But fascinating as it is, the workings of this great capitalist machine is lacking in human animation. The hands that keep it going, especially in the models derived from Adam Smith, are what the man said they were -- invisible. Karl Marx and his intellectual descendants acknowledged the productive genius of the capitalist class, and assigned it a crucial, but transitory, role in the history of cconomic progress. Smith assumed that capitalists would be with us always, but, in the most famous lines he ever wrote, assigned them a moral role about on a par with wolves:
In spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labors of all the thousands they employ, be the ratification of their own vain and insatiable desires . . . they are led by an invisible hand . . . and without intending it, without knowing it, advance the interest of society.
Ideas matter -- to politicians as to the rest of us. If political elites are ignorant of entrepreneurship, the reason is in part that the ideas they receive from economists are of no help to them. In standard economic theories of capitalism, the entrepreneur is a mere "scout of opportunities," a puppet of price signals, a servant of sovereign consumers, a dependent variable barely perceptible in the looming shadow of such major factors of production as land, labor, and capital, such massive numbers as money-supply and aggregate demand. Through the ideas of economists, in short, political elites have learned that capitalism, that great system so warmly hailed at election time, can exist essentially without capitalists.
It cannot. The capitalist, above all the entrepreneur, is not merely a dependent of capital, labor, and land; he defines and creates capital, lends value to land, and offers his own labor while giving effect to the otherwise amorphous labor of others. He is not chiefly a tool of markets but a maker of markets; not a scout of opportunities but a developer of opportunity; not an optimizer of resources but an inventor of them; not a reflexive respondent to existing demands but an innovator who evokes demand; not just a user of technology but a producer of it; not only a producer of garbage but a visionary who can transform it into wealth.
At the human level, down where men like Fatjo actually work their transformations, this indispensably creative function of the entrepreneur seems utterly obvious. It is a wonder that the exploits of businesspeople don't break through the abstractions of economic modeling like a hand through a cobweb. But reinforcing the fragile elegance of the economic models is an emotional compatibility between the political enterprise and the academic exercise, between the would-be servant of constituencies and the would-be modelers of a capitalism without capitalists.
This emotional compatibility forms around fear. What the theorists of campus capitalism offer the politicians is a hope of stilling their fears. These fears stem from the very nature of the endeavors of capitalists. Most entrepreneurial success stories are surprise stories: disruptive, illogical, unpredictable -- in a word, frightening. Nobody likes to be frightened, and political constituencies, especially, have a way of turning their fears into anger -- at politicians. Then economists enter, holding out the possibility of one day, somehow, controlling the tempestuous source of all this anxiety, the great machine, so-called, of "the economy."
It is a vain hope. More accurately, it is a hope with a fatal contradiction. For controlling "the economy" always means, at bottom, down there where men like Fatjo strive, controlling the men and women who make it grow, who create the wealth that sustains the world and makes everyone so nervous. But the entrepreneur cannot be controlled -- not if he is to act as an entrepreneur and thereby create wealth. Wealth is created in markets: not controlled ones where the media of exchange tick along like the men and machinery of a tight ship, but disorderly ones, like great ports, where every wealthmaker knows that his niche is a potential Pearl Harbor -- or else it is a scam.
Failure, getting blown out of the water, going belly-up, this is the fear that ultimately gave birth to the fantasy of a capitalism without capitalists. In business failures, lives are disrupted, hopes are dashed, money is wasted -- and fear takes hold. Politicians would banish capitalists for their failures -- at the very least, protect them from themselves.
Most of the ignorance and misunderstandings in the usual political view of entrepreneurial capitalists revolve around their right and freedom to fail. Even socialists tend to tolerate a profitable company. But they will never tolerate for long a thriving economy. This is because growth entails a steady stream of bankruptcies. Socialists take this as a sign of capitalism's failure, and a signal to nationalize; but even theoretical advocates of capitalism often recoil from the prospect of failure opened up by entrepreneurial struggle.
It would be one thing if a company grew and developed like a human being, beginning small, growing smoothly and rapidly during a "growth phase," maturing and stabilizing for some period as it reaches a point of rising costs and diminishing returns before eventually dying of old age and obsolescence. But in entrepreneurial companies, there is no necessary tendency to decline or any inexorable momentum to grow. Outcomes are always open. For a technologically daring and creative entrepreneur, there is no point of diminishing returns. As his learning and experience advance, his costs will tend to drop rapidly. As his prices drop and his products change, his markets can grow forever. No company has ever died of old age.
