It Isn’t Always Obvious How Modern Business Models Limit Entrepreneurship … Or What To Do About It … But There’s A Postmodern Eject Option That Will Set You Free
[This particular post is dedicated to the real and aspiring entrepreneurs out there, especially my brethren who are the creators, compilers and consorts of information ... and it's distribution to the people.]
As Always, I like to start near the beginning …
In the case of looking at modern business models we need to look to the great monarchies and empires that grew out of the dawn of the Agricultural Era. There were a number of forces that shaped societies at this time, including the ever present economic forces driving the behaviors of men (Author’s Note: assume the term “men” is used here and throughout for convenience sake referring to all of humankind, i.e.: children, women and men).
By economic forces we can begin with the fundamental necessities required for sustaining and nurturing life, including creating a context appropriate to successful procreation. Prior to the Agricultural Era the evidence we have uncovered points to at least two previous phases of evolutionary development in human systems, a “Hunter/Gatherer” phase and a “Hunter/Horticulturist” phase. Sometime during these phases of human development basis social tenants were being programmed into the basic biological machinery as well as the social machinery. Essential remnants of the developmental process that imprinted itself on the human species remain in place today, e.g.: competition and altruism.
The primary social evolution mechanism during this phase transition from “Hunter/Gather” to “Hunter/Horticulturist” to “Agriculturalist” included the ability to create larger groupings leading to the first of many city-states and subsequently empires. The primary driver of this development was the ability to create wealth in the form of excess food resources, freeing individuals for specialization beyond food production in the population. From this consideration we can make the argument that the first rudimentary elements of what we think of today as business began to evolve within the social fabric.
It would be a reasonable conjecture to presume that the first elements of business in early societies took the form of services and craft, production of products, access and acquisition to goods, and distribution of goods. While it would also be reasonable to presume that services and craft, along with the production of products came first, the access and acquisition of goods, and the distribution of those goods was unlikely to be far behind. We can place the last of these two elements of business under the heading “trade” for simplicities sake. This model of the fundamental elements of early business models can then be presented simply as a triad of services/craft … production … and trade …
At this time there were only a few ways business of any kind to be conducted …
In a very local model, e.g.: craftspeople serving their local communities … carpenters, potters, healers …
Creating goods to be traded directly, i.e.: barter … or later for the exchange of payment in coin made of valuable metals representing fixed value, typically in direct association with the value of the metal in which the coin was minted, e.g.: copper, bronze, silver, gold …
Trade between kingdoms for precious resources and goods … this trade was the sole privy of monarchs, even when conducted on their behalf by merchants of their choosing.
Back to Basics For A Moment …
However, behind this model was the constant of food production as the basis of all “real” wealth – and in an Agricultural society that meant land upon which the Agriculture depended for the growing of grains, vegetables and fruits, the raising of livestock, or the hunting of game. This was the driving force behind the concept of “real estate” … of the “King’s Estate” … the land is owned by the monarch, and all others have use as decreed by the monarch with taxes applied to the rights of use, i.e.: “real estate taxation” … the “owner” of the land is NOT the one who occupies and or uses the land, the “owner” of the land is the one who can claim taxes for the right of occupation and use. The owner can also always reclaim the land for a higher use, e.g.: eminent domain.
Since the ownership and control of land, the right to occupy and use it, as well as access to the resources contained on or below it … e.g.: fauna, flora and minerals … was (and to a great extent remains) the most essential economic driver another source of economic growth for the monarchies was conquest. As the need to expand the ownership and control of land became more dominant, to sustain the less productive inhabitants of the cities for essential resources, the monarchs were forced to expand their armies and seek new lands for these essential resources to bring back to the cities, with their aristocrats and elites, if they themselves desired to remain in control. This new necessity of supporting a growing elite class placed a new kind of pressure on the system to become more effective and efficient in the arts of war, e.g.: the Roman Legions.
Now a new economic entity sprang into existence as well. The knowledge associated with the building of war machinery and of the conduct of war. New technologies evolved to support the enterprise of war and conquest, including sophisticated communication technologies for the delivery and security of critical messages to and from afar – in this endeavor speed and utmost secrecy could mean the difference between ultimate success and utter failure. Yet, at the core of the massive campaigns conducted by the armies the issues of supplies, especially food, clothing and weapons, remained critical.
Supply Chains and Distribution As An Economic Cornerstone
Once again we can look to the Romans and their feats of engineering, specifically their roads. To a great extent the success of Rome can be directly traced back to its ability to build roads to distribute goods throughout the Empire.
This had two significant functions …
- Keeping the armies of Rome supplied so they could conquer and rule in foreign lands
- Providing the access to Rome necessary to bring back essential goods required to keep the Roman citizens pacified
In the world of the Roman Empire, Rome was the first mega-city with over a million people occupying it. This population was largely comprised of aristocrats and elites, their servants and slaves, the service providers catering to them, the craftspeople providing skilled labor, and the producers and traders providing them with the goods they desired. This population created far less wealth than they consumed, yet through the control of the surrounding lands they continued to refill their coffers and exert control on the ever deepening maw of Rome’s own resource hunger. This made for a very unstable position for a Caesar unable to keep the provisions coming … so the constant need for conquest and the drain on the essential resources from the conquered to feed the Romans.
Without the technologically advanced engineering required to build the roads that led to and from Rome, and the aqueducts that kept her supplied with clean water and water to wash away the waste of millions Rome would have never survived to build such an edifice to herself. In some ways Rome in her unsatiable hunger for goods created the basis for the modern age of business that depends on the movement of goods as its lifeblood today.
Mid-Course Conclusions And Corrections
Once this fundamental structure was established, i.e.: the acceptance of an elite ruling class, the blueprint for modern society, modern economic structures and modern business was firmly grounded. When we look through the lens of history at a particular angle what we see is that the elite, ruling class was built on the labor of the peasant class who accepted their rule in exchange for the illusion of safety, security, freedom and the potential to pursue a life of liberty and wealth themselves. What the peasant class never realized was the extent of the bargain they were making, or the reality that they were always playing by different rules than the aristocrats and the elites.
The lessons contained in history continue to show that only those who were able to exploit the limitations, weaknesses and gaps in the ruling class’s position were ever able to become part of that class themselves. Before they crossed the chasm of becoming aristocrats and elites, many of those working the chinks in the system to their own ends would have been by definition at best outside the borders of lawfulness and at worst criminals. Staying with this same lens what we can learn is that the most efficient way to cross the chasm from commoner to elite is to do the dirty work of the elites for them, earning you passage beyond the gates yourself.
Modern Banking And The Fleecing Of The Common Man
We can look at the modern banking system as an example in quick review. Beginning with the Medici’s who devised a way for the Kings and Queens of a Catholic European Empire to circumvent the rule of usury to the modern age of centralized banks and fiat money the bankers have aligned themselves with the ruling class to concentrate the wealth of the system at the top. The recent activity we’ve seen throughout South and Central America beginning in the postwar era of 1950’s through the 1980’s and on, in North America in the 1980s, 90s and most recently in the last five years leading up to a massive reformation of the banking industry with massive bailouts based on taxpayer indebtedness bloating the bottom-line of the failed banking institutions that fundamentally corrupted the system, and now the debacle threatening all of Europe with the same re-distribution of wealth upwards are perfect constructs of the mechanisms I’m pointing to here.
Essentially in a central banking environment, like those in most industrialized Western countries, and in the U.S. via the Federal Reserve System (which is neither Federal, holding any reserves, or a system in any real sense of the word), fiat money is created at the demand of a government (in the U.S. via Congressional request for increased funding outside of the requirement of raising it through direct taxation or tariffs), then the “banks” loan that money out at a ratio of many times the funding they hold in reserve (in the U.S. the ratio is about 10:1, i.e.: for every dollar a bank holds they can make a “loan” of ten dollars) and they are allowed by law to charge interest on the loan amount that is payable by debtor.
The “trick” in the system is that they are collecting interest on money they don’t have, so any interest rate is exhorbitant, creating windfall profits. A further insult on injury is that those furthest away from the lending source pay the most for the money they borrow, so the wealthiest borrow as the best rates. When you add in inflation to the sequence it immediately becomes apparent that holding as much debt as possible, borrowed at the best rates possible, becomes a pathway to increasing wealth at an accelerated rate, i.e.: you are borrowing money at a cost that’s lower than the value of the money you will pay the loan back with, and if you are close enough to the lending source you will borrow at preferential rates and your costs can be passed onto those who have to borrow further down the line. In the meantime if you purchased real assets with borrowed money they appreciate while you are paying back the borrowed money with devalued currency … a nice little spiral of wealth creation if you can “get in on it” early enough. One of the best way to “get in on it” is to become a borrower and a lender, borrowing inexpensively and lending expensively, i.e.: become the bank. (Thank you for the examples Mr. Morgan, Mr. Rockefeller, Mr. Rothschild …)
The Modern Entrepreneur
Now we come to the crux of my tirade (you did realize this was a tirade didn’t you?). The story that continues to get sold about modern entrepreneurial success is that it is a function of insight, courage, wisdom, brilliance … and maybe some hard work. We also “know” that it’s being in the right place at the right time, and who you know as much as what you know. FWIW I agree with much of this … to a great extent it’s true … until you get to the point where you have to work the system. At some point in the equation you have to find the chinks in the armor of the ruling class and use them to your benefit.
In a modern entrepreneurial system the ruling class is made up of at least three segments:
- The political/governmental sector
- The financial/banking sector
- The existing commercial sector that you seeks to displace
To do this, and to succeed in a monumental way, you have to work the system … often at the edge of criminality, or downright stepping over that line. There are hundreds or thousands of books that document what I’m referring to here. Some of the favorite targets are mega-companies like Walmart, the mulit-national banks, the fiascos like Enron and World-Com. However, when you study the field you’ll find that there is no large business that isn’t tied in with the political and the financial players required to perpetrate their actions.
HOWEVER … this tirade isn’t about that … it’s about what you can choose instead if you so desire … BUT AT A PRICE!
I’ll lay it down simply … to use an oft quoted comment, “If you aren’t part of the solution you are part of the problem”
If you are making your bed and lying down with the players I’ve been decrying then you are part of the problem, even if you only occasionally suck at the corporate teat. You cannot claim you are only a small little guy/gal trying to make a living off of the leavings of the corporate giants and not be awash in the stench of the garbage they put out. Even if you are selective in your takings, and what you do with them – e.g.: charity and philanthropy, you are insidiously continuing the subjugation by the ruling class. Of course the lunacy is that the subjugation I refer to includes your own (I am assuming that Bill Gates, Jeff Bezos, and even Mark Zuckerberg are not reading this … although some Congressperson, Senator or even the Oval Office itself may have readers who keep an eye on things doing it for them).
So how do you opt out … where the lever to eject???
The way out of the debacle is to stop being part of the problem … become a problem for the problem.
Despite their ill-fated attempt the “Occupy” movement had the right idea fundamentally … what they left out was that they thought they were playing on a level field. What they might not have anticipated was that the folks who are much more “like them” then their masters would turn against them, i.e.: the police, law enforcement officials and legal system jumping through the hoops of the puppet masters on Wall Street and in City Hall.
Remember, once these folks get to City Hall they are no longer one of you! When politicians pass laws that discriminate preferentially for themselves they are declaring that they have entered the hall of the elites and you are not entitled to sit beside the table with them, e.g.: the healthcare bill in the U.S. that excludes Federal politicians … Congresspeople, Senators, Presidents … all get preferential treatment over the citizenry … and that was a Democratic initiative!
So you opt out …
You set up shop for the people directly … and you co-opt the resources of the elites. You use their distribution systems to get your goods to the people, you use their communication tools to spread your message, you take advantage of their financial systems to build your own position … just enough.
This last bit is critical … JUST ENOUGH … because when you cross the line to more than enough it’s very hard or impossible to come back. However, when you realize that JUST ENOUGH is really enough there’s no way to control you anymore. You don’t need or want the bigger house. You don’t need or want the prestige car. You don’t need to display your wealth to prove you possess it .. and you begin playing a different game.
The new game you play is riding the waves of the system rather than being caught by them. You set up and run your own thing. learning how to become a part of and to tap into communities of your own making … by invitation or creation. You decide independently, apart from the system’s approval, certification and licensing process, how you will run your life … and part of that is the kind of business entity you establish.
The whole “lifestyle business” movement is a part of this idea. The most basic expression of it however is a harkening back to the days of old in the marketplace, where you are serving a “local” audience that knows you and your personal credibility and mark mean something to them. Yet in the modern expression of this idea that local market is not confined by geography, but is instead comprised of islands of values, beliefs, philosophies and concepts in common. Like the first traders you become a “global” citizen belonging to many tribes, not just the one defined by and imposed upon you by the ruling elites.
Once you learn to surf the system staying on the boat just doesn’t make sense … maybe it’s time for you to consider what it will take to jump ship and take back the oceans.
Joseph Riggio, Ph.D., Princeton, NJ
Architect & Designer of the MythoSelf Process and Soma-Semantics
P.S. – If you want to spend some quality time finding the eject lever, opting out and landing well take a look at my page here, How I Work, check out the links for the practice areas I specialize in, and then let’s talk.