Still, the chief dreamers of a capitalism without capitalists, wealth without the rich, progress without risk, tend to be in the social-democratic left. In pursuit of the dream, the crucial step is to deprive entrepreneurs of disposable funds. Even in Silicon Valley, the center of sophisticated venture capital, around 90% of all technology startups begin with personal savings. All programs that take them away, that favor established companies, certified borrowers, and immobile forms of pay, pensions, and personal wealth; all programs that militate against mobile capital, disposable savings, and small-business borrowing; all these schemes of capitalism without capitalists will tend to thwart the turbulent, unpredictable processes of innovation and growth.
No discipline of the money supply or reduction in government spending, no support scheme for innovation and enterprise, no program for creating jobs, no subsidy for productive investment can have any significant effect without an increase in the numbers and savings of entrepreneurs. Even with an array of government bureaucracies, loan guarantees, and celebrations of entrepreneurship, the social-democratic economy gradually comes to resemble the feudal and static societies of the precapitalist era.
This may be precisely what social-democratic idealism wants -- a society in which individuals rise and fall according to academic and corporate standards of "merit" or "comparable worth," but in which the larger structures are as placid, and as safe, and as comfortable as a college campus, an industrial park, or a great cultural foundation. There are no conflicts among organizations, no crazily erratic courses to triumph or disaster -- all is tranquil and controlled.
Neither, however, will there be any wealth-making in this society. For wealth-making is the province of the entrepreneur, the adventurous capitalist, the creative revolutionary, the very sort of "mover and shaker" whom social-democratic traditionalists will have banished from the peaceable kingdom.
This process of entrepreneurial decline is already well under way in the social democracies of Western Europe. Whether these countries will be able to recover their entrepreneurial vitality remains uncertain. But in the United States, the forces of paralysis are much less effectively organized. With the competitive clash of 50 different state governments, a continuing impulse toward deregulation which flourished even under President Carter, a disruptive onrush of immigration, legal and illegal, a potpourri of religious faiths and ethnic factions, a rebellious cowboy individualism, and a populist revolt against excessive taxation, the United States continues to resist the blandishments of social democracy, still reverberates with entrepreneurial flair.
Largely expelled from the capital-intensive domains of heavy manufacturing, American entrepreneurs and venture capitalists performed miracles in the skill-intensive realms of high technology and uncapitalized software. But during the mid-1970s, when the capital-gains tax rose to a nominal level of nearly 50% -- confiscating more than 100% of all net real capital gains -- the United States nearly succeeded in destroying its most precious assets of entrepreneurship.
Nonetheless, with the tax act of 1978 and the rise of the spirit of enterprise, Americans broke free of the social-democratic slough. During a time when leading economists on all sides of the political spectrum were predicting worldwide depression, America's entrepreneurs have been making a defiant statement of their optimism and faith. They have been starting new companies at an all-time record rate of some 630,000 a year, more than three times the number begun annually in the supposedly thriving years of the early 1960s, and more than seven times the rate of the high-tax 50s. Venture capitalists are pouring unprecedented billions into thousands of start-ups in a range of new technologies, from bioengineering to fiber optics.
Scores of new semiconductor and computer companies are rising up in the face of massive efforts by giant Japanese corporations in league with a commercially ambitious government. Wildcat oil and gas prospectors are still fanning out across the country and around the world in the face of sinking prices and a short-term glut of oil. Most important in this American resistance to social-democratic planning are the immigrants from Latin America, Asia, Europe, Russia, and the Middle East who continue to press to the shores of the United States, starting companies and creating jobs, in the face of perennial xenophobia and unbelief from the prophets and protectionists of the welfare state.
Entrepreneurs everywhere ignored the suave voices of expertise: the economists who deny their role as the driving force of all economic growth; the psychologists who identify their work and sacrifice as an expression of greed; the sociologists who see their dreams as nostalgia for a lost frontier; the politicians who call their profits unearned and their riches pure luck; the pundits who call this investment-led and entrepreneurial recovery an effect of the "consumers" rather than of the producers of wealth.
Bullheaded, defiant, tenacious, creative, the American entrepreneur kept solving the problems of the world even faster than the world could create them. Whether these triumphs can continue will depend on whether the politicians who win in America for the rest of the decade celebrate entrepreneurs chiefly to tame them and take their money -- or whether they foster the high adventures and redemptive risks of an economy of heroes.*
