Dr. Barbara Kolm, Dr. Daniel Mitchell, and Professor Gissurarson.
Karl Marx presented an incredibly simplified picture of modern society where people were divided into just two classes, capitalists, owners of the means of production, and workers who had nothing to sell but their labour. In fact, Professor Hannes H. Gissurarson submitted, most people nowadays made their living by selling their knowledge, talent, skills, and abilities, not their raw muscle power. In Marx’ scheme of things there was no space for two groups essential to the creation of wealth, entrepreneurs and venture capitalists. Entrepreneurs discovered new and better ways of satisfying human needs, and venture capitalists provided the capital necessary for experiments and innovations. Gissurarson posed the question which was more likely in the long run to encourage innovation, a large public ‘innovation fund’ where the majority of a board made decisions about investments, or hundreds of thousands of capitalists who were risking their own money. In a society of 100,000 venture capitalists it was likely that 100,000 experiments were made, leading to the acquisition of new knowledge and the creation of new wealth. Gissurarson also pointed out that the ability to convince at a meeting the majority of a board about a new project, perhaps with the help of a glib tongue or a colourful slide show, was not necessarily the same as the ability to operate a company for many years, a task requiring hard work, ingenuity, patience, and perseverance.
Gissurarson’s remarks were made at a panel on entrepreneurship in London on 18 April 2023, organised by the Austrian Economics Centre as a part of its ‘Free Market Road Show’. Most entrepreneurs and venture capitalists were not motivated by greed, Gissurarson observed in his talk: Rather, they were driven by an urge to create, experiment and innovate, and of course often a burning desire to get ahead of their competitors. They were usually individuals full of restless energy. But at the same time as these two groups made money for themselves, they were highly useful to society. By doing well, they were doing good. The best evidence of this was a comparison between different economies. If the economies of the world were divided into quartiles according to economic freedom, it turned out that the 10 per cent lowest-income group in the freest quartile actually enjoyed higher average income than everybody in the unfreest quartile (as shown by the Index of Economic Freedom, published annually by the Fraser Institute in Vancouver). Thus, capitalism could be looked upon as an efficient way of providing opportunities for people to produce themselves out of poverty and into affluence.
Other speakers at the meeting included entrepreneurs Thomas Borwick and Max Rangeley, and economists Dr. Eamonn Butler, Dr. Barbara Kolm, and Dr. Daniel Mitchell.
