedness as the opening of a door to an emergent and entirely new and revolutionary concept of economic, social and cultural innovation.
Entrepreneurs Co-create and Co-construct.
Entrepreneurship becomes the continuous co-construction and co-creation that results from the interconnections among a network of market actors, actions, contexts and resources. Innovation is the emergent outcome: “a shared knowing and doing” of society. Innovation is about interactions between networks of actors, a set of collaborative practices taking place on nested, interconnected networks. The next great phase of innovation is interconnecting humans and non-humans in new ways to build new innovation opportunities. There is no predicting the new experiences that will emerge.
Importantly, entrepreneurship and innovation are no longer merely business issues. Entrepreneurs will change everything: socially, culturally, material and contextually. The shared knowing and doing of an interconnected society can improve lives, evolve new institutions, and change culture.
The new innovation extends to institutions. For example, money is an institution that is currently constrained by central planning. Now, entrepreneurial application of technology is now evolving a new institution of money based on decentralized money creation, and cryptographically protected single-ownership private property rights.
The institution of political democracy is based on individuals delegating their political rights to representatives via occasional voting, after which the voter loses control and influence. New digital concepts of “liquid democracy” change the institution. Every citizen can vote on every issue at all times via smartphones and digital devices, and can delegate their voting rights to any other informed citizen on any issue if they choose to do so, without giving up power to a “representative”.
The country of Estonia is innovating the institution of citizenship of a country via e-residency on the blockchain, open to any one who applies from anywhere in the world, independent of the geography in which they reside, or the country of which they are currently a citizen.
These are just a few early examples of the kind of institutional innovation that digital interconnectivity in the service of creative entrepreneurs will bring.
A new era for freedom.
Super-connected entrepreneurs will create an unhampered system of market exchange, freed of all kinds of frictions, interventions, centralized institutions and mediation. It is the entrepreneur who will lead the way to greater freedom, and more efficient, global market exchange.
Jesus Huerta De Soto has stated that “the most just society will be the society that most forcefully promotes the entrepreneurial creativity of all the human beings who compose it”. With new technologies, we bring this ideal closer.
 Cristina Mele & Tiziana Russo-Spena, Innovating In Practice: Perspectives and Experiences, Springer, 2017
 For example, Democracy Earth Foundation, The Social Smart Contract, v 0.1, 2016, https://www.democracy.earth/#paper
 Jesus Huerta de Soto, The Ethics Of Capitalism, Journal Of Markets And Morality, Vol 2, No. 2, Fall 1999, pp150-163
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