Wednesday, February 23, 2005

The Entrepreneurial Heuristic

If people cannot be persuaded to do something voluntarily, we should not force them.

If institutions are designed correctly, then voluntaristic activity results in the betterment of the human condition.

Thus if we have any complaints about the world, we have an obligation either to solve the problem entrepreneurially or we must specify how institutions must be changed so that we can solve the problem entrepreneurially.

If someone thinks that our current media are failing, then he or she needs to propose an entrepreneurial solution or to specify how current institutions must be changed so that he can solve the problem entrepreneurially.

If someone thinks that people are not respecting the environment adequately, he or she needs to propose an entrepreneurial solution or to specify how current institutions must be changed so that he can solve the problem entrepreneurially.

If someone thinks that teachers are not being paid adequately, he or she must propose an entrepreneurial solution or specify how current institutions must be changed so that he can solve the problem entrepreneurially.

This is the sort of ethos that our movement ought to cultivate and respect. No whining, just do it. Or at least explain intelligently what legislation would need to change so that you (or someone) can do it.

I describe this approach as an “entrepreneurial heuristic” because I see it as a discovery process: This is how we need to think about how to solve social problems. We might not be able to come up with a solution immediately, and I can’t guarantee that we can solve all problems this way. But I do think that a commitment to this approach to solving social problems will help us to break new ground constantly, both in theory and practice.

For instance, I do think that women are, to some extent, undervalued in the marketplace. According to Kirzner’s theory of entrepreneurial alertness, anytime that something is undervalued in the marketplace, there is therefore a profit opportunity available to be made. I think that there are profit opportunities available for someone to create more female-friendly organizations that more constructively manage and utilize female characteristics. I do think that there are numerous organizations that are very much in the process of creating more female-friendly workplaces, and are thereby taking advantage of this profit opportunity; every organization that is a better place for women to work, which successfully attracts and retains disproportionately talented women, is taking advantage of the extent to which women are undervalued in the marketplace. That said, as long as there are women who would work harder, more effectively, and more happily under different managerial circumstances, there will continue to be unexploited entrepreneurial opportunities for those who aspire to create more female-friendly workplaces.

This approach is more honorable, respectful, and effective that is “fighting” for legislation that forces organizations to pay women the same as men. If an organization does not value a woman as much as a man, and is forced to pay her the same, resentment and evasion will take place in the organization and a destructive, controlling bureaucracy will undermine the work of all organizations, even if they had previously been treating women well.

Moreover this is not merely a matter of women. Insofar as some of us believe that human beings in general could be significantly happier and more fulfilled at work, we have an obligation to create such enterprises. Insofar as some of us believe that people could be significantly happier and more fulfilled in their entertainment and consumption habits, we have an obligation to create enterprises that offer more fulfilling entertainment and consumption options. Insofar as some of us believe that young people could be significantly happier and more fulfilled during their school years, we have an obligation to create schools at which students are happier and more fulfilled.

I have created such schools and have discovered that doing so is mostly against the law to do so. I now am working to change the laws so that it will become legal to provide young people with happy, fulfilling educational opportunities.

In the past, we have allowed ourselves to whine and complain about the state of the world. The claim of intellectuals that they are providing useful work by providing a “critique” of society is absurd. Every “social critique” by intellectuals should be transformed into an entrepreneurial obligation. We need to quit the habit of whining and complaining. We need to get busy and do something about it.

If we believe that low-wage workers are “underpaid,” then we need to create a business that pays them “what they are worth.” When we try to do this, I’m afraid that in many cases we will discover that their labor is not worth very much. I have been in the situation of eagerly seeking an office manager and being able to pay this person $45,000. And I have gone through dozens of applicants who were simply inadequate: Their labor was not worth $45,000. If I hired a less than competent person for the job, I would be failing the students, parents, and teachers. I have hired great office managers who have been high school dropouts; higher education is not necessary. But they do need to be bright, motivated, organized, and responsible. As a manager, I can’t and shouldn’t pay an incompetent person more than he or she is worth in the labor market.

When we lose in the marketplace because someone else is providing a better product at a better price, or when we fail to sell our goods and services, we have to acknowledge that we have not done a good enough job. We have a responsibility to improve.


Anonymous michael vassar said...

Very well put piece.
I would consider the evidence that women are underpaid to be mixed, but it is clear that short men are severely underpaid, and probably fat people and ugly people are more severly underpaid. Malcolm Gladwell writes interesting articles on this topic.
By the way, the name flow and the first quote on the main page have taoist connotations. Have you tried contacting/involving existing taoist organizations?

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