Why Entrepreneurs Rule

With my own eyes, I saw the fall of a totalitarian communist regime. As a teenager, my parents sent me to Poland in 1989. I lived with my grandmother for five months. Like most communist countries, Poland was run as a centrally planned economy. The government determined a budget via politicking. Then they choked off any other economic activity.

 

I landed in August, a month after the former communist ministers had given up. The factory workers, which communism venerated, were revolting. They had united as the Solidarity movement. It was difficult for the politicos to imprison protesters.

Performance art often disguised a thinly-veiled political message. The Orange Alternative protested with thousands of subversive dwarves marching down the street. At this scale, locking up or killing political dissenters was ineffective. If everyone is revolting, who cares if you have an army?

Terrified of increasing riots and political unrest, the communist politicians had failed to realize Marx’s vision. They couldn’t tell the masses to eat cake, because there was no cake available. They’d agreed to free market reform…but with democratic elections also. In effect, they allowed for the introduction of a free-market system.

At the time, the shelves in stores were empty. They had been for much of the previous decade. Citizens scrounged by with food they would get through friends and connections. There were only a few items which my grandmother could buy in a traditional grocery store:

• bread
• vinegar
• a dry yellow cheese

Everything else was a crapshoot. Sometimes there, sometimes it wasn’t. It depended on your willingness to stand in line for hours. A test of persistence and character.

Despite these difficulties, there was a sense of “anything being possible” in the air. Citizens were used to being conditioned, intimidated and told what to think. Fifty years of totalitarianism had worn them down.

Now, all the sudden, their opinion mattered. Critical thinking didn’t require courage. You could voice an opinion contrary to the government’s. For the first time in decades, you wouldn’t disappear in the night for saying what you think. The massive, impersonal government bureaucracy was ceding control. Crumbling. Shock. The same happened around Central Europe, and even in many Soviet republics which broke away from the Soviet Union.

I remember a conversation between two distinguished older ladies. They were returning home with a bag of potatoes each. The first democratic election had just happened:

“Did you hear, Kathy, that this election wasn’t rigged?”

“What do mean?”

“The results they gave were what we voted.”

“Really?”

“Yes, the communist party is handing over power to these new people.”

“You mean they aren’t just turning this into a puppet show?”

“The people we chose are now going to make decisions, just like in ancient Greece.”

“You mean they represent us?”

“Yes, they should, if they want to get elected again.”

“That’s crazy.”

“They’re even rewriting the constitution, to try to make this a permanent change.”

“So there’s always going to be ham at the store in the future?”

“Yes, that’s such a comforting thought. I’ll be able to feed little Peter proper baby food.”

“Even though I’m poor, I’m amazed I can buy anything I need.”

Consumers had experienced an explosion in choice. The government stopped treating entrepreneurs like drug dealers. By permitting economic activity that centralized state budget wonks didn’t sign off, everything changed.

Within two months, the free market (read: entrepreneurs) put food on all store shelves. As soon as prices rose in line with the actual cost of providing goods, the products appeared within a few weeks. The change in system, to one where entrepreneurs focus on consumer needs, meant that it worked.

While newly aligned incentives weren’t something you could see, the effects were dramatic. A deprived and worn-down populace could finally hold their head high. They had access to products which addressed their basic needs. Most importantly, they had control over their own decisions, by choosing to buy what they liked. Not just whatever happened to be available. This is what happens when you enable entrepreneurs to work their magic.

As new problems and opportunities emerge, entrepreneurs ensure needs remain fulfilled as they emerge. They have the right incentives to take risks and provide valuable goods and services.

A lot has happened in Central Europe since 1989. It turned out that the shaky beginnings described above turned into solid enough foundations to deliver economic growth for a few decades since. Today, the unrest in Ukraine is the first step backwards on the same trajectory. Towards centralization. Shudder.

In short, I believe in entrepreneurs. Entrepreneurs were the unsung heroes in the post-Soviet transformation. Entrepreneurs introduce something new and solve a problem for people. That’s progress.

While I’m a technologist, tech just happens to be how I deliver on this hope for the future. Software and the internet are powerful delivery mechanisms, for social and economic change.

Fundamentally, though, I want to help people and improve their lives through my work. By helping entrepreneurs achieve their goals, I’m making a difference in the entrepreneurs’ lives. Indirectly, I’m also impacting the lives of their clients. That’s what Launch Tomorrow is really about. Grab a free sample if you haven’t already.