Entrepreneurship Can Be Hazardous to Your Health
The Economist ran a good article last week about the enormous difficulty of being an entrepreneur. In particular, the piece emphasizes the importance of doing away with the mythology of entrepreneurship as a life of romance, adventure, and the heroic pursuit of greatness. In reality, entrepreneurship is grueling and unforgiving, and can destroy not only an entrepreneur’s finances, but her mental and physical health as well. Now, there’s irony in the fact that the article appears on The Economist’s Schumpeter Blog, given that Schumpeter himself helped popularize the romantic view of entrepreneurship. But the article rightly points out that thinking about entrepreneurship in idealistic terms glosses over the harsh truth:
It is fashionable to romanticise entrepreneurs. Business professors celebrate the geniuses who break the rules and change the world. Politicians praise them as wealth creators. Glossy magazines drool over Richard Branson’s villa on Lake Como. But the reality can be as romantic as chewing glass: first-time founders have the job security of zero-hour contract workers, the money worries of chronic gamblers and the social life of hermits.
It’s the romantic view that encourages individuals and institutions to throw mountains of resources into “being more entrepreneurial,” without thinking about the cost of that behavior. Yes, entrepreneurs have a profound impact on our lives, but it’s important to come to grips with the practical implications of that fact, and not get lost in idealizations based on a few extreme examples of success. This is one reason entrepreneurship is best understood in economic terms: when we reduce it to its basic elements, it’s much easier to see the fundamental contribution entrepreneurs make to human welfare. Judgment and economic calculation may be “mundane” concepts, but they are the indispensable core of the market process. Naturally enough, taking a sober approach, such as the Austrian view, reveals more about the world than the idealized picture:
The paradox of the current, romantic view of entrepreneurs is that it leads us to undervalue their achievements. It is easy to envy people if you focus on a handful of success stories.
The implication is that once we understand what entrepreneurs truly give up, personally and professionally, in order to achieve success in the market, we will value their efforts—and even their failures—all the more, even if it means we envy them less. Austrians should appreciate this insight, given that it adds extra weight to Mises’ saying that entrepreneurship is the driving force of the market.