The Saturday Exhale Episode 24: What Can Marx Teach Us About Entrepreneurship?

Entrepreneurs tend to be people who want to do something big, and it’s been perverted to thinking, ‘Oh, doing something big is making a lot of money.’ Well, that’s not necessarily true. We forget people who just had a lot of money. We remember people who did something that changed the world, regardless of how much money they have. 

One of the messages of this article is that you resisted venture capitalist funding for your enterprises, namely in molecular hydrogen. You point out, correctly, that shareholder primacy legislation makes it illegal to pursue anything besides profit for a corporation. Yet, people should engage in enterprise for reasons besides making money. It is my view, one that I believe is echoed in this article, that “making money” can be a signal that you are providing a valuable service (and, indeed, it often is simply that) or it can be a signal that you are engaging in a parasitical activity, such as providing an addictive drug.

I am reminded of how Karl Marx describes production, for two classes: the proletariat and the bourgeoisie. In Capital, Vol. 2, he writes that, in the case of the bourgeois (or capitalist) class,

The circular movement of capital takes place in three stages, which, according to the presentation in Volume I, form the following series:

First stage: The capitalist appears as a buyer on the commodity- and the labour-market; his money is transformed into commodities, or it goes through the circulation act M — C.

Second Stage: Productive consumption of the purchased commodities by the capitalist. He acts as a capitalist producer of commodities; his capital passes through the process of production. The result is a commodity of more value than that of the elements entering into its production.

Third Stage: The capitalist returns to the market as a seller; his commodities are turned into money; or they pass through the circulation act C — M.

Hence the formula for the circuit of money-capital is: M — C … P[roduction] … C’ — M’, the dots indicating that the process of circulation is interrupted, and C’ and M’ designating C and M increased by surplus-value.

Contrast this with the mode of production of the proletariat, or the working class, at least according to Marx, which is written as C—M—C. A worker has labor-power as a commodity (C), but this is not capital in the form of factories or other holdings. The worker sells their labor-power on the market, receiving money (M), and then he or she spends that money on the necessary commodities (C) of life, starting again at their labor-power (and nothing else). Note that, in Marx’s formulation, the C’ and M’ which come out of the capitalist’s processes are indicated with a prime (’) sign (as in mathematics), noting that these are augmented with surplus value, with the potential for new investment and transformation into capital. The capitalists’ M—C—M’ (and later M—C … P … C′—M′) is an ongoing process, a kind of economic osmosis or expansion, whereas, for the worker, making money is just about buying stuff to use.

My question for you is twofold: first, do you think Marx accurately captures the production/consumption distinction between people who own a lot (capitalists) and those who work on behalf of them? Second, how does your critique of the legal imperative of shareholder primacy differ from Marxist critiques of capitalism?    

AT: Critically, to paraphrase Zig Ziglar, one can have all the education, all the motivation, but none of this mindset will work if they don’t. Likewise, a “capitalist” can start with substantial “M,” attempting to turn it into “C” and thereafter more “M,” but if they don’t insert their own “C” in the form of sweat equity, or intellectual know-how in connection with action, their “M” will certainly evaporate, leading them to a position in which they only have “C” remaining, in the form of their own labor—a commodity they were previously incapable of unlocking during their capitalist intentions. The proletariat, now and during time immemorial, relies on more than simply their labor. They need their wits, their charm, their appearance, and their reputation. A certain percentage of the “proletariat” will be without work, another percentage will turn their “C” into additional “M,” potentially leading to a dualistic position where they are running both the “proletariat” and “bourgeois” equations, and even more will simply amplify the proletariat equation into one that leads to more comfort and security. 

My point in all of this is that we cannot reduce a complex and nuanced civilizational exchange system into a polarized two dimensional equation. Finance, and our economic system, is the medium, but during communist regimes this fluid spectrum between power brokers and the powerless existed, with the medium of exchange changing. Perhaps information, cunning, ruthlessness, sycophancy, and the ability to be a “chameleon,” or potentially many other traits, were elevated into a new equation. The end result was the same, equitable outcomes did not exist, pain and suffering emerged—to a substantially greater degree—and the very challenges Marxism looked to resolve were amplified. 

This simplistic equation ignores a critical consideration: when money, a means to purchase, is sufficient for comfort, it no longer motivates. Money can sometimes purchase our desires, but it is not what we desire. This is true whether we are aware of it or not. Our modern capitalism has hoodwinked the majority into thinking money is more than what it was designed to do, which is to act as a medium for human exchange. Moreover, it has been manipulated and distorted to a point where we no longer, speaking generally, understand the relative power in its ability to deliver our true desires, as the goal posts are changing rapidly, irregularly, in a manner too complex for the human brain to cohere. 

When I ran door-to-door sales crews, time and again when I would run a cash bonus, our numbers would be unimpressive. However, when I would run a bonus on an item which my reps desired, something they could perhaps buy with less money than the bonus but hadn’t, and especially if I was able to secure something exclusive with waiting lists, the motivation and appreciation was substantially greater, and our sales numbers showed it. This is likewise true when partnering with high value team members to work with my company. Especially the more valuable, experienced, and intelligent the candidate, the less the exact dollar figure matters to them in deciding who and where they wish to work. They consider if the work they will be doing inspires them; if they need to relocate or commute, or if it is remote; and if the position helps move them towards their eventual goals and aspirations. They are by definition workers, being employed by a “capitalist,” but their behavior is more in line with Marx’s bourgeoisie.

An intelligent capitalist understands desire, but more importantly, understands the distinction between desire and value. Something can be desired and harm societal or individual value, or it can be desired while providing value for both society and the individual. In this sense, a true capitalist is an individual that understands this flow of desires, and how the desires culminate into successful collaboration, seeking civilizational cohesion. Those that seek to supply desires at the expense of true value are parasites. We have historically enacted laws protecting ourselves against such actions. Today, the parasites are protected, heralded as success stories, and turned to as inspiration. We have allowed our perception of this equation to change, and a light needs to be shone onto this foundational error in order for us to move forward.

VG: In defense of Marx, I don’t think proletariat and bourgeoisie are immutable categories but relate to one’s relationship to the “means of production.” So it is conceivable a proletariat accumulates enough wealth that they function like a capitalist if they have access to the “means of production.” Further, I think elements of one’s psyche like cunning are a parcel of what Marx calls labor-power. In any case, I think what Marx is saying is fundamentally elitist: people who know how to make money have a fundamentally different relationship to money to those who struggle at making it. Those who make money, perhaps like you, may treat it as you do: as a tool or a medium for self-mastery. It is maybe those who struggle with money who view it as an object of desire, amplified by the capitalist message that the accumulation of capital—i.e., the putting of the ‘prime’ sign after M—is the point of productive creation and exchange.

I am reminded of what was told to me by one of my friends: the only thing money can’t buy is community. But, what do human beings need (unlike money)? Community. And, I think your commentary on desire here is crucial, namely that a “true” (or competent) capitalist understands desire and has a simultaneous view to the future—a “civilizational” view, if you will. I think the imperative of shareholder primacy, to go back to my original question to you, is not a policy with an eye towards civilizational cohesion. It is the opposite of this. In fact, it is the exact opposite of this short of everything but zombie apocalypse, to paraphrase Nick Land.

The main message of Marx in the passage I shared, which is not a revolutionary one (that is perhaps impossible to divorce from his broader revolutionary message), is that people who work for others are subject to some degree of exploitation. Their labor-power is extracted from them by the capitalists, who may or may not have retained their ‘C’ legitimately. I disagree with this notion of exploitation overall, because I think people enter into contracts voluntarily and it’s fine for me or anyone else to work for someone else since I wouldn’t want to be an entrepreneur. Many—perhaps most—people are like me. But, as your example of the gift bonus showed, what people want more than money is community, exactly what money can’t buy.

Some Marxists did consider the question of desire, though they tended to read it through the lens of Sigmund Freud, and among these Freudo-Marxists were Herbert Marcuse. What Marcuse says about work (i.e., “making money”) in his Eros and Civilization is revealing (emphasis mine):

[In his essay, “Work and the Pleasure Principle,” Ian Hendrick] suggests that the “energy and the need to exercise the physiological organs available for work” are not provided by the libido but rather by a special instinct, the “mastery instinct.” Its aim is “to control, or alter a piece of the environment . . . by the skillful use of perceptual, intellectual, and motor techniques.” This drive for “integration and skillful performance” is “mentally and emotionally experienced as the need to perform work efficiently.” Since work is thus supposed to be itself the gratification of an instinct rather than the “temporary negation” of an instinct, work “yields pleasure” in efficient performance. Work pleasure results from the satisfaction of the mastery instinct, but “work pleasure” and libidinal pleasure usually coincide, since the ego organizations which function as work are “generally, and perhaps always, utilized concurrently for the discharge of surplus libidinal tension.”

As usual, the revision of Freudian theory means a retrogression. The assumption of any special instinct begs the question, but the assumption of a special “mastery instinct” does even more: it destroys the entire structure and dynamic of the “mental apparatus” which Freud has built. Moreover, it obliterates the most repressive features of the performance principle by interpreting them as gratification of an instinctual need. Work pure and simple is the chief social manifestation of the reality principle. In so far as work is conditional upon delay and diversion of instinctual gratification (and according to Freud it is), it contradicts the pleasure principle. If work pleasure and libidinal pleasure “usually coincide,” then the very concept of the reality principle becomes meaningless and superfluous, and the vicissitudes of the instincts as described by Freud would at best be an abnormal development. Nor can the reality principle be saved by stipulating (as Hendrick does) a work principle different from the reality principle; for if the latter does not govern work it has practically nothing to govern in the reality.

To be sure, there is work that yields pleasure in skillful performance of the bodily organs “available for work.” But what kind of work, and what kind of pleasure? If pleasure is indeed in the act of working and not extraneous to it, such pleasure must be derived from the acting organs of the body and the body itself, activating the erotogenic zones or eroticizing the body as a whole; in other words, it must be libidinal pleasure. In a reality governed by the performance principle, such “libidinal” work is a rare exception and can occur only outside or at the margin of the work world—as “hobby,” play, or in a directly erotic situation. The normal kind of work (socially useful occupational activity) in the prevailing division of labor is such that the individual, in working, does not satisfy his own impulses, needs, and faculties but performs a pre-established function. Hendrick, however, takes no notice of the fact of alienated labor, which is the predominant mode of work under the given reality principle. Certainly there can be “pleasure” in alienated labor too. The typist who hands in a perfect transcript, the tailor who delivers a perfectly fitting suit, the beauty-parlor attendant who fixes the perfect hairdo, the laborer who fulfills his quota—all may feel pleasure in a “job well done.” However, either this pleasure is extraneous (anticipation of reward), or it is the satisfaction (itself a token of repression) of being well occupied, in the right place, of contributing one’s part to the functioning of the apparatus. In either case, such pleasure has nothing to do with primary instinctual gratification.

To link performances on assembly lines, in offices and shops with instinctual needs is to glorify dehumanization as pleasure. It is no wonder that Hendrick considers as the “sublime test of men’s will to perform their work effectively” the efficient functioning of an army which has no longer any “fantasies of victory and a pleasant future,” which keeps on fighting for no other reason than because it is the soldier’s job to fight, and “to do the job was the only motivation that was still meaningful.” To say that the job must be done because it is a “job” is truly the apex of alienation, the total loss of instinctual and intellectual freedom—repression which has become, not the second, but the first nature of man.

In contrast to such aberrations, the true spirit of psychoanalytic theory lives in the uncompromising efforts to reveal the anti-humanistic forces behind the philosophy of productiveness:

Of all things, hard work has become a virtue instead of the curse it was always advertised to be by our remote ancestors. . . . Our children should be prepared to bring their children up so they won’t have to work as a neurotic necessity. The necessity to work is a neurotic symptom. It is a crutch. It is an attempt to make one feel valuable even though there is no particular need for one’s working.

To put a bow on this, Marx’s analysis of two money-making modes, for bourgeoisie and proletariats, is perhaps overly simplistic and hinges too much on exploitation (rather than the engaging in of voluntary contracts). Yet, the analysis somewhat dovetails with Alex’s critique of the imperative of shareholder primacy, namely as a broader attack on the instrumentalization of labor-power and “the making numbers out of man.” But what are we to make of Marcuse? To me, this is a man working to justify not working, for whom the conditions to make a productive contribution to the world will never come, and he is happy about this—snarking at men like Hendrick trying to explain human affairs in an actually-existing (capitalist) society. I think it’s important to note that, while taking Marx seriously in a response to an article in Entrepreneur magazine may seem like an extended joke to some, the consequences of certain belief systems are no laughing matter. I am happy I can respond to an article in Entrepreneur rather than World Socialist Web Site. There is something to learn from the former, even if you apply concepts from the latter to reveal it (and perhaps especially if you do so). The inverse of fishing for insights in the utopian fantasies of sexually-repressed men will leave you with a barrel with very few fish.   

AT: In regards to human motivation, I am not going to respond to Freudian or Freudo-Marxist positions here. I detailed my own theory on human action and motivation in The Stone Wall, and rehashing it here would either need to be complete, or would necessarily require loss of nuance. As for workers forced into jobs which do not bring them pleasure, this is, again, a complex dynamic.

First, a job that brings one pleasure may bring the next misery. Second, the means accrued by one, from doing a certain job, may relieve stress and allow flourishing of a desired lifestyle. For the next, it may be wholly inadequate. To paraphrase Robert Nozick, the problem with the Marxist position of “…to each according to his needs,” what happens when one’s needs are, say, to have the British Library and unlimited access to it in their backyard?

Next, we must ask ourselves why there exists a situation in which many must work in jobs that bring them despair, not pleasure or purpose. The simple answer is power, one of the key topics I cover in The Stone Wall. Just as monarchs, tyrants, and emperors looking to conquer and subjugate necessarily conscript those under their rule to fight their battles, the conquerors in capitalism, those who seek to subjugate, not those aspiring to elevate society, create economic scenarios in which a monopoly arises, and then, the responsibility of the conqueror of this domain becomes job creation for the listless masses. Just as our governmental institutions create useless jobs that harm society, to placate their spiritual serfs, the conquering capitalists do likewise.

This is precisely why we need accountability back in capitalism and government. We need to divorce ourselves from their constructed reality, remember the purpose of governance, the purpose of commerce, the purpose of community, and through it the purpose of life. Through understanding the foundational challenges we are looking to overcome collectively, and as individuals, we can employ strategies, and erect structures, which bring about the best of us. Subjugation ends, and for the most part, human flourishing begins, through the act of remembering who and what we are.