What's at stake in the social justice debate
The most interesting cultural debate of modern times is about the free expression of ideas. The main instigators of this debate are the social justice movement. It champions people who lack or are seen as lacking social power, like women, racial minorities and transgendered people. It does this by criticizing people who say and do things that hurt or reinforce the powerlessness of these groups. An example may be the ‘misgendering’ of a transgendered person – that is, referring to someone as a man when they identify as a woman.
Opponents of the social justice movement are numerous but intellectually disorganized. In this post I hope to draw the lines of battle as fairly as possible in order to make the fundamental argument clearer to both sides. I will try to make a case for the side I prefer in a future post.
The social justice movement sometimes tries to “show the door” to people who say what it sees as bad things. One example was the campaign against Brendan Eich after he was made CEO of the Mozilla Corporation, which makes the Firefox web browser. Eich, who invented the Javascript coding language, had donated $1,000 to the anti-gay marriage campaign in California six years previously. This led to a campaign for a boycott of Mozilla products and calls by Mozilla employees for Eich to resign. Ultimately, Eich resigned.
Another recent example is the (comparatively muted) reaction to TV presenter Judy Finnegan’s discussion of a rapist footballer on Loose Women earlier this week. Finnegan argued that because the rape was not violent and the victim was drunk at the time, the footballer should be able to return to playing football after he had served his time. This has prompted calls for apologies and so on.
The Eich case is significant, the Finnegan case is not. But both are essentially skirmishes in the debate over what we can say in public and what we can't. Note that I disagree with both Eich and Finnegan – I support gay marriage and I don’t think ‘non-violent’ rape is any less bad than violent rape (except the obvious additional injuries and trauma associated with any violence).
But the crucial issue is not whether these beliefs are good or bad, it’s whether they’re acceptable to say in public. This is what distinguishes the social justice movement and makes it interesting: its aims are to discourage the expression of certain bad beliefs, not to correct or rebut them. It’s not about whether Eich or Finnegan’s beliefs are right or wrong, it’s about whether society should tolerate their expression at all.
This is very important. Much of the content of the social justice movement’s beliefs is either right or trivial – gay rights are good, acceptance of transgendered people is good, etc. The idea that makes the social justice movement special is the idea that some ‘words matter’ so much that we need to stop them from being said through social and consumer pressure.
For the most part, the debate is not about legislation on either side. Most social justice advocates want to boycott firms that employ people with bad beliefs and socially shun people with bad beliefs. Some have sudden conversions to ‘thin libertarianism’ when opponents say they are undermining free speech, claiming that the only kind of freedom of speech worth caring about is that affected by the state.
But this is silly. Private actions can impose costs on others to an enormous extent. If being a Muslim in Britain meant losing your job and losing your friends, it would be a significant and meaningful limit to your freedom to be a Muslim. To the extent that this happens, it is a meaningful limit on Muslims’ freedom. The consequences are what matter.
Members of the social justice movement might point out that words do indeed have consequences. Eich’s donation helped the platform of people who want to restrict gay rights; Finnegan’s beliefs may lead to greater tolerance for rapists and hence, at the margin, more rapes. And almost everyone thinks that some words should be restricted: harassment and threats can ruin people’s lives and it is for the best that certain kinds are illegal.
What’s more, lots of people who think it’s bad to boycott a firm for employing a transphobe think it’s right to boycott a firm for employing, say, a racist. And virtually everyone thinks it’s OK for a firm to fire an employee for being rude, obnoxious or dishonest.
But this may go too far. Even if words can have bad consequences, they can have good consequences too. A utilitarian justification for free speech is that we need it to discover what’s true. Many beliefs that once seemed untrue to almost everyone later became very convincing to almost everyone, like heliocentrism and equality for non-whites. We can never be sure of practically any of our beliefs, but we do seem to have the ability to gradually sort bad ones from good ones. A competitive ‘marketplace of ideas’ may be a good way of helping that to happen.
I suggest that opponents of the social justice movement should organize around this kind of principle. The onus may be on us to prove that losing the 'marketplace of ideas' is worse than the hurt and/or powerlessness that its existence exacerbates.
The question is about the costs of freely discussing ideas that may indirectly lead to bad things. In a future post I will try to argue for a very extensive form of free speech that would require us to tolerate the expression of virtually any concept or idea, if it’s done so politely and honestly. But to understand why we should value a 'thick' definition of free speech we must first understand why people want to curb it.
Looking at the world through neo-liberal eyes
Adam Smith Institute President, Dr. Madsen Pirie, explains why he is willing to own the usually-derogatory term neo-liberal, and explains why the world actually shows us the success of the much-maligned perspective.
I spoke at Brighton University as part of their seminar series on neo-liberalism. The term ‘neo-liberal’ is usually used in a derogatory sense, though I chose not to use it that way. I was the only speaker in the series to speak in favour of neo-liberal ideas, and my title was “Looking At the World Through Neo-Liberal Eyes.” I began by quoting an old Chinese proverb: “Never criticize a man until you have walked a mile in his shoes. That way you are a mile away when you voice your criticism; and you have his shoes.” I invited the audience to see the world briefly as it looks through neo-liberal eyes. These were the points I made.1. Value is in the mind, not within objects.
Value is not a property of objects or a quality they possess. Although we talk of objects “having value,” we mean that we value them. Value is in the mind of the person contemplating the object, not in the object itself. If value resided in things, it could theoretically be measured objectively and we would all agree on what it was. There would then be no trade, for exchange takes place when each person values what the other person has more than they value what they are offering in exchange. A trade gives each of them something they value more, and thus wealth is created by the exchange. When people make the mistake of supposing that value resides in objects, they ask how it arrived there, and come up with fallacious ideas such as Marx’s labour theory of value. An object can take masses of labour to produce, but if no-one values it, it will be worthless.
Roger and I live in parallel universes
The friend Roger I wrote about, who opposes every single policy that might achieve his declared objectives, lives on the same planet as I do. We share physical space, but we live in very different parallel mental universes. His world is dominated by sinister dark conspiratorial forces which leave ordinary humans as helpless victims of their oppression. Big Pharma, as he calls the pharmaceutical companies, is in cahoots with Big Tobacco, and they have allied themselves with Big Bankers to create cartels that acts against the interests of the public by overcharging for goods, by denying the public access to life-saving treatments, and by forcing them into buying harmful products and detrimental services. Big business, which includes fast food providers and major brand retailers, have bought legislators, think tanks and the media, and contrive to ensure that their misdeeds are never adequately uncovered and exposed by a servile media and legislature. We are all their helpless victims, and Roger campaigns against them by eagerly buying each new book that highlights their nefarious influence.
In my parallel universe people buy stuff they like, and their choices influence businesses into tailoring their output so that they can sell more. Individuals exercise the power of their feet; they walk away from stuff they don't value, and every year big household names go under as they fail to match up with changing tastes. People make choices, and they allocate their resources to where they think they'll bring most satisfaction. Sometimes they buy things whose value others might question, things such as carbonated beverages, salty crisps, tobacco, alcohol and fatty foods. But others who dispute the value of these things are free not to buy them.
In Roger's universe the dark forces control our lives, and in the parallel universe we mostly control our own through our decisions. Roger's world is full of pessimists who see individuals as helpless pawns, constantly manipulated; the other world is inhabited by many cheerful optimists, confident that human resources can be applied to achieve worthwhile objectives. In the cheerful world people watch out for rent-seeking, for the desire to use government restrictions to limit choices and secure greater returns than people's free choices would have bought them. The optimists campaign constantly against this crony capitalism and in favour of free choices, open entry to markets, and against using legislation to thwart competitors. They often win, and they know that eternal vigilance is needed if individuals are to keep a world they can control, rather than succumb to one in which they are controlled.
It has to be said that the cheerful world is a lot more fun to live in than the one controlled by shadowy, sinister forces.
Lost and loster
“So you’re telling me there’s a chance!” That is Jim Carrey’s reaction, in Dumb and Dumber, when the lady he fancies tells him his chances are like one out of a million. (The 33-second clip is here.) You’ve got to admire such optimism. May we classical liberals find it when we ponder the chances of seeing a turn toward classical liberalism.
The prospects are enhanced by understanding the situation. But currently we are still stuck in the ruts that were worn into our culture from 1880. A hard look at the period 1880-1940 might inspire, not a comedy, but a tragedy: Sad and Sadder.
But there’s still a chance, so chin up. At the end of Dumb and Dumber, Carrey does not get the girl, but he and his friend carry on in good cheer.
Our movie would be called Lost and Loster. “Lost” not as in “lost cause,” but as in “lost children.” Our civilization has gone astray and is now bewildered as to place and direction. That is the theme of the new website, Lost Language, Lost Liberalism, nicknamed 4L.
With governmentalization on autopilot, with the center-left dominating much of the media, schooling, academia, and other cultural institutions, with the entrenchment of government as big, suffocating player, it is no surprise that many people who fancy themselves “liberal” are doing some soul searching. Edmund Fawcett’s 2014 book Liberalism: The Life of an Idea demonstrates such soul searching, if not soul finding.
What makes a liberal? To answer that question, it is good to learn about how the term “liberal” first arose as a political term. Here, think Adam Smith (as I explain here). Then, we also need to understand how from 1880 the meaning shifted—the theme of Lost Language, Lost Liberalism – 4L.
4L shows that English-language discourse underwent a watershed change during the period 1880-1940. 4L studies the changes in the meaning of words, and suggests that these changes played an important role in the decline of classical liberalism. Ten central words are treated: liberal(ism), liberty, freedom, justice, property, contract, equality, equity, law, and rights.
Compendia of quotations show the debate over the meaning of each word. The site also features other forms of evidence, including ngrams and copious testimony about generational shifts.
I am honored that the Adam Smith Institute has chosen to partner on the project; the Press Release from ASI can be found here.
The chances of recovering Adam Smith liberalism depend on understanding the course of the past 250 years. The 1880-1940 act is especially sad and casts a long shadow. But there is still hope that we’ll find our way to the true path of liberalism.
Liberalism Unrelinquished: An interview with Dan Klein
Liberalism Unrelinquished (LU), is a new project by Prof Daniel Klein and Kevin Frei which aims to reclaim the word 'liberal' from those people who want to 'governmentalize' social affairs. So far it has been signed by around 350 people, including Alan Macfarlane, Charles Murray, Deirdre McCloskey, Richard Epstein, and Alan Charles Kors — as well as several members of the ASI. Dan spoke at the ASI back in 2012 on“Mere Libertarianism”, his synthesis of Hayekian and Rothbardian strands of libertarianism. I reviewed his rather excellent book Knowledge and Coordination here. I spoke to Dan about his new project. Bio: Daniel Klein is a professor of economics at George Mason University (where he leads a program in Adam Smith), the JIN Chair at the Mercatus Center at GMU, a fellow of the Ratio Institute in Stockholm, editor of Econ Journal Watch, and the author of Knowledge and Coordination: A Liberal Interpretation(Oxford University Press, 2012).
What is Liberalism Unrelinquished (LU)?
LU is a declaration of no surrender on the word liberal. The 250-word Statement is as follows:
In the 17th and 18th centuries there was an ascendant cultural outlook that may be termed the liberal outlook. It was best represented by the Scottish enlightenment, especially Adam Smith, and it flowed into a liberal era, which came to be represented politically by people like Richard Cobden, William Gladstone, and John Bright. The liberal outlook revolved around a number of central terms (in English-language discourse, the context of the semantic issue that concerns us).
Especially from 1880 there began an undoing of the meaning of the central terms, among them the word liberal. The tendency of the trends of the past 130 years has been toward the governmentalization of social affairs. The tendency exploded during the First World War, the Interwar Years, and the Second World War. After the Second World War the most extreme forms of governmentalization were pushed back and there have since been movements against the governmentalization trend. But by no means has the original liberal outlook been restored to its earlier cultural standing. The semantic catastrophes of the period 1880-1940 persist, and today, amidst the confusion of tongues, governmentalization continues to hold its ground and even creep forward. For the term liberal, in particular, it is especially in the United States and Canada that the term is used in ways to which we take exception.
We the undersigned affirm the original arc of liberalism, and the intention not to relinquish the term liberal to the trends, semantic and institutional, toward the governmentalization of social affairs.
Thus far, about 350 people have signed the statement.
You speak of "governmentalization." What’s that?
“Governmentalization” captures things beyond interventionist restrictions and taxation, such as the role of government or governmentally subsidized institutions in the culture -- government as benefactor, employer, and on-the-field player in commerce, industry, and finance. Government as big player. That comes only from coercive power, of course, but too often critics of governmentalization focus on the coercion and not enough on the resultant cultural power. Government is a ginormous player in social affairs. It both rams and beguiles its way into cultural spaces, to self-validate. Government as cultural vortex. Look at what has become of France, despite its rich history of liberal intellectuals.
What made you decide to start Liberalism Unrelinquished?
Kevin Frei and I started it. Kevin emailed me to propose a Liberalism Day, to talk up the original political meaning of liberal. That morphed into Liberalism Unrelinquished, executed mainly by Kevin, though I drafted the Statement. We approached five individuals as initial signers — Deirdre McCloskey, Stephen Davies, Richard Epstein, James Otteson, and Mario Rizzo. That set the ball rolling.
Why should we care about what word we use to describe ourselves?
The word liberal is powerful. It relates to liberty and toleration, reflected in to liberalize. Words have histories that a generation or two cannot undo. A word has cognates and connotations that make our language cohere, more than we know, more than dictionary definitions can tell.
We need a wider understanding of the semantic changes of the 1880-1940 period. In a way, semantic issues are the momentous issues of our times; semantics tell who and what we are, our selfhood; they condition how we justify our everyday activities.
I’ve heard a few people object that you’re trying to be prescriptivist about the word liberal – that, rightly or wrongly, the word’s meaning has changed and it’s pointless to try to undo that. And you say?
When words hit home everyone is prescriptivist. People who say “That’s just a semantic issue” don’t seem to have thought very deeply about the importance of semantic issues.
If T.H. Green and L.T. Hobhouse could affect how words are used, what they are taken to mean, why shouldn’t we try to do the same when doing so would be to the good? LU does not force anyone to learn about the original political meaning of liberal. People choose for themselves what semantics to practice.
Can you tell me about the differences between ‘liberalism’ and ‘libertarianism’, as you see them? Are there liberals who could not be described as libertarians, and vice-versa?
Since age 16 or 17 I’ve been raised up on American-style libertarianism. As I see it, there is a narrow sense and a better, broader sense. The better sense, to me, rediscovers the outlook of Adam Smith. But the narrow sense of Murray Rothbard, for example, certainly has some tensions with the broader sense (from me on such tensions: one, two, three, four, five). I like to think that libertarianism grows more Smithian; in that sense I don’t see it as a matter of liberalism versus libertarianism.
Are you trying to effect a change within the libertarian movement, or among members of the centre-left who describe themselves as liberal?
The left gains enormously by getting away with calling itself “liberal,” so getting them to give up the goods is not even a prayer. Partly, I just want to self-declare, like Popeye, “I yam what I yam.” An Adam Smith liberal; a lovely little subculture. Next, I’d love to see the center-left, in the US, the Democratic Party people, be called by others something other than “liberal” simpliciter. Progressive, Democratic, social democratic, leftist, or left-liberal – all good. It is unfortunate that so many non-leftists comply with the self-description assumed by the left. For some 100 years the left/center-left dominated the cultural institutions. If non-leftists didn’t go along with their self-description, they were excluded. Then it took on a life of its own, and Republicans and libertarians are now surrendering “liberal.”
Why is LU generally restricted to over-30s?
Just to put some bounds on it. Wisdom comes with age …
In what countries do you think LU is most relevant? I’ve noticed that in the US ‘liberal’ usually means something like ‘progressive’, whereas in Europe it still generally has its old meaning. In the UK we’re a little bit in between.
I’m learning that, within the English-speaking countries, “liberal” means center-left most in the US and Canada, and that it retains its original political meaning most in Australia and New Zealand. Though I’m really not sure about India, South Africa, Hong Kong, and elsewhere. Yes, the UK is in between. In most of Europe liberal still principally retains its original political meaning.
Discourse from North America extends globally, so I think LU is relevant globally. Although our recruiting has been directed only to those in English-speaking countries, people from other countries, too, have signed on.
Do you think ‘liberalism’ implies a greater sympathy with redistributive public policies than ‘libertarianism’? Where do you see the ‘Bleeding Heart Libertarians’ fitting in to the ‘liberal’ nexus?
I think that Adam Smith liberalism is more flexible, more pragmatic generally, so yes. But I wouldn’t say that Adam Smith liberalism is positively friendly toward redistribution by government coercion. The attitude is more one of compromise.
As for the “Bleeding Heart Libertarians,” I am a fan. I think they are right (and concordant with Smith) that justice should not be confined to commutative justice (CJ). For justice beyond CJ they use “social justice.” I wouldn’t use that term, I’d use “estimative justice” for what they are talking about. But still I like what they are doing.
Do you have any thoughts about how political discourse will change in the future?
The left has a penchant to protest against "the unjust system." But we are wising up to the fact that, to a great and increasing extent, they are the system. The establishment, the status quo, is one of long-standing governmentalization of social affairs. If "conservative" means conserving the way things have been, the term increasingly fits governmentalization, since the trend is well over a century old. The establishment is one of governmentalization and hence cronyism and apparatchism. Since, let's face it, the left is basically about leaning toward governmentalization, more and more it is the left who are the conservatives, strictly speaking. What will come of this? I hope it starts to gnaw on their conscience, and that there is a reconsideration of what it means to be liberal.
Do you think the current left-right dichotomy makes sense and will it last?
The left/center-left dominated discourse. They determined semantics as follows: We the left are the humane ones. If you are not one of us, you are “the right” or “conservative.” So really there is the left and an everything-else category. Whether we can overcome the iron cage of leftist semantics is to be seen. Learning more about the original political meaning of the term liberal, 1769-1880, is a start (from me on that here).
The Statement says that the meaning of many ‘central terms’ fell into confusion during the 1880-1940 period. What terms?
The core set are: liberty, freedom, justice, property, contract, equality, as well as liberal. It was those terms, it seems to me, that confusion most befell. A second set would include equity, rights, law, rule of law, force/coercion, and privilege.
What should people read if they want to learn more about liberalism?
At LU (here), Kevin and I compiled a list of sources on the history of classical liberalism. Let me also offer my short piece “What Should Liberals Liberalize?,” needling left-liberals for failing to promote liberalizations that would promote what they claim to care about. But I see Smith’s The Theory of Moral Sentiments as the most important work of liberalism.
Where do you think the semantic shift that LU wants is most likely to happen – academia, journalism, online, or somewhere else?
The Adam Smith Institute and the Institute of Economic Affairs!
Where next for capitalism?
Writing for the BBC today, Madsen outlines his ideas about what capitalism should do to renew itself:
What capitalism should now do is to free itself from these rent-seeking perversions and spread its benefits as widely as possible.
It should act against anti-competitive practices to give people instead the power of free choices between competing goods and services. It should spread ownership of capital and investment as widely as possible through such things as personal pensions and individual savings accounts.
Politics makes us 'stupid' because the world is complex
Ezra Klein has launched his new site, Vox.com, with an essay on ‘how politics makes us stupid’.
The piece is provocative, and Klein uses some interesting examples. Most striking is the study that shows that people’s maths skills get worse when the problem they’re dealing with has a political element and goes against their political instincts. (Klein seems to have slightly misunderstood the study he’s written about, but his basic point stands.)
The basic claim is that people engage in ‘motivated reasoning’ when they think about politics – in other words, they think in order to justify what they already believe, not in order to discover the truth. This, he suggests, is because the politically-engaged people get more loyalty to their ‘tribe’ than they lose by being wrong.
This ‘identity-protective cognition’, as he calls it, makes sense – a pundit who decides that the other side is right about some particular political issue (Klein uses global warming as an example) has a lot to lose in terms of status within the group they’re part of, and little to gain by being right.
Klein says that this has become worse as political parties have become more ideologically uniform and ideological ecosystems, like think tanks, blogs, media, more expansive. Not only is there the external cost of being wrong, but admitting to yourself that you’ve been wrong for a long time is quite difficult too, especially if you’re politically engaged and some of your sense of self is tied up with your beliefs. You could call this ‘rational ignorance’.
Even though that might seem plausible, I think he is assuming too much and is wrong about some of the phenomena he identifies. I’d like to suggest an alternative understanding of political ignorance that, I think, explains more and assumes less.
I think Klein’s fundamental error is to assume that the truth – or, at least, his mode of truth-seeking – is obvious. Basically, he starts off from the position that most people could reasonably see the light if they wanted to. If that’s right, then it could follow that incentive to disbelieve the truth. And “identity-protective cognition” is an interesting way of understanding that.
But suppose truth is not obvious – that we’re ignorant not because we want to be but because, in Keynes’s words, “we simply do not know!”. In contrast to the rational ignorance Klein is discussing, this kind of ignorance comes about because life is complex. The existence of this kind of ignorance is what allows people to disagree without either being willfully ‘dumb’.
To demonstrate his case, Klein uses examples of ideological dogmatism that are based on rejection of the hard sciences. Here he is assuming that a reasonable default position must be to believe in the usefulness of science, so anyone who deviates from that by disbelieving some scientific point must have an incentive to do so. But if they are simply unaware of the fact that science is usually a good way of learning things, them ignoring scientific consensus is simply a mistake.
Klein may see it as being obvious that science is great. But he has probably spent a lot more time thinking about it than most people – for many, rightly or wrongly, the jury is still out on science, as a great man once said. Error, not group loyalty, may be a simpler explanation for people’s refusal to accept what seems to be a well-established truth.
If the truth is difficult to determine, people who have an interest in politics need some way of sorting the truth from the information they can access. Since there is a huge amount of conflicting data and theory in nearly every area of policy (whether garbage or not), people need some way of sorting the wheat from the chaff.
That’s where an ideology comes in. An ideology, I suggest, is a type of ‘web of belief’ that allows people to use what they already believe to be true to sort relevant and true new information from irrelevant and untrue information. As Jeffrey Friedman puts it, ideology “provides pegs on which to hang the political facts of which non-ideologues tend to be so shockingly ignorant”.
This fits with the fact that ideologues are usually a lot more informed than non-ideologues, an important fact that, so far as I can tell, Klein ignores.
Klein’s view is that political ideology ‘makes us stupid’, but ‘closed-minded’ is probably a more accurate term. The vast majority of the public is shockingly ignorant of basic political facts, with the informational 'elite' also happening to be the more closed-minded. The alternative to closed-mindedness may simply be to be extremely uninformed.
This matters because the things Klein blames for politics making us stupid – ‘gerrymandering, big money, and congressional dysfunction’ – are mostly irrelevant if the view I’ve outlined here is correct. In a complex world where the truth is hard to discover, even the purest politics would make us stupid.
This implies a much more fundamental problem with the democratic process than Klein suggests. The trade-off between ignorance and dogmatism may be unavoidable in politics, making a well-functioning deliberative democracy virtually impossible to achieve. This may imply that less cognitively-demanding ways of making decisions, like markets, may be even more valuable than we realise.
Video: Ayn Rand Lecture 2013 by Lars Seier Christensen
Lars Seier Christensen is CEO and Founder of Saxo Bank. You can read a full transcript of this speech here.
Ayn Rand: More Relevant Now Than Ever
This is a transcript of the speech "Ayn Rand: More Relevant Now Than Ever" given by Lars Seier Christensen, Co-founder and CEO of Saxo Bank, at Goldmsith's Hall for the Adam Smith Institute's Ayn Rand Lecture on the 29th October 2013
"First of all, I would like to thank The Adam Smith Institute and Eamonn Butler for having me here. I would also like to extend a big thank you to Yaron Brook and the Ayn Rand Institute for suggesting me as the speaker for the second annual Ayn Rand speech at this renowned institution. I am very proud of being offered this opportunity, and would also like to thank all of you in the audience for coming here tonight. I hope it will interest you to hear about both the positive aspects of deploying Ayn Rand in practical, day-to-day life, as well the more grim part of the speech – about a world that is on the wrong track and where change is desperately needed.
Now – I am going to start by quoting someone that anyone who knows me realizes is not my favourite politician. I consider him a very significant part of the problem we currently increasingly. But at least he did us a favour by underlining just exactly how relevant and important a voice Ayn Rand is even today, more than 30 years after her death. Let me quote the 44th president of The United States, Barack Obama, for the first and last time this year, I promise.
“Ayn Rand is one of those things that a lot of us, when we were 17 or 18 and feeling misunderstood, we’d pick up. Then, as we get older, we realize that a world in which we’re only thinking about ourselves and not thinking about anybody else, in which we’re considering the entire project of developing ourselves as more important than our relationships to other people and making sure that everybody else has opportunity – that that’s a pretty narrow vision. It’s not one that, I think, describes what’s best in America.”
Why Britain should embrace entrepreneurship
Guy Myles, managing director at Octopus Investments, welcomes The Entrepreneurs Network, a new think tank set up by the Adam Smith Institute.
It’s hard being an entrepreneur. You work every hour God sends. You have people depending on you for their livelihoods. And you’re taking levels of risk most people couldn’t even contemplate.
On top of all that, you probably feel you’re on your own. Within your company, it may be you’re the only one shouldering real responsibility, while the wider world can feel like hostile territory, where you go into battle all by yourself – fighting for finance, for customers, for less red tape, and most of all for recognition.
It’s crazy that we as a country should let entrepreneurs feel unloved or isolated in this way. After all, we’re relying on them to create the jobs and sales that are helping to get the UK economy back on its feet. And they deserve to have their voice heard.
Making a difference in communities
Part of the problem is that smaller businesses don’t attract the attention that commercial giants get, even though their contribution to the economy may be just as important. If one of the big supermarkets unveils plans for a new distribution centre, or a car manufacturer decides to build its latest model in the UK, you’re bound to see it in the news. But if a local furniture factory gradually doubles its staff from, say, 20 to 40, few people will find out. Yet the impact of those extra jobs on shops, tradesmen and support services in the area could be enormous.
That’s why Octopus Investments is so pleased to be sponsoring The Entrepreneurs Network (TEN). We work with entrepreneurs all the time. They’re great fun, but we see at first hand exactly how much support they need. The ones we back tend to have businesses that are already established. They’re looking to take things up to the next level, and they’re invariably hungry, not just for money, but for ideas, contacts and encouragement.
Why continued support is so vital
We make a point of helping out in any we can. Completing an investment is just the start of the story. Whenever we invest in an unquoted company, someone from Octopus will sit on the board. One CEO has told us this helped him keep his eye on the big picture, without micro-managing. Another said the Octopus director offered a strategy for breaking into the US market.
We came up with the idea of hosting regular forums, such as breakfast seminars, for CEOs from our portfolio companies. These events give them a chance to swap stories and hear how other businesses are coping with challenges and capitalising on opportunities. We may focus a session on a specific sector – such as media, technology or telecoms – but it’s great if we can also create cross-fertilisation of ideas between businesses in completely different fields.
Keeping up the pressure for change
So, we’re hoping The Entrepreneurs Network will provide a bigger arena where entrepreneurs can support each other. But it’s in the area of public policy that I hope TEN can make a real difference. We desperately need a body that can lobby government and policy-makers on the many issues that affect smaller businesses. To take just one example, a major area of complaint in recent years has been the length of time it can take to get work visas for staff coming in from abroad. This is the sort of problem where we need to keep pressuring the government to take action.
As it happens, the UK isn’t such a bad place to set up a business. A report from the World Bank’s Doing Business project put us seventh out of 185 countries on the ‘ease of doing business index’ for 2013. The survey looks at everything from getting building permits and electricity connections to enforcing contracts and trading across borders.
The worrying point is that the UK has slipped a couple of places down the rankings in the past few years. And there are countries like South Korea, Georgia and Malaysia coming up fast behind us. We have to keep working to make the regulatory environment as supportive as possible for small businesses, and that’s the challenge we’re all hoping TEN can rise to.
Guy is co-founder and Managing Director at Octopus Investments.