What is the economic importance of entrepreneurship

The economic and social importance of entrepreneurship

In no other country in the world is the entrepreneur so little respected and popular as in Germany. This indisputable fact is all the more remarkable as the importance of entrepreneurship has been clearly demonstrated precisely by the rapid industrial development of Germany. For only the latter made possible the feeding and employment of the great increase in the population, the enormous reduction in emigration and the increasing employment of foreign workers in Germany during the last decades. Obviously the imagination of the German people first has to become familiar with this phenomenon, which may have occurred in the course of a generation 1). The big industrialist is not yet as familiar to him as the big landowner. The latter, however, occurs less often overall, i. H. in the city and in the radical parties, where public opinion is made and often also falsified. After all, the people cannot deprive the landlord of their historical raison d'etre and their economic and political significance for our public life. It is different with the industrialist. He has the popular opinion against him, that in him

1) According to a publication by the Bavarian Ministerial Councilor Dr. Fr. Zahn in the annals of the German Reich on the occupation and company census of 1907 and the census of 1910 rose from 1871 to 1910 Germany's population from 40 to 65 million and the emigration decreased from 220,000 in 1881 to 20,000 people in 1908 with increasing Immigration. While in 1882 agriculture still employed 43% of the total population, in 1907 it was only 29%, while conversely, the number of people employed in industry from 35 to 43% of the population and the number of people working in trade and transport from 10 to 13 % rose. The number of industrial workers increased between 1895 and 1907 from 7.0 to 10.2 million people.

i.a. sees the spoiler of the good artisan and the exploiter of the workers, which of course he is not. He is, or at least used to be, often an upstart1) - for now Germany already has entire generations of entrepreneurs, whose current representatives, and often their fathers, are highly educated, socially privileged people - which the poor or poorly funded masses are difficult to forgive. But he also has the preconceived notions of many academically educated people who, perhaps even more so than the uneducated people, resent the less or no scientifically educated entrepreneur for his rapid advancement and consider it wrong that such a man earn and earn so much more So much more should count in public life than a philosophical, legal or medical doctor, a senior teacher, professor and councilor, not to mention the holders of higher civil servant posts! The former President of the Senate in the Reich Insurance Office, Professor Dr. In his book "The Practice of German Workers Insurance", Friedensburg lists certain examples of popular bias against insurance carriers about the general public's attitude towards this insurance. H. essentially employers, and adds: “The same thing reads as if the envy of the dispossessed class, which has already become proverbial, had infected wider circles, as if one wanted to use workers' insurance as a means to steal some of its abundance from the hated large-scale industry . Also an echo from the congresses of our catheter socialists! ”In contrast, this experienced practitioner of workers' insurance refers to the general expression of a“ completely senseless pity ”for the suspected

1) The Kölnische Zeitung recently wrote in a Berlin letter "Berlin and the Province": The word upstart is consistently used in a reproachful sense like the parvenu, which was more common in the past, although it actually expresses a praiseworthy fact, namely that a person succeeded is to work your way up. Behind the reproach of upstart hides sometimes the arrogance of people who, placed by fate in a softly padded cradle, have never had to fight their way step by step on the hard path of work, therefore also disregard a strenuous activity in others and in a pharisaic manner Conceit the value of the outward appearances, in which they are masters, overstate.

economic hardship of the surviving dependents of the miners who died at the Radbod colliery. In this regard, the calls for mild contributions outbid each other; "But nobody thought of workers' insurance, i.e. here the accident insurance that was practiced entirely at the expense of the employers and that intervened immediately with very high payments". Then the German as such often lacks the business acumen and business spirit that make him understand that the entrepreneur is of great importance for the well-being of the whole people. This is a deficiency that can only be remedied over time. After all, and not least, it is the ideal direction of the German people that sees in the entrepreneur primarily the exploiter of the workers he employs. So no sooner did we have industry than we had the Kathedersozialisten1), the scholars of the

1) Prof. Dr. Ehrenberg in Rostock, the most outstanding representative of exact economic research, marked in his lecture, which he gave in June 1911 in the academic courses at Essen a. d. Ruhr held, a report of the Rhein.-Westfäl. Contemporary from June 26th d. According to J., the so-called "Kathedersozialisten" (Kathedersozialisten) as supporters of an economic view that opposed the theory of English economics that had prevailed until then (beginning of the 1970s), against so-called Manchesterism, and united in the association for social policy founded in 1872 found visible expression. They proceeded from the opposite principle as the English, from the principle of distributive justice, i. H. essentially from the public service principle. They did not deny the importance of economic self-interest, but they made it subordinate to their public economic demands. That is why they were called "Kathedersozialisten". They demanded a share in all cultural goods for all members of the people, regardless of their achievements. They demanded restriction of the exploitation of workers through worker protection, unconditional freedom of association to obtain the most favorable working conditions possible, workers 'insurance to reduce the insecurity of the workers' existence. They demanded strong public economic influence on the distribution of the production yield. But they did not give a specific or any practicable standard for the justification and limitation of these public service interventions in the distribution process. Politically, their starting point was very effective, as Schmoller, the main leader of the Verein für Sozialpolitik, once said: "You have to make what is socially expedient appear just, only then does it ignite and set the masses in motion." Catholic socialist basic views are first: the indeterminacy of the starting points. What is actually to be demanded from the standpoint of compensatory justice? Which standard is to be used for the examination of the existing? Which yardstick is to be used to determine the share of individuals in production yield? The virtue, merit and achievements of the individual, the right to participate in all the goods of culture? Everything has to be justified with this, every exaggerated demand. Since practically nothing can be done with such standards, it only comes down to the fact that the subjective ethical ideas of the social reformers themselves are the standard. And these are often simply based on the demands of the classes that one considers to be leading, that one is used to seeing as "weak", although in some cases they are no longer this. It is impossible for ethics or compensatory justice to determine whether working hours should last eight, nine or ten hours, to what extent piecework wages should be promoted or combated, etc.

Political science, of which one of its most prominent exponents, Professor Wagner, recently said in the manor house that they wanted to protect the worker. Of course, the protection should be directed against the entrepreneur, who is always seen as the evil spirit. Indeed, economics should bestow at least the same benevolence and promotion on the entrepreneur as it does on the worker. This desire is based on the importance of entrepreneurship for our economic life.

First of all, the entrepreneur is the intellectual originator of any company, regardless of whether he uses or exploits science, knowledge and skills that are foreign or his own. The idea of ​​doing a business, of building a factory, comes from him, and he either carries it out or has it carried out by his agents. Once the commercial establishment has been set up and provided with the most perfect, most advantageous facilities, its operation can begin when there is sufficient and naturally profitable sales for its products. The entrepreneur does not have to take care of this any less in a timely and continuous manner than to ensure that the factory is built in the right place. This concern always remains with him as long as he runs the work, and the existence, the flourishing and prospering of the company depends on its correct management inside and outside, on the use of good opportunities, on the avoidance of dangerous circumstances. If it perishes - what can counter the best company by changing the fundamentals of the course of business, through new inventions, superior competition, etc. - then its owner, the entrepreneur, is a poor man; If it comes to ample earning capacity, the entrepreneur only enjoys the well-deserved reward for his enterprising spirit, his drive, his daring. Because he has to put his belongings, the often sourly acquired smaller or larger fortune, to the work that he makes his life's work, to which he remains afterwards tied for all time, if he does not want to give it up without corresponding remuneration. Above all, as a settled part of the population, he gains increasing importance for the public life of the place, the province, the country as his company grows. A large or even the largest part of the tax burden, especially the local one, rests on it. On him, on his efficiency, justice, humanity and on his business successes, not only does the workforce he employs with their families depend, but also, to a greater or at least to a considerable extent, the fate of the community to which he belongs.

When you now see the enormous masses of industrial products, from coal and pig iron, tops and cotton yarn to the finest everyday and luxury objects in the home and clothing, in games and sports, in art and science Industry manufactures; If one observes the enormous figures of our foreign trade, our inland and foreign traffic, one must necessarily feel respect for the intellectual authors and actual creators of such works and value their importance highly. Above all, one must also appreciate the courage, the enterprising spirit and the self-denial that the entrepreneur has to exercise when he establishes a work and brings it to economic prosperity. You also have to take into account the failures that are inevitable. The fact that entrepreneurs need a large number of human resources to carry out their business projects certainly does not detract from their personal and economic merits. Because they provide many workers with worthwhile employment and thereby gain greater importance for the people and humanity! An industrialist can employ 1,000 or 10,000 people, all of whom are unable to start or run a large-scale business.

It is now due to human nature and its inherent sense of acquisition that the old empirical principle of the influence of supply and demand on the price of the commodity also applies to the price of labor. This price is partly limited below in the standard of living or the necessities of the workers. But apart from the fact that this term is neither factually nor individually fixed and varies greatly depending on the local and other conditions, it is quite natural that the wages offered by the new entrepreneur must give the worker more than he has earned up to then, otherwise he would not accept him and the new, unfamiliar occupation. If there are unfavorable employment conditions and low wages due to poor soil conditions, lack of traffic routes, overpopulation and the like, it is a blessing for the population of this area if the cheap wages induce entrepreneurs to set up branches or branches there. As a rule, the first entrepreneur will soon be followed by others who already value the suitable workers there and pay higher accordingly. As a rule, it does not take long before a very poor rural district receives permanent employment, higher incomes and a higher standard of living through industry. So has z. B. the tobacco industry opens notoriously poor areas of land new and considerably better sources of income. Often the entrepreneur has to pay the high wages of a large industrial city from the outset if he needs skilled workers for his purpose who he cannot find in the flat countryside. These skilled workers who z. B. in the metal industry often earn multiple times a local daily wage, have recently been largely trained by industry, i.e. at its expense. And the skilled workers who have come from the trade usually first have to retrain. Industry must not indulge in all this labor and expense in order to meet its need for suitable workers. The skilled workers have the advantage of this at least as much as the employers concerned. Both pursue their justified use and thus serve, unintentionally, but actually the common good. A healthy national economy can only develop on the basis of a privately financed individual business.

A confirmation and recognition of this principle can be found in the document issued by Reich Chancellor v. Bethmann-Hollweg, the philosopher on the ministerial chair, occasionally made the statement made at the feast of the German Trade Conference on May 13, 1911 in Karlsruhe: "Economic life is unthinkable without egoism." Speakers who identified a community of interests between businesspeople and the state and emphasized the importance of entrepreneurship. It therefore also bears witness to a complete misunderstanding of the situation and a difficult to understand lack of consistent thinking when a member of the Reichstag who claims to represent his party in economic issues (Dr. Heinz Potthoff in “Tag”, 1910, No. 277 “ Public burdens of industry "), on the occasion publicly made the assertion:" The situation and the progress of millions of workers in the trades is for the population, the state, even more important than the good return on the capital invested therein. "The former is namely - in the long run - as everyone has to say, not possible without the latter. The entrepreneur will be grateful to only wear his skin to the market for his workers. In Germany, at least, he does indeed apply the principle: “Live and let live”; but not: “Die and let live”. With the death of entrepreneurship, the letting of workers cease by itself. In reality, however, the entrepreneur often suffers losses for years before going out of business; because with him he usually loses his fortune, his economic existence. The workers live so long at his own expense, and when they are laid off they stay what they are and find work elsewhere, but only if there are other employers, entrepreneurs who offer them work. Otherwise they will be bare and impoverished. The existence of companies that deliver good returns is therefore decisive and of decisive importance for "the situation and the progress of millions of workers in the trades".

The law of supply and demand works quite automatically in relation to wages 1). As is well known, it has also produced the deplorable phenomenon that the labor force in agriculture has become considerably more expensive and, for the most part, withdrawn. The question of servants has also been created or exacerbated by this circumstance. From an economic and socio-political point of view, however, one can certainly not blame entrepreneurship, namely not that of exploiting foreign labor.Therefore the serious efforts of the social reformers among scholars and politicians are basically completely superfluous. The law of supply and demand takes care of everything automatically, at least as long as economic life moves in an ascending line. This has been the case in Germany since it became a federal state in 1871, with a few interruptions, and it was on the whole already in the 1960s. The wages and working conditions of the workers have continuously become more favorable, and this is all the more remarkable as our socio-political legislation, apart from working hours for women and children and Sunday work - with which, on the whole, every sensible entrepreneur will fundamentally agree - has not yet extended. Wages are entirely a matter of free agreement, and so is the working time for male adults, with the exception of certain health-endangering operations such as white lead factories and the like. And yet these are the two main things: wages and working hours for them

1) Ehrenberg said in his above-mentioned Essen lecture about the mistakes of the cathedral socialism, among other things: In the past, people started from the view that self-interest automatically promotes the common good; now, conversely, from an abstractly conceived overall good that is not at all more closely and deeply justified. However, just as little is being investigated now as in the past, how the two organizational principles actually worked, that is, historical and statistical studies are being carried out, but these are not sufficient because many facts are too interpretable and the gaps are too large. These gaps are filled by the political-ethical tendency, and earlier by the individualistic tendency.

Workers. What they have achieved in this regard, and that is certainly not a small amount, they have basically only been able to gain because industrial entrepreneurship offered them more favorable conditions than they would ever have achieved without the presence and activity of the former.

In general, industrial workers do not appear to be in need of protection in relation to employers, rather the reverse is true of the latter compared to the former. Because the highly undemocratic autocracy of the social democratic (free) and most of the Christian trade unions causes a lot of trouble for entrepreneurship. Strikes and declarations of disrepute are so common means of workers' associations to achieve better working conditions or to restrict the entrepreneur's natural right to self-determination in his company that one can or must actually speak of a constant state of struggle between worker and entrepreneur in industry. Significantly, it is precisely the best-paid classes of workers who continually wage such wars: metal and woodworkers, who also form the largest and most combative free trade unions. Need and want or oppression and unfair treatment on the part of employers are really not what prompt these skilled workers' associations to go on a constant campaign against the employers, but only their sense of power and their lust for power. Ultimately, they can lead to the killing of enterprise, to the strangulation of enterprises. Because in the long run no entrepreneur will be found who can see his ability and being, his belongings and goods at the mercy of the organized workforce. Here lies one of the great dangers which our socio-political development, if not conjured up, at least increased and promoted through its one-sided partisanship for the worker and against the employer.

1) Professor Ehrenberg also drew attention to the dangers of our social policy in his several-mentioned Essen lecture; by stating: Prince Bismarck, as the creator of the German workers' insurance, nevertheless described it as a leap into the dark; After a while he began to hold back against new socio-political demands and warned against slaughtering the hen that laid the golden eggs. Through all of this he showed how much he felt the lack of sufficient justification and limitation of social policy; the social reformers, on the other hand, who were not under the pressure of great responsibility like Bismarck, did not stop, but now pressed even more vehemently and ever more vehemently for the work to be continued. It is impossible to overlook the number of socio-political suggestions that we have had since that time; almost every day has produced their new ones. Even in what is first intended there are still many healthy, feasible thoughts, but also many that bear the stamp of exaggeration on their foreheads. Above all: all of this only happened in a short time, with what effort in terms of strength and capital! Should it now always continue at the same or possibly even faster pace as our social reformers impetuously demand? Very many of them give little consideration to the feasibility of their proposals, much less to whether their implementation must not result in worse evils than those which are now being combated. The mere wanting and striving to change the current situation is already celebrated as high idealism. What is worse: more and more ethnic groups are taking part in the battle for the food bowl in demagogic forms that can hardly be thought of in a more alarming way, and the political parties outbid each other in a race for the favor of the masses. Every means is considered to be allowed in the “social” interest. All the courage of one's own conviction, all independent thinking threatens to be drowned in this goings-on.

In addition to the legitimate institutions of workers' insurance, the protection of the health and life of workers, our social policy has also created phenomena that are highly questionable or deplorable; such is the prevailing view among scholars and laypeople of the inferiority of the employer as an exploiter of the workers and as a profit maker. Hopefully public opinion will not persist for too long in this prejudice, which is shameful for Germany, and will do more justice to entrepreneurship in the future. The more recent work of well-known scholars in the economic and socio-political fields, such as Ehrenberg, Adolf Weber, Tille, etc., which are based on exact economic research and put the activities of outstanding entrepreneurs in the right light, will undoubtedly contribute to and the old school view that the worker needs protection against the employer, refuted by proving the fact and bringing it to general recognition: the truly great employer is the benefactor and not the exploiter of the workers.

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This chapter is part of the book Entrepreneurship and Public Conditions in Germany