The entrepreneurial spirit is the spirit of enterprise: ambition to succeed, initiative in taking action, alertness to opportunity.
It means being proactive rather than reacting to events and opportunities as they come along. It involves a full acceptance of the responsibility for initiating action to achieve one’s goals and for dealing with the consequences that arise as one does so.
The managerial spirit is prepared to do likewise but only up to a point. It is the attitude: “I’ll take responsibility for achieving my goals—if someone else provides the opportunities and the necessary means. I’ll work hard—if someone gives me a job. I’ll play by the rules, but someone else has to make sure that the rules are enforced.
Many people tend to see society as a kind of family in which the leaders will ensure that good behavior is rewarded. They tend to see the economy as a kind of schoolroom or schoolyard, in which grades and prizes will be given out in accordance with merit. They never fully outgrow the sense of responsibility they first learned as children, when parents and teachers served as intermediaries between them and reality. Real responsibility means dealing with cause-and-effect relationships in reality. Children are not able to do this, so parents and teachers provide rules that serve as proxies for cause-and-effect, rules that teach children about consequences without exposing them fully to the often-harsh reality of real risks in the world. But then we have to grow up and realize that the world is not a home. Society is not a family. An economy is not a game or race or test. Taking full responsibility in action, as an adult, means dealing directly with reality, not through any intermediary.
As Bruce Judson, author of Going It Alone, points out:
When you’re on your own, for better or worse, there is no “A” for effort. If what you’re doing doesn’t work, you still have to pay the mortgage. You have to accept responsibility for whatever happens to you. (Gallup Management Journal, “The Talent to ‘Go It Alone’”)
Politicians often try to play the middle class against the wealthy by referring to the former as people “who play by the rules.” What “rules” are they referring to? In a market economy, the only economic rules are those which limit one to voluntary exchange, respecting property rights, and keeping contracts. There can be no “rule” that one’s job—or even the company one works for—will exist forever. There can be no “rule” that a job, or an investment, or the real estate market will continue to offer the opportunities and returns they have in the past. As every investment prospectus says, “Past performance is no guarantee of future returns.”
The entrepreneurial concept of responsibility is an analogy, drawing on traits commonly associated with business entrepreneurs in order to capture the meaning of responsibility within the moral code of individualism. The point of the analogy is to make it clear how different that conception is from the more common, “managerial” view of responsibility as self-restraint, compliance with duty, living by the rules.
Think of the difference between a manager of a business and an entrepreneur. A manager manages the business for someone else. He is in charge—up to a point. He makes decisions and exerts effort within a sphere that is delimited by someone else, the owner. The manager has to go by the rules and work for the goals set by the owner. He can expect rewards if he goes by the rules and achieves the goals, and he has to exercise thought and initiative to do so. But his independence has limits; there comes a point where he is not to question why. An entrepreneur, by contrast, is an owner. The business belongs to him. He sets its course, chooses its goals, makes the rules. He is an initiator, all the way down.
There is obviously nothing wrong with being a manager. It is a highly productive and challenging form of work, essential to any kind of corporate enterprise. As a job, a form of personal productivity, it demands intelligence and ambition. My point is that the conventional, flawed view of responsibility asks us to think of ourselves as managers of our own lives, responsible to someone or something outside ourselves. It is a view of one’s life as a branch office one has been given to operate in accordance with rules issued by the main office, with the expectation of rewards for going by the book. The Objectivist view, by contrast—a view consonant with the Founders’ conception of individual rights—asks us to be entrepreneurs in our lives: full owners and initiators of our goals and actions.
Similarly, an entrepreneur in the literal sense is someone who performs a specific economic function. Not all of us can be entrepreneurs, but we speak more generally of the “entrepreneurial spirit” as a set of character traits possessed by those who perform that function most successfully. In that sense, the entrepreneurial spirit is something that all of us can and should aspire to.
To spell out the meaning of the analogy more clearly, consider three points of contrast between the entrepreneurial and the managerial conceptions of responsibility, pertaining to the pursuit of goals, self-ownership, and commitment to reason.
The managerial outlook, with its concrete-bound conception of responsibility, tends to view long-established practices and expectations as entitlements. It tends to assume that someone else has the responsibility for dealing with the economic reality outside the walls of the firm. It is willing to give “an honest day’s work for an honest day’s pay,” but it expects someone—if not the corporation, then the government—to guarantee protection against economic risks such as unemployment and disability. It regards security as a right, rather than an achievement.
Those who have an entrepreneurial outlook on life are aware that to live by trade with others, they must not only produce something of value, they must also accept, as facts of reality, both the value judgments that others place on their product and the larger economic forces that arise from the interplay of supply and demand: the forces that determine prices, interest rates, the business cycle, etc. Entrepreneurs are aware that economic change and its attendant risks are a fact of life, that no one and no institution can entirely eliminate risk factors, and that they are responsible for insuring themselves against such risks. They know that they must save for their retirement instead of relying on Social Security. They know that they must continually invest in their own knowledge and skills, instead of assuming that a high-school or college or graduate degree is a lifelong passport to employment in a certain field.
As noted above, the entrepreneurial outlook does not require that one be an entrepreneur. It does require that if one works for a company, one must regard the relationship as a trade, a sale of one’s time and talent. One must recognize that that trade is possible only if one’s own goals and interests overlap with those of the company, and only for as long as that overlap exists.
What is true in the economic sphere is equally true in every other sphere of life. In regard to family, for example, the entrepreneurial outlook does not assume that one must (try to) love one’s parents and siblings, regardless of their actions and character. It does not assume that one must conform to the conventional pattern of getting married, having children, putting them through college, and retiring at 65. That pattern is—or was—conventional because it worked for many people. There’s nothing wrong with choosing it if it works for you. But there’s nothing irresponsible in choosing another pattern of life that works better. The point is to choose on the basis of your cherished and chosen values, and then to act accordingly—that’s the entrepreneurial spirit.
The sense of self-ownership is the second major element of the entrepreneurial outlook. An entrepreneur is one who owns the business and controls it. It belongs to him. Of course he is responsible to his workers, his customers, his investors, for any obligations he has incurred to them. But those obligations are the result of his own choices, the contracts he has made. He has no unchosen duties to others except to respect their rights. He does not answer to anyone else. Ultimately, he is responsible only to himself.
Not all of us own the businesses we work for. But all of us are self-owners. The concept of self-ownership is a partly metaphorical way of capturing the fact that individuals are ends in themselves. That fact is easier to state in the abstract than it is to embody in the concrete, in one’s actual outlook and practice. The sense of self-ownership manifests itself in the kind of total autonomy that leads us to say of someone: “He is his own man.” It involves a commitment to one’s own happiness as a true end-in-itself—not something one has to apologize for pursuing, not something that one may enjoy only on condition that it serves some other end. It involves the ability to experience happiness without any tendril of guilt at having succeeded. It involves a sense that the only person one answers to, ultimately, is oneself.
Needless to say, this is not the outlook encouraged by conventional morality. Throughout most of history, people have been told that they do not belong to themselves but to God. A major strand of religious thought reflects a managerial conception of the self: man the creature belongs to God the creator; God is the owner, we exist for His sake, and we are managers of ourselves on His behalf, answerable to Him. There is even a book of company policies we have to follow—the Bible, the Qur’an, the Catholic catechism.
In The Screwtape Letters, C.S. Lewis expounded the moral code of Christianity by the delightful device of having an older, experienced devil advise his young nephew on the techniques of corrupting humans. Among other things, Uncle Screwtape offers the following advice:
The sense of ownership in general is always to be encouraged. The humans are always putting up claims to ownership which sound equally funny in Heaven and in Hell, and we must keep them doing so. Much of the modern resistance to chastity comes from men’s belief that they ‘own’ their bodies—those vast and perilous estates, pulsating with the energy that made the worlds, in which they find themselves without their consent and from which they are ejected at the pleasure of Another! ...And all the time...the joke is that the word ‘mine’ in its fully possessive sense cannot be uttered by a human being about anything. In the long run either Our Father or the Enemy [i.e., God] will say ‘mine’ of each thing that exists, and especially of each man. They will find out in the end, never fear, to whom their time, their souls, and their bodies really belong—certainly not to them, whatever happens.
In our own time, to a large extent, the public good has replaced God as the “owner” of the self. Society—the community, the nation, the brotherhood of man—has become the entity to which we are ultimately answerable. At the beginning of the 20th century, John Dewey said, “Within the flickering inconsequential acts of separate selves dwells a sense of the whole which claims and dignifies them.” That whole is society, and Dewey’s belief in the primacy of society over the individual was the basis for his educational theory, which held that the primary purpose of education is social adjustment and cooperation, rather than developing the child’s ability to think, achieve, and live as an independent adult.
More recently, American sociologist Robert Bellah and his collaborators published a critique of individualism called The Habits of the Heart, in which they argued: “Finally, we are not simply ends in ourselves, either as individuals or as a society. We are parts of a larger social whole....” This collectivist view has come to be called communitarianism, and it is the premise of calls for consensus and “a new era of responsibility.” By contrast, the entrepreneurial outlook is inherently individualist. Society is no more a God or a master than it is a family. It is a panoply of opportunities for rewarding exchanges with other self-owning individuals in pursuit of our own happiness.
Another strand in the metaphor of self-ownership has to do with pride and self-esteem. As Ayn Rand often observed, a person of self-esteem cannot truly regard himself as a sacrificial victim, existing only to serve others. Those who take pride in themselves may be highly benevolent to others; they may be outgoing and sensitive; they may be good at collaboration and willing to compromise to get the job done. Like an entrepreneur who is fiercely proud and protective of his enterprise, however, they do not compromise their principles or subordinate their goals or their judgment to the will of others.
In speaking of happiness, I do not mean momentary physical pleasure. I mean the kind of satisfaction that comes from achieving the things we value across the whole course of our lives, or at least in the major areas of life. It is in this sense that we speak of a happy marriage or a person who is happy in his work. That kind of happiness is not the product of acting by whim or impulse. Reason is the human method of cognitive functioning and our only guide to action. It is our means of resolving conflicts among the things we want, our means of adapting present actions to long-term goals, and our means of predicting the likely consequences of our actions.
The role of reason goes beyond serving as a means to achieving desired ends. It is also involved in the choice of ends. All of us have needs that must be satisfied if we’re going to be happy. There are universal categories of things that all of us need as human beings, such as a sense of achievement and efficacy in our work, leisure and recreation, relationships that bring us friendship and intimacy. Within these categories, all of us differ as individuals in the particular things we need—for example the particular kind of work that is suited to our ability, temperament, personality. There is no way to identify these needs without observation and rational thought.
Ayn Rand had an eloquent way of expressing the relationship between happiness and reason. Happiness, she said, is a state of non-contradictory joy. Joy is the emotional content, but reason is our means of eliminating internal conflicts among the sources of joy: contradictions between one goal and another, contradictions between the short-term and the long-term, contradictions between our desires and the facts of reality, including the facts about our needs. We cannot achieve a state of non-contradictory joy if we are torn apart by conflicting desires, or if we wish for things that contradict the facts of reality.
The final element in the entrepreneurial concept of responsibility is that entrepreneurs take full responsibility for the exercise of reason. They make up their own minds, they gather their own information, they don’t accept received wisdom, they rely on their own judgment. This trait embodies the principle that reason is a faculty that must be exercised by the individual. No one else can think for us, or weigh the facts, or reach decisions. That is our responsibility. And the responsibility includes choosing our basic values and convictions by first-hand thought. To be responsible all the way down, we have to take responsibility for our own principles and values, which means knowing why we have accepted them.
Adherents of the conventional view of morality often claim that we have to choose between subjective whim and compliance with social custom and tradition. In fact, these are two forms of cognitive irresponsibility. Subjectivists, who act on impulse, ignoring ethical standards or even demanding liberation from them, are abandoning the essential function of reason: to grasp reality. But traditionalists who conform to social rules because they are the rules are abandoning the task of grasping reality. Without adopting a first-hand approach, how can one be sure that the things he has been taught to believe are really consistent with the facts or with his happiness? And if a person believes what he does because he accepts some authority, how can anyone else be sure that he won’t switch tomorrow to another authority?
This last point is a serious problem for those who advocate a return to traditional values, in line with a managerial view of moral responsibility. If morality consists in social customs and traditions to which individuals conform, rather than principles which they grasp by means of reason, then it is vital for society to maintain a high degree of uniformity in moral attitudes. Too much variety will weaken the individual’s tendency to conform; it will encourage him to shop around for his values. Rules not based on reason cannot survive a challenge from rival ideas. They cannot maintain themselves by argument or persuasion; their status as rules of behavior depends on their being widely accepted and taken for granted. They depend on cultural stability. That’s one reason why historical periods of intense moral inquiry, as in classical Athens, occurred during periods of heightened trade across boundaries of culture and religion. The same is true of our contemporary global economy.
Choosing our goals and pursuing them independently, with pride of ownership in ourselves and reliance on reason—these entrepreneurial virtues apply at any time but are especially important today. In our personal lives, it is only these virtues that can help us navigate through the roiling waters of a bad economy. In our political lives, we cannot defend our rights without defending their moral basis. We will never halt the expansion of government or preserve our freedom without demonstrating—in words and by our example—that the entrepreneurial way of life is the human way.
David Kelley earned his Ph.D. in philosophy from Princeton University in 1975, and later taught cognitive science and philosophy at Vassar College and Brandeis University. His articles on social issues and public policy have appeared in Harpers, The Sciences, Reason, Harvard Business Review, The Freeman, and elsewhere. His books include Unrugged Individualism: The Selfish Basis of Benevolence; The Contested Legacy of Ayn Rand; TheEvidence of the Senses; and The Art of Reasoning, one of the most widely used logic textbooks in the country. Kelley is founder and executive director of The Atlas Society.
TNI articles by David Kelley Atlas Society articles by David Kelley
David Kelley is the founder of The Atlas Society. A professional philosopher, teacher, and best-selling author, he has been a leading proponent of Objectivism for more than 25 years.