An Entrepreneurial Gift

(Editor’s note: Michael Strong is the CEO of  a non-profit devoted to entrepreneurial solutions to world problems. In an earlier article, Jay Schalin of the Pope Center also defended the BB&T grants.) 

Richie Zweigenhaft, professor of psychology at Guilford College, complained recently about a philanthropic gift given from the BB&T Foundation at the direction of John Allison, former CEO and chair of the board at BB&T, a North Carolina bank. The gift requires Guilford College (and other colleges that have accepted similar gifts) to offer a course that includes as a required reading Ayn Rand’s novel Atlas Shrugged.  Zweigenhaft, whose academic area of expertise includes analysis of the American power elite, regards Allison’s influence on the curriculum as pernicious. “Is This Curriculum for Sale?” is the title of his piece.

Thirty years ago I would have been as outraged as Zweigenhaft. Since then I’ve learned economics, observed the fall of communism and the rise of Asia, spent fifteen years as an educational entrepreneur myself (creating value for students and parents), and then worked with a global network of entrepreneurs striving to make the world a better place.  Despite the fact that capitalism’s role in eliminating global poverty is now unambiguous, college students don’t learn much about it.

In my opinion, Rand is a mediocre novelist, her use of the dollar sign as a symbol in her jewelry is crass despite her attempt in Atlas Shrugged to romanticize it, and her celebration of “selfishness” is misguided. Yet she is one of the few writers in any genre who celebrates the role of the entrepreneur as the key creator of value and prosperity. If students do not learn about the role of entrepreneurs as creators of prosperity and value through Rand, where, exactly, in the curriculum will they learn about it?  

Not in their neo-classical economics classes, where the entrepreneur is invisible, nor in most business classes, where the typical focus is management rather than entrepreneurship. It is quite unlikely that they will learn about entrepreneurial value creation (EVC) in other social science or humanities classes. Even most entrepreneurship classes at business schools are focused on nuts-and-bolts issues rather than the social, moral, and philosophical implications of entrepreneurship. And business ethics? The philosophy professor Stephen Hicks points out that this field is focused on how to prevent predatory behavior, on the one hand, and how to encourage altruism, on the other. The category of EVC is missing.

Thus in the absence of Allison’s gift, academia would continue to neglect the means through which some two billion human beings are no longer poor, by which another two billion are rapidly escaping poverty, and through which the remaining three billion hope to escape poverty in the coming century. Entrepreneurial vision and drive have transformed the raw materials of human capacity and natural resources that all countries have into prosperous societies whenever they have been allowed to do so. Allison’s gift is a brilliantly entrepreneurial approach to educating and humanizing the academy.

Despite Rand’s flaws, she understands and communicates the importance of EVC arguably better than any other writer in human history. Atlas Shrugged is her best, most compelling presentation of its essential role. The protagonists of Atlas Shrugged are entrepreneurs who have devoted their lives to creating value: a new, better steel, a new, better railroad, a new, better source of energy, and so forth.  Each of them is eventually so harassed by government that they escape to an isolated mountain valley. And as the entrepreneurial creators of society “go on strike” one by one, society collapses. There are more sophisticated abstract accounts in works by Mises, Hayek, and others, but they are as rarely encountered in university curricula as is Rand, and their work is considerably less accessible. 

Most improvements in human well-being are due to the creation of value by entrepreneurs. The fact that the cost of cotton cloth declined one hundred-fold from 1780 to 1880 is due to EVC. Cyrus McCormick’s innovative strategy for providing farmers with credit, Sears and Roebuck’s creation of catalog retailing to rural folk, and the container revolution in shipping were all examples of EVC. Silicon Valley, the largest legal creation of wealth in history, is built on sand, mathematics, and entrepreneurial freedom.  The Soviet Union had plenty of sand and the world’s best mathematical minds, but without entrepreneurial freedom nothing of value was created.

Whenever entrepreneurs are allowed to create goods and services freely, the result is steadily improving quality and steadily decreasing cost, allowing the great mass of humanity to experience a steadily improving standard of living—whether or not workers’ incomes increase. When one adds the fact that even laissez-faire capitalism typically results in wage increases as well, the result is unambiguously positive.

At present, most public policy issues across the disciplines are framed in zero-sum terms:  How much more do taxpayers have to pay, how much foreign aid should we give, how much will we have to reduce our standard of living if we run out of oil, etc. The possibility that entrepreneurs could continue to create new and better tools for living is largely invisible.  By ignoring the possibility of new entrepreneurial creation, much academic work in the social sciences is limited to taking snapshots of the present, which is in reality already the past. Until and unless professors and students understand the process that results in the entrepreneurial creation of new value, they cannot understand how we became prosperous and how we will continue to create a better world for all in the future.  Rand provides us with a vivid illustration of those entrepreneurs who are responsible for creating a better world, past, present, and future—when their efforts are not frustrated by governments.

In the tribes of 150 people in which we evolved, we needed to be concerned with who was taking from whom and who was giving to whom.  The categories of predation and altruism are hard-wired into our brains.  But since EVC was not a category that existed in our evolutionary history, are brains are not hard-wired to interpret the world through its lens. Indeed, because of our tribal propensity to see the world through predation and altruism, we have a primitive hard-wired bias against capitalism, in spite of the morality of entrepreneurial value creation.

Our minds only perceive those phenomena for which we have cognitive structures already developed. Jerome Bruner and Leo Postman conducted what has become a classic psychological experiment in which a deck of playing cards which includes various anomalous cards (e.g. a red two of spades, a black ace of diamonds) is included in the deck. The deck is shown one card at a time, slowly, to an observer who is asked to report the identity of each card.  Most of the observers categorized the anomalous card according to one of their existing mental categories (e.g. they reported that they “saw” a red two of spades as a normal two of hearts or a normal two of spades). (Here is a YouTube version you can try yourself.)

This result was based on the conventional categories of playing cards, not hard-wired biological predispositions to see only predation and altruism. If students (and professors) are not educated on the role of EVC in a free enterprise system, they are apt to be unaware that it exists, let alone that it is arguably the most important moral phenomenon in the world today.

I’m wary of David Horowitz’s legislative, and therefore coercive, approach to the problem of academic bigotry and ignorance (a legislatively enacted “academic bill of rights”). By contrast, Allison’s gift is voluntary. Indeed, as Zweigenhaft notes, it was obtained only after professors at the campus wrote a grant proposal requesting the funding. Each institution must decide whether or not to use such funding, and I respect those institutions’ autonomy.  But if Allison and other donors do not provide some sanity to the academy, the atavistic anti-capitalist elements within the academy will continue to undermine human progress for decades to come.