Who built what?

Two schools of thought have attempted to explain the success of business endeavors. The first holds a free-market philosophy, maintaining that the entrepreneur’s talent and hard work determine his success in business. The alternative, collectivist theory, emphasizes that success is not possible without societal input, in form of the infrastructure available to the entrepreneur and the preparation of the individual by societal agents, especially education. (The latter factor would, in Marxist theory be described as the determination of base by the superstructure.) This position was forcefully expounded by Elizabeth Warren (“Nobody got rich on their own”) and Barack Obama (“If you’ve got a business you didn’t build that. Somebody else made it happen.”) Their representation posits societal contribution as a cause of entrepreneurial success.

In fairness to both positions, we must observe, however, that there is a cause-effect relationship between society’s infrastructure and superstructure on one hand and the ability of business to generate value, on the other hand, but the causal relationship is the reverse of what the collectivists propose. A survey of history will clarify this fact.

The first entrepreneurs (sometimes called pioneers) went into wilderness with the purpose of generating value for themselves, as wheat from the soil, lumber from the forests, gold from the rivers, etc. While building their fortunes they had a clear purpose of erecting churches, schools, roads and towns, that is, the superstructure and the infrastructure, as soon as they could. And all these things they built once they had created enough value through their work.

To say that entrepreneurs are beholden to the Army for creating the internet (assuming that the Army did so) is to put the cart before the horses. It was because of the economic activity of their people that the colonies could afford to raise an army in the 1770s.

Nothing has changed conceptually from those days to ours. The highways and the schools are still built and maintained by the money gained through economic activity, that is, provided by those that develop and run businesses. It is natural for producers to make use of all the resources that they pay for in their efforts of creating value. Likewise, the Army’s researchers have always been the salaried employees of those who created value by their economic activity, as business owners and workers. The politicians who have inserted themselves into this employer/employee relationship have generated overhead as their main contribution.

Those who benefit from the infrastructure and superstructure generated by economic activity, without creating value themselves, can be defined (by the term dear to collectivists) as freeloaders. Examples are those who refrain entirely from working, as well as many university professors, and all community organizers.