It used to puzzle people -- Adam Smith, for example, and Napolean, and, very likely, the Kaiser and Hitler, too -- that Britain, "a nation of shopkeepers," in Smith's famous phrase, should have founded and long defended one of the greatest empires in the history of the world. In times of crisis, the British are a formidable lot: tenacious, resourceful, full of Churchillian pluck. But in less interesting times, which is most of the time, they seem stricken by the shopkeeper's malaise -- a low-grade fever of anxiety in constant struggle with complacency.
There has been an epidemic of shopkeeper's malaise in the past 30 years, with complacency getting the upper hand. The gallant defenders of the West were proud of themselves after World War II, and they were tired. As individuals, they felt entitled to a living from the state, more or less regardless of effort and contribution. As a country, they felt entitled to a living from the community of nations.
That the community of nations might not oblige, that the helping hands of the state might be overextended, were truths slow to penetrate the malaise. Eventually, however, they found a somewhat improbable home in Margaret Thatcher, a shopkeeper's daughter who believed devoutly in the galvanizing effects of free enterprise and the unfettered market. Such views were alarming to the Tory squirarchy, but they were also curiously thrilling. The party made her its leader, and in 1979, on becoming prime minister, she promised a liberation of the entrepreneurial spirit.
Now, five years later, the spirit appears to be stirring -- fitfully, spottily, but definitely in the air. The statistics are flatteringly described as crude, but at least they exist. They show that in 1980, '81, and '82, something like 20,000 new businesses were registered in Great Britain.
This is a modest accomplishment in view of the government's efforts. Each Thatcher budget has brought in a series of measures designed to ease the burdens on small business people and to entice more of them to set up enterprises. Most useful are the loans-guarantee program, which is intended to stimulate heretofore skeptical bankers, and the business expansion schemes that give tax breaks to would-be investors in small companies.
The private sector has also been helpful. Nearly all the big banks have set up small-business divisions. Accounting firms have set up special departments. Big companies, whether nationalized (British Steel) or not (The Boots Co., Courtaulds, Esso Petroleum, Imperial Group, Vauxhall Motors), have all nurtured small subsidiaries. Multinationals (Prudential Corp.) have vied with government development organizations and local agencies to demonstrate whose is the greatest devotion to the small business person.
Venture capital has increased and multiplied in the past five years, and venture capitalists are prepared to invest in promising endeavors. Britain probably has more than 60 venture partnerships, with a combined capital of ?300 million, most of it raised quite recently. In addition, an unlisted securities market, established in 1980, has provided some financing for about 200 companies. With looser regulations, lower fees, and smaller allowable offerings, this market offers higher potential rewards for both entrepreneur and investor.
The entrepreneurial spirit has been encouraged by other developments as well. Management leveraged buyouts, rare in Britain until recently, now are becoming much more common. British universities, those cloisters of the intellectual graces, are at last beginning to offer business courses, management training, and scientific research programs that may have some slight relevance to the world of commerce and manufacturing. Science parks now adorn three universities -- Aston, Heriot-Watt, and Cambridge. More are planned and there are several others unconnected to universities.
Just as important, Britain may now boast of one or two individuals, and several small companies, which are dramatic models of entrepreneurial daring and persistence. Heroes are vital, especially in high-technology industries. They encourage the timid, the overly prudent, to hazard a break with their current employers and set up businesses of their own. This is a well-worn path in California's Silicon Valley, where self-made millionaires dazedly lurch from their garages every day, so common that they are celebrities only to their neighbors. But Britain has Sir Clive Sinclair, a Cambridge-based adventurer, whose face is known in all the land. Televised, it launched a million computers in less than three years, and plumped up his worth to an estimated ?130 million. Since 1980, more than 200 companies have gone public on the unlisted securities market, creating -- says the accounting firm of Touche Ross -- at least 115 paper millionaires.
Entrepreneurs get another boost from foreign companies looking for a place to invest. Many seem to favor Britain. American electronics companies, for example, prefer it to all other European countries, and to Mexico, Canada, Taiwan, and Japan. Its membership in the European Economic Community (EEC) is now part of the attraction, of course; but so is a widespread perception that Britain has a good supply of trained manpower, particularly scientists, and a happier university-industry relationship than exists in most competitive nations.
Many of the major U.S. electronics companies have established colonies in Silicon Glen, Scotland's echo of the California valley. IBM is there, as is National Semiconductor, Motorola, Wang Laboratories, General Instrument, and NEC (from Japan). Others have subsidiaries elsewhere in the United Kingdom.
The area around the M4 motorway, which undulates westward from London, bears some resemblance to Massachusetts's Route 128. Hewlett-Packard Co. is there, for instance, and Digital Equipment Corp. will have a sales office in the area soon. Most of these immigrant concerns seem delighted with their choice; many are expanding. Hewlett-Packard is planning to build a new research facility outside Bristol.
The hope is that these giants will foster indigenous entrepreneurship by providing a market for small-business products and by spinning off their employees as independent businesspeople. It is a justifiable hope: The success of the M4 corridor owes much to Ferranti PLC, the military electronics company; and to International Computers Ltd. PLC, one of Britain's biggest computer manufacturers. Silicon Fen -- the dank lowlands around Cambridge -- has fed on Pye PLC, a large electronics firm; and Silicon Glen has recruited its tartan entrepreneurs from Burroughs, Hewlett-Packard, and Ferranti. All of this may account for the U.K.'s comparative success in Europe as makers and marketers of microcomputers, semiconductors, software, and the like.
Yet all these cheery allusions to Silicon Valley may someday be remembered as little more than a folly of grandeur. Britain still has a lamentable record at matching brains and capital. More accurately, it prefers to match its money to other minds. Roughly $600 million flowed out of Britain last year into U.S. venture capital partnerships. During the same period, says the London office of Wellesley Hills, Mass.-based Venture Economics, the British put only about ?150 million into comparable funds in their own country. New British endeavors such as Biogen, a biotechnology outfit set up in the late 1970s, and Rodime, a new disk-drive manufacturer, had to go to America for the money to get started.
Most British enterprises are nowhere near the avant-garde of the new technologies. The internal market for such goods and services is small, for one thing, and even within the EEC it seems easier for a buyer to let his fingers do the walking up and down the American list of original equipment makers than to suffer the import-export imbroglios of that allegedly free-trade community. The typical new-business-venture story in Britain is that of a couple who were working for a large chemical company, Imperial Chemical Industries (ICI), and decided to sally forth on their own. Toward some perilous frontier of genetics? Alas, they opened a drugstore. It was a calculation of pressing concerns: the secure income and leisure at ICI versus the secure income and leisure at the drugstore. Venturousness had nothing to do with it.
The deepest difficulties in the way of small business in Britain revolve around business itself -- the appetite for it, the know-how. Businesspeople may complain that the government isn't doing more for their cause (66% in a recent survey saw either no change or a worsening in the state's attitude); they may rail against the tariff on imported microchips; they may even loathe British beer. But the fact is that, more than anything, they hate risking their time and money.
The Victorians started it. Two or three generations after Edmund Cartwright, James Hargreaves, and James Watt led England into the 18th century's Industrial Revolution, the country had become Karl Marx's prime example of the contradictions, the squalor, the stupidities, and the injustices of capitalism. The Victorians coasted on the comfortable assumption that their head start in manufacturing would last forever. They extracted from their aging plants, and from their increasingly restive workers, everything they could get -- and invested most of it abroad. They put little back: neither into the plants nor into their society. Meanwhile, their sons entered an educational and social "course of honor" that pointed anywhere but to business enterprise. Undergraduates were taught to analyze, theorize, criticize -- to produce not money and jobs, but books and brilliant conversation. They could, like Lord Peter Wimsey, solve murders; or, like James Bond, commit them. But they would not make money: They would spend it instead. The result was that by the first World War, Britain was more nearly a victim than a victor in the revolution it had set in motion.
There were only two exceptions to this rule, two lines of endeavor that were both respectable and related to the means of production, distribution, and exchange. One was merchant banking, the other was farming. On both the state looked fondly and solicitously.
Other ways of making money were not so well treated. On the contrary, many were punitively taxed. Speculations consequently became the typical road to riches. Clever men (but not quite respectable men) speculated on the stock exchange; during the 1960s and 1970s, they speculated on real estate. To this day, those who would get rich in Britain believe that if it must be done, it were better that it be done quickly. The merchant bank Hill Samuel & Co. Ltd., for instance, recently launched a scheme that ploughs private investors' money into farming. The scheme depends on the government's business-expansion program, which was designed to help small business people. Investors then get tax relief at the top marginal rate. It is an almost parodic British operation.
All this was supposed to have changed many years ago. Labor's Sir Harold Wilson, arriving in power at the-end of 13 years of Tory rule, vowed that, as prime minister, he would bring "the white heat of the technological revolution" to bear on Britain. The Tories' Edward Heath, the first prime minister of his party not to have gone to a public school, was thought to spell the end of its bumbling squirarchical traditions. The same was said of Margaret Thatcher, the grocer's daughter who embodies everything the old aristocracy detested. Yet her cabinet is still dominated by farmers, happy accomplices of the European Economic Community's agricultural policy, if not by Old Etonians.
It will take time for the British to catch the venturous business spirit. The government still works to palliate the shopkeeper's malaise, not to cure it. Tax breaks go to the middle class for home mortgages. Businesses are still permitted to hand out cars and other nontaxable perquisites in lieu of higher taxable salaries. Laws keep most executive pensions immobile, which keeps executives immobile, too. All this saps the energy and imagination of people who might sink their last penny into a new business. The people stay static, the economy with them.
Still, the usual winds of change include strong new currents of enterprise. The former head of Silicon Valley's Fairchild Camera & Equipment Corp., Wilfred Corrigan, once a British brain drainee, now finds a "real entrepreneurial atmosphere" in his old country. Paul Sanger, a partner in the Atlanta-based public relations consulting firm of Kennedy Sanger, also sees a difference. As one who often aids British companies seeking to break into the American market, he believes that their aggressiveness abroad is born of a new self-confidence at home. "Small changes -- a new balance between employers and unions, the cut in the corporation tax -- have persuaded businessmen that the struggle is worth it. Moreover, there is a new sense that the professions into which bright young people used to go no longer hold the old promise. Who wants to be a civil servant nowadays? Business is becoming the cultural norm."
There are other signs. Sir Kenneth Alexander, vice-chancellor of Stirling University, personally persuaded Wang Laboratories to put ?40 million and eventually 700 employees on his campus. Edinburgh and Heriot-Watt Universities have jointly launched a biotechnology company to do contract research for industry. And Sir Clive Sinclair is still a national hero. Of course, it remains less glamorous to run a launderette than a microcomputer company, but it is no longer considered quite so peculiar for young men to want to go into industry. In Britain today, it is at last becoming respectable to describe oneself as an entrepreneur.