Like the rest of the Caribbean, Barbados is said to be recording a rise in self-employment.
Just the other day as the taxi headed from Warrens to the University of the West Indies’ Cave Hill campus, the female driver and vehicle owner talked about paying the bills and keeping a roof over her family’s head.
“You must be able to support yourself and my way of doing so is to own and drive my own cab,” insisted the businesswoman. “It makes you feel good as an entrepreneur.”
But is she really an entrepreneur or simply a self-employed person? Is there a difference? Sir Courtney Blackman, the first Governor of the Central Bank of Barbados’ would describe the hard-working mother as a self-employed person but not an entrepreneur.
“An entrepreneur is someone with capital to produce new goods,” said Sir Courtney, a former Barbados Ambassador in Washington.
“A major characteristic of an entrepreneur is the commitment of risk capital, innovation and new technology, etcetera. The use of certain assets to sell services to different people is not in itself alone entrepreneurship. If you are a lawyer and you sell legal services I wouldn’t call you an entrepreneur. You would be a self-employed person.”
Take his case. When Sir Courtney left the Central Bank more than a quarter of century ago, he became a consultant whose services were retained by several companies.
“I had to use what assets, what skills I had to earn a living,” he said. “I became a director of a number of companies which paid me for my services. But I wouldn’t consider myself an entrepreneur. I was a self-employed person.”
Charlie Skeete, a former Permanent Secretary in the Ministry of Finance, who later became Barbados’ top diplomat in Washington before serving as a senior economic adviser at the Inter-American Development Bank for at least 25 years, thinks such distinctions between self-employment and entrepreneurship are troublesome.
“Whoever is making this hard and fast distinction is misguided,” was the way he put it. “Not all entrepreneurs are self-employed, and not all self-employed people are entrepreneurs. The term entrepreneur has within it an element of risk-taking and rewards associated with risk-taking. That’s what an entrepreneur is. They may do that individually or they may do that in combination with other people of similar ilk who may or may not be entrepreneurs.”
In other words, some people may have the special ingredient called entrepreneurship and others, including self-employed people don’t.
“When I retired from the IDB I wanted to be self-employed. But I am not by nature a risk-taker. I am not an entrepreneur,” he added. “I am not willing to risk my money and I am not prepared to risk anybody else’s money. Other people like the cut and thrust of having money out there at risk, they love it.”
Don Wehby, chief executive officer of Grace Kennedy, a leading Caribbean’s conglomerate, shares Skeete’s views.
“Entrepreneurship is now a new buzzword and it is actually being taught as part of the new curriculum of the University of the West Indies,” explained Wehby, a chartered accountant who is also a vice-president of the Private Sector Organisation of Jamaica. “Self-employment and entrepreneurship are absolutely related. Entrepreneurship is associated with innovation. You have to be an entrepreneur to be self-employed.”
Not so, argued Dr Nima Sanandaji, author of a new report on successful entrepreneurs in Britain.
In an analysis for the Centre for Policy Studies and an article for the Daily Telegraph in London, Dr Sanandaji warned against confusing starting a company with engaging in entrepreneurialism.
“Starting a company does not qualify as entrepreneurship, if the business is, for example, a one-man taxi-firm,” he wrote recently.
“Nor is it enough to innovate. Much innovation is carried out by large companies without any input from an individual entrepreneur. Even highly talented, creative individuals cannot be described as entrepreneurs if they lack the skills to convert a brilliant idea into a successful business.”
Somewhere between those arguments is the view of Austrian economist, Joseph Schumpeter, who has made entrepreneurialism a special field of study. He considers the entrepreneur as an agent of change, an innovator and has given the world the phrase “creative destruction” to outline the transformative process. His model calls for established businesses to be dismantled by new and innovative methods of operating.
That stance is on a collision course with the Iain Duncan Smith, Britain’s Work and Pensions Secretary, who Dr Sanandaji accuses of “conflating self-employment with entrepreneurship.”
He disagrees with Duncan Smith who said the most striking feature of Britain’s economic recovery was the 4.5 million people who were now self-employed. The minister considers the growth of self-employed people in the UK as evidence of the coalition government’s success in “reviving Britain’s entrepreneurial spirit.”
That brings us back to Sir Courtney, Skeete and Wehby as well as the female taxi-driver/owner in Barbados.
Sir Courtney’s conclusion is more in line with Dr Sanandaji’s while the retired IDB senior economic adviser finds allies in Wehby and the Bajan taxi-driver and owner.
