1. Entrepreneurship and the Solidarity Economy¶
Since the name of our course is entrepreneurship, we should start by looking at what that word means, and how we will adapt its meaning to use it as a tool for building the solidarity economy.
1.1. What is entrepreneurship?¶
The Longman Dictionary of Contempory English defines an entrepreneur as “someone who starts a new business or arranges business deals in order to make money, often in a way that involves financial risks”, while the Longman Business Dictionary says that an entrepreneur is “someone who starts a company, arranges business deals, and takes risks in order to make a profit.”
The European School of Management and Technology (ESMT Berlin) states that entrepreneurship is “the process of designing, launching, and managing a new business or venture. It typically involves innovation, risk-taking, and the goal of achieving financial and social value,” and that an entrepreneur is “[a]n individual who initiates and operates a business, bearing financial risks in the hope of profit.”
The Oxford Learner’s Dictionary provides “the activity of making money by starting or running businesses, especially when this involves taking financial risks” as its definition of entrepreneurship, and “a person who makes money by starting or running businesses, especially when this involves taking financial risks” as its definition of entrepreneur.
Each of these definitions mentions making money as the goal of entrepreneurs. But what is money? And why is it so important that entrepreneurs should make getting it the central focus of their activity?
1.2. What is money?¶
We live in a world where money plays an essential part in our lives. We use it to obtain the things we need to live - our housing, food, clothing, education, health care, and everything else that we aquire by handing over money in exchange.
Yet we rarely think about what it actually is that we are exchanging. Like the proverbial fish being asked about water, we live in a world surrounded by money. It is so constant a presence in our experience that we don’t stop to question it.
And then when we take a course in economics or, like this one, in entrepreneurship, we are told a story about money that just isn’t true.
Investopedia provides a simple and direct presentation of this classical story about money.
To quote:
“Money has evolved from bartering systems to coins, paper currency, electronic payments, and digital assets.”
“Money serves three primary functions: a medium of exchange, a unit of account, and a store of value.”
In the following paragraph it says that “[m]oney has influenced human life for more than 5,000 years, beginning with bartering and later evolving into metal coins.”
Look in almost any introductory textbook on economics, or entrepreneurship, and you will find a story much like this one. There is just one problem with this story. It’s a lie. To quote British anthropoligist Dr. Caroline Humprey from her paper Barter and Economic Disintigration,
“No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing.”
So if anthropologists have never found evidence of a human economy based on barter, why does this story about money arising from barter keep getting repeated? And if money didn’t arise from barter as a way of making barter more efficient, what is money?
1.3. Defending the Current System¶
Before getting back to our question about the meaning of money, let’s pause a moment to try to understand why the barter myth keeps getting repeated despite lack of any evidence for it.
One clue to consider is the many benefits that the myth provides to neoclassical economists and other defenders of the current economic system.
Barter is a system of fair exchange, because those involved exchange items of equal value. And value here is a subjective concept related to how the person involved in the exchange assesses their personal benefit (called marginal utility by mainstream economists) from the exhanged item.
If money grew out of barter as a way to make fair exchange more efficient, it is just another way to engage in fair exchange of equal values between people who are equal in the exchange. And the question of value is further hidden in a circular definition in which money indicates value, and value is indicated by price (i.e. money).
This same definition is then applied to wage labor, where the employer and the employee simply engage in a fair exchange of wages (money) for labor. By pretending that this relationship is just bartering with money, defenders of our current social relations completely dodge the real questions concerning how the system works - questions about who owns what, who creates value, and who has the power to make decisions about how it is allocated and utilized. It hides inequities and exploitation built into the system by making every exchange look like a free choice among equal actors rather than as coerced decision forced on those without power by those with it in an unequal social structure.
1.4. Systemic Exchange Value¶
A recent book by Dr. Warwick Powell, Thermodynamics in the Time of Monsters, proposes some groundbreaking thinking about value and money that we will make use of in this book. He develops a Systemic Exchange Value Theorem, which can be loosly paraphrased as:
For economic value to grow in a lasting way, that growth must ultimately be supported by the real-world transformation of energy and materials into products or services that satisfy human needs.
He points out that the transformation of energy and materials needs to be efficient for the society to be sustainable. More available tranformative engergy must be returned from viable economic activity than was employed by it. This concept, energy return on investment (EROI) is crucial to both economic and environment questions of sustainability. Economies that do not have a positive EROI eventually collapse.
Money, according to Dr. Powell, is a symbolic claim on future energy. It arises from within a monitary economy to organize access to the energy and materials needed for humans to survive and for the system to reproduce itself.
To say that it “organizes access” is another way of saying that it represents the social relations under which production takes place.
Throughout this book we will be exploring the social relations of production that exist within the present system, and thinking about new and better ones that could be created in the next system. We will argue that doing just that is what it means to be a solidarity economy entrepreneur.
1.5. What is the solidarity economy?¶
The New Economy Coalition defines the solidarity economy as “a global movement to build a just and sustainable economy where we prioritize people and the planet over endless profit and growth.” The United Nations defines the social and solidarity economy as “forms of economic activities and relations that prioritize social and often environmental objectives over profit motives.”
1.6. Can there be solidarity economy entrepreneurship?¶
In a paper titled Decoding the differences between the Social Solidarity Economy (ESS), Social Entrepreneurship and related initiatives, author Yvon Poirer points out a fundamental distinction between the solidarity economy and most proponents of what is called social entrepreneurship. While the latter subscribe to a social darwinian world view based on individualism and competition, the solidarity economy is premised on the belief that humanity’s historical success as a species rests primarily on cooperation and solidarity.
Our previous discussion of common definitions of entrepreneurship and its relationship making money illustrates another obstacle for us in using the term. So can we even speak of solidarity economy entrepreneurship?
Former Harvard Business School professor Howard H. Stevenson, often referred to as the “lion of entrepreneurship”, created a concise definition of entrepreneurship that suggests a way forward. He defined entrepreneurship as “the pursuit of opportunity beyond the resources you currently control”.
Ending up with “resources beyond what we currently control” sounds a lot like having a viable EROI. So if our goal is to promote social well-being, and if we take into account Dr. Powell’s observation that societies need to be energy efficient if they are to sustain themselves, then we can use this definition:
Solidarity economy entrepreneurship is the cooperative and democratic pursuit of energy efficient and socially sustaining productive activity.
Let’s go with that.
1.7. Glossary¶
- solidarity economy entrepreneurship¶
The cooperative and democratic pursuit of energy efficient and socially sustaining productive activity.