The Emerging Middle Class Of Business Is Characterized By Entrepreneurial Venturing.
Americans have associated their concept of the middle class with virtues and positive values. Members of this group were seen as hard-working ethical achievers, succeeding on the terms set by the economic system of entrepreneurial capitalism, where the cultivation of specialized skills enables individuals to make their distinctive contributions to socially shared goals.
The proxy metric for membership of this admired group was family income. Statisticians defined the range that they decided was middle class – not the richest, not the poorest. But the concepts of income and class don’t gel particularly well. Class refers to bounded structural tiers that restrict entry and exit. A member of the peasant class can’t become a member of the aristocracy. The point about the middle class is that it is open to all who are willing to play by the rules of hard work, specialization, and collaboration.
Disastrously, the use of income statistics to define social class has had the unintended effect, in the entitlement society in which we now live, of triggering envy and anger. Income statistics become comparative, and comparisons engender hatred (https://www.phrases.org.uk/meanings/Comparisons-are-odious.html). Consequently the middle class – once a realm of admiration for achievement – becomes a war zone of social conflict.
The concept of the middle class as the backbone of an economically dynamic and philosophically vibrant society remains fundamentally important, especially when the twisted and distorted entitlement jealousies of the welfare state threaten to sour all social relationships and to undermine the natural collaboration of free markets. How can we recover the appreciation of the virtue and ethic of the middle class?
Professor Deirdre McCloskey, in her Bourgeois Trilogy, did, in fact, define the middle class by its virtues: prudence, justice, courage, temperance, faith, hope, and love. All of these can be interpreted as including an economic component: the courage to innovate, the prudence to take affordable risk, the justice of honest trading and avoiding extractive and exploitative behavior, and the temperance of meritorious behavior.
Professor Saras Sarasvathy goes much further, changing the thinking about the middle class and its positive role in society via an entirely new perspective. The middle class, she says, should be a middle class of business – those firms and corporations that are not the biggest, such as the Fortune 500, and not the smallest, such as individual contractors, but ventures between 5 and 300 employees. These ventures are founded, led, managed and staffed by people, bound together by a sense of belonging, both to the collaborative company to which they contribute, and the larger community in which the company is embedded.
Size is important: there is value in the “middle” in middle class, says Professor Sarasvathy. In society, the middle class follows the impetus to bridge the chasms of unequal opportunity to arrive at a shared level of economic experience, escaping from the distasteful consequences of not producing and not participating. In the realm of business, there are also distasteful consequences at the extremes. When companies grow too large, they tend to become monopolistic and predatory, and they sidle up too close to government in the shared corruption of government lobbying and agency influence. Similarly, economies with the largest number of individual and small-employment ventures tend to be poor communities where entrepreneurship is due to necessity rather than opportunity.
Professor Sarasvathy’s preferred classification is not based on size but on endurance and stability. This embraces growth, but not of the unstable type that aims to produce only unicorns and gazelles. Growth is increase in size over time, but not at breakneck speed. Small firms add vitality through the diversity of innovations they introduce into the economy. Growth need not require the churn of creative destruction, a game of competitive innovation involving large numbers of losers with few winners.
Endurance can deliver a more deliberate and conscious kind of innovation, including the innovation of new ends – reconceptualizing what is worth striving for, and co-creating new possibilities beyond the traditional notions of market and government.
Ventures can endure without stagnation. They can provide local stability, especially employment stability, but also technological stability and community stability. Individuals and families and communities can thrive while harvesting the productivity gains from deliberate innovation and the social gains from human well-being. The pursuit of well-being involves more than income and prosperity. It involves the freedom to choose what is worth pursuing in the first place.
The guides on this journey to considered growth, stable communities, and advancing well-being are entrepreneurs. Not all will be founders. Many will be co-founders, team members, managers, employees, or value partners in multiple network roles. The commitment of entrepreneurship is to the generation of value for all, with multiple players in multiple roles of mutual support. The prospect of defining the middle class of business by entrepreneurial venturing promises a future of shared growth and shared well-being in a value generation network rather than an envy-tinged calculation of income levels.