When the Cold War ended and the Soviet Union collapsed, the argument was made that history had ended; the final debate over how best to organize society had concluded with a decisive victory for Western democracy.
But history, of course, hasn’t ended, and the debate continues as heated as ever. It may even seem similar, in some respects, to the previous one: Western Europe proposes a basically centrist system presenting itself as humane and caring, working to level outcomes, as opposed to the every-man-for-himself decentralized system on the other side of the Atlantic, depicted as heartless, striving only to level the playing field, but ruthlessly willing to leave many behind once the games are on.
Johan Norberg, a fellow at the Center for the New Europe, has written a commentary in the WSJ in defense of classic liberal capitalism. He points out that the advances of the past 150 years that have brought us the historically unprecedented wealth that is so meaningfully felt so deep in so many societies, are the result of the insights and initiatives of innumerable individuals everywhere in the world motivated by self-interest - they were decidedly not produced by centralized governments. In other words, the benefits we all enjoy are the product of capitalism, not paternalism.
Mr. Norberg is attempting to make a defense of entrepreneurs, sadly maligned for creating - not real advances in so many fields ultimately enjoyed by all - but real disparities in wealth which create a false sense of poverty for some.
But there is at least as much value in the individual initiative inside our organizations, as inside our societies. Just as we organize those societies (at least on one side of the Atlantic) to unleash that initiative, managers need to find organizationally beneficial ways to release the individual insight and entrepreneurial spirit of their own employees.
As mentioned in yesterday’s post, in wider society people are finding ways to collaborate which draw on - rather than curtail - individual creativity; and businesses are slowly beginning to catch on. Managers should examine this with the greatest attention. Centralized control - particularly, of course, in businesses growing beyond their initial spark of individual entrepreneurial insight - will not produce the goods that energized employees will for your organization.
Which side of the Atlantic is your business on?
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[...] In a post last week entitled “The invisible hand,” I presented the argument that much of history today is driven by the debate between the varying approaches to societal and economic organization characteristic of Europe and the United States. In its very efforts to promote social welfare and equality, the European centrist system is falling short of the gains in these same areas achieved by the individualistic and free-ranging American capitalist model. This discussion was occasioned by an excellent piece in the Wall Street Journal by Johan Norber, a fellow at the Center for the New Europe. [...]
[...] Phelps’s main argument is that capitalism is designed to generate dynamism, and the continental system is designed to suppress it. A related point was made by another WSJ essayist, as discussed in our post of a week earlier, on 4 October 2006. Johan Norberg, a senior fellow at the Center for the New Europe. In the course of his defense of global capitalism, he made the telling point that virtually every advantage and blessing we enjoy today - healthier, longer lives filled with greater diversity and generally fewer hours committed to generally more fulfilling work (and this advancement has penetrated to one degree or another to people of all socio-economic conditions in virtually every corner of the world) - result from the scientific, economic, commercial, and general technological innovations of individuals inspired by an entrepreneurial spirit or enabled by their living in an entrepreneurial system. Put another way, they weren’t invented by government bureaucrats. They arose from individual self-interest, not from centrally planned efforts at social justice. [...]
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