No matter the state of the economy, Americans have been creating and expanding their own businesses at an astounding rate. A strong recovery, extra savings, and steady consumer spending all played a role.
Schweikart and Doti provide an insightful account of this phenomenon by interweaving vivid narrative with economic analysis. They recount interesting successes and failures ranging from Eli Whitney reshaping business landscape to Asa Candler, W. K. Kellogg, Henry Ford’s Consumer Marketplace as it emerged; to Warren Buffett, Michael Milken and Martha Stewart experiencing its New Economy aspects.
The Origins of Entrepreneurship in the United States
Entrepreneurship involves taking risks, starting new businesses and extracting economic value for profit. Entrepreneurship has long been at the heart of technological innovations, business processes and social trends throughout history.
The United States has always been renowned as an incubator of entrepreneurs, from Thomas Edison and Benjamin Franklin, to AT&T, Sears Roebuck, and DuPont companies like AT&T, Sears Roebuck, and DuPont being founded here.
The United States has also shown itself to be extremely tolerant of entrepreneurial failure. While bankruptcy in Europe was once seen as a moral misfortune, bankruptcy in the U.S. never caused shameful feelings and has instead become an incentive for those seeking opportunity, freedom and independence.
The Early Years
Frederic Tudor used an innovative strategy when starting to sell ice in the early 1800s: shipping cheap New England ice to areas such as Calcutta and West Indies where its price was higher.
Entrepreneurship is more than a business activity; it also provides products and services that create lasting change within society. From Facebook and Amazon, to LuminAIDs providing solar-powered lighting in disaster areas, entrepreneurs fuel economic growth while creating innovations that benefit all.
Entrepreneurs’ influence reaches well beyond a single company, as their innovations spur structural transformation by challenging stagnating firms and helping reduce unemployment rates in communities across America.
The Middle Ages
Entrepreneurship has long been part of America’s fabric. Although the word may suggest risk and reward, its true power lies in connecting those with vision with capital sources – this was what Irish-French economist Richard Cantillon meant when coining his term back in 1772 as part of an economic movement of change and progress.
Early entrepreneurs emerged when hunter-gatherers transitioned from hunting and gathering to farming and raising livestock, providing families the ability to stay put while also creating businesses without facing social disapproval if their venture failed. These early entrepreneurs set the standards that would become prevalent worldwide.
The Renaissance
American entrepreneurs are increasingly being celebrated. Celebrities appear in commercials for coffee meet-up apps and artisanal peanut butter; college students take an interest in entrepreneurship courses; etc.
Schweikart and Doti deliver this remarkable story through vibrant narrative and economic analysis, telling one of America’s great success tales.
The Industrial Revolution
The Industrial Revolution, commonly referred to as the First Industrial Revolution, marked a transition away from agrarian to urban economies and saw goods previously handcrafted becoming mass produced due to new iron and textile manufacturing techniques.
Innovations required extensive labor. To meet demand, companies turned to the Atlantic slave trade – a practice which brought both profits and human suffering.
Entrepreneurs of the Industrial Revolution were pioneers of innovation. They found new ways to make money and expand their businesses, elevating small business owners’ social status. Today, entrepreneurship remains alive: magazines cover entrepreneurs with equal coverage as movie stars in magazine columns; college students flock to courses on entrepreneurship.
The New Economy
Charles Alexander wrote his iconic Time Magazine article under bleak conditions; energy prices had skyrocketed, productivity had plateaued and American innovation could no longer compete with Asian advances.
Small business owners and their representatives earned significant legislative victories during the late 1970s and early 1980s in Washington. These included passage of legislation such as the Revenue Act of 1978 (with permanent graduation of corporate income taxes), Equal Access to Justice Act, Motor Carrier Act reforms and others which greatly assisted smaller firms.
Gar Alperovitz notes that many advocates for new-economy reform struggle with public perception of their advocacy as being socialist or unrealistic, which needs to change by increasing entrepreneurialism.
The Post-World War II Era
World War II marked an unparalleled period of economic prosperity that became known as “The Golden Age of Capitalism,” giving rise to an American culture confident about their place in the global community.
Government contracts were key drivers of growth; automobile manufacturers rapidly moved away from making cars toward developing trucks such as Jeep that met Army requirements.
Entrepreneurs saw an opportunity in consumer demand. After years of rationing, people could afford new consumer goods like televisions and automobiles as well as affordable mortgages to build their homes.
The Present
Entrepreneurship in the United States is flourishing quickly. Thanks to an economic rebound fueled by President Obama’s American Rescue Plan and unemployment rates below 4 percent, inflation-adjusted GDP rose well beyond pre-pandemic estimates and many Americans now pursue their dreams of business ownership.
Men and women across demographic lines are taking risks and exploring entrepreneurial opportunities in equal numbers, with African-American, Asian, and Hispanic majority-owned small businesses reaching unprecedented levels.
Communities that adopt policies designed to support entrepreneurs will have greater success in encouraging entrepreneurship. Such policies should include lower entry barriers such as tax policies and start-up costs, respect for private property rights, and robust legal systems.