What would happen if everyone in the world desired equally to start a business?

Question

Consider the following concept:

• Everyone in the world is naturally a hard worker.

• Everyone in the world is naturally of equal intelligence.

• Everyone in the world receives equal educational opportunities.

• Everyone has an equal desire to follow some passion and start a successful business in order to offer that passion to society.

To be clear, people want to share their passion with the world in exchange for revenue without the constraints of a boss or bosses. Everyone desires to be the leader of their endeavor, so as to create innovate and share freely, and earn the maximum return on their labors, with no boss above them to share the profits with based on class or rank, since everyone is equally intelligent and educated.

I was thinking about a philosophical concept and decided to put a world building twist to it. I've been thinking about the bottom 50% of the world's population in terms of wealth. If the above points were all true, everyone could be happy, financially free, successful people, right?

All people could work hard, think hard, obtain knowledge, and start successful businesses, and no one would be poor, right? But is that actually true? That's the question I had to ask myself, and I thought such a question could be best answered here.

What would a world be like where all of the above points are true and everything outside of those factors is similar to Earth? What challenges would people have to overcome in a world like this?

Answer 1

There are two points about your post that struck me:

1. You assume, that being smart, motivated, and educated will automatically lead to a succesful business.
2. You assume that everyone having their own business would lead to a good quality of life.

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If you choose an appropriate sampling of people, we can assume that conditions as you describe them allready exist in todays society (e.g. by only looking at people who have started their own business). As such we can assume that the same problems business owners are having today, would still apply (scarcity of resources, production outpacing consumer markets, unequal distribution of wealth leading to market advantages/disadvantages, markets crowding because people want in on a lucrative business...). In shortform: The lack of a guiding force would lead to tension where business interests overlap.

Other than that, we would look at a hyper-outsourced world: The positions that would be traditionally filled by employees, would instead be filled with subcontractors as nobody would be willing to be a employee for long. As time went on, these subcontractors would fill smaller and smaller niches, up to a point where they become indistinguishable from regular employees.

At first these companies would act largely indipendent, with contracts always beeing handed to the lowest bidder. If you want to know what happens when Companies can hire people on demand, based purely on profits, with no long term binding conditions, have a look at the industrial revolution.

Soon politics would intervene, granting protective rights to small (one-man) companies.

At this points you have todays society, only with different names.

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To conclude: If you don't change the requirements of the market, no matter what system you choose, you will arrive at very similiar conclusions.

Answer 2

In Czech language we have term for something which I think would happen. It is called Švarc systém and the link goes to english term which boringly says "misclassification of employees as independent contractors"

What does "my own business" mean?

To someone it means to buy some product cheap, and sell at higher price. To someone it means to create a product and sell it. And to someone it means to offer their services as lawyer, accountant, or IT professional.

My personal opinion would be, that not much would change. "Employees" would turn into "contractors" and there would be no standard form of closing employee contract.

Also I expect very low level of state regulation. People would deal everything by closing a contract.

As next step, I think you should read on libertarianism, which is economical school of thaught to deal with exactly this idea.

Answer 3

Total breakdown of society as essential services no longer function.

Why? For every business there is a right size or size range. A cab driver can be a single, self-employed individual. To run a restaurant, you need at least one waiter and one cook; more are better. A power company or a bank needs hundreds, if not thousands. If all those insist on being self-employed businesspeople, either their independence is a fake (cf Pavel's answer) or the system becomes impossible to manage.

Answer 4

There's no reason to assume that people with different passions will earn the same amount of money.

If there are a few people whose passion is to be dentists and many people whose passion is to be musicians, the dentists are going to earn more money.

Society in general would also be poor if value can't created by having big organisations that can produce products through economies of scale.

Answer 5

There would still be economic differences between different types of businesspeople, and different business types would still require different amounts of initial training and on-going practice.

For example, if my desire was to create the best brain surgery business in the world, I'd need to invest in a lot of training for myself (this could be a time investment, assuming that all education opportunities are open to all), in getting contracts with skilled anaesthetists, surgical nurses, operating theatre equipment manufacturers, cleaners, receptionists, and logistics providers (I need blood delivered regularly, therefore I need a reliable transport company, with a reliable storage system, and related maintenance), in getting people to use my brain surgery business (marketing/advertising) and in ensuring that there is post-surgical support for my patients. That's a lot of effort, especially when I can't (due to lack of interest from other people) employ them to do specific jobs. I'd have to pay the best rates, and offer the best standards to keep them, else someone else could come up with a better contract for them.

On the other hand, if I want to be a freelance artist, I need some materials, and possibly some way to show off my work, but essentially it's just me. The materials might need third party support, but I could work with found materials (e.g. wood from forests, rubbish, mud) and still do OK if people like my work.

In both cases, basic life requirements such as somewhere to live, and food and drink are essentially the same.

However, the artist can sell a lot of art works. They are constrained essentially by the number of people they can find who want to buy what they create, and the time it takes to create their works. The price they get for their works doesn't necessarily correspond to the time or material cost. If people like what they create, they can be rich and successful. If people don't, they will be poor and lacking in basics.

The brain surgeon can only operate on people who need brain surgery. There are presumably a limited number of these, so this is essentially a low demand occupation, but when you need a brain surgeon, you're willing to pay whatever it takes. The price they get for their work probably starts higher than the artist can handle, but the expenses are a lot more too. If there are lots of people needing brain surgery, they will be rich and successful, but also really busy, so possibly lacking time to enjoy their income. If there are no people requiring their services, they won't be rich. They might even be in debt to people they have contracts with.

You would also have some problems in this society. There are some businesses that can't work without multiple people involved, and there are some jobs that don't necessarily result in a direct gain for the worker. An example would be an airline pilot - they can fly the plane themselves, but how would they get a plane in the first place? The initial investment would require contracting with 100s or 1000s of people to build it, then it's totally useless unless you have other people determined to build the best airport business in the world, people determined to drill oil, people determined to refine the oil to fuel, people determined to transport the oil to the airports, people determined to operate air traffic control towers (would you have a contract with each individual? If not, what if you have a contract with Alice, and Bob is controlling the rest of the planes in the airspace you're in?) and so on.

Answer 6

Most people aren't equally talented in all facets of running/owning a business. For instance,just because someone is a hard worker and motivated, doesn't mean they know how to market themself/their product or understand the necessity of it. Just because I am good at making bread doesn't mean I know how to manage money or talk to people. Some will solve this by contracting with someone else to complete the marketing aspect.

The other trick is, does politics and government count as a 'business'? Are judges and teachers also running single person businesses? If so, public servant type positions are going to get much more challenging. Not only will you have to consider a persons qualifications when running for office, you will also have to examine the contract they supply, the price they are willing to do the work for, etc.

Answer 7

It's not just training and motivation. Bach was not better educated than other composers. He was simply better. No matter how much musical training I received, I still wouldn't be Bach.

@Christian said:

If there are a few people whose passion is to be dentists and many people whose passion is to be musicians, the dentists are going to earn more money.

But this isn't true. Some of the musicians will make more money than any dentist. This is because there is a maximum number of customers for an individual dentist. There's no limit to the number of customers for a musician's recordings. And some musicians are going to be more popular than others. Some of that can be explained by different levels of passion and training, but not all.

And there are also skills involved with running a business that are entirely separate from knowledge. For example, when are you better off refunding a customer's money and when should you tell them to go away? The answer is not to tell them to go away whenever you can get away with it. Some businesses will be preferred to others for these kinds of reasons.

And automation definitely won't help here. Automation makes it easier for one business to dominate others. That's why music is so easily dominated. It's heavily automated, where one person with assistance from a relatively small number of people can make a recording that billions could hear. Even live performances can have tens of thousands in the audience.

With sufficient automation, you no longer need people to work. The machines could do everything. They'd grow food, prepare it, etc. Some hobbyists might continue to produce art.

Answer 8

Other than the equal education/intelligence, we have that now in the western world. You just have to ignore what we programmers call the 'syntactical sugar'. In this case, the syntactical sugar of the employer/employee terminology. Employees are, ultimately, independent contractors who can take on new clients (employers) as they see fit. They can take a job, leave a job, demand more money, turn down jobs, etc. Economic reality may put them in a position that they need to take on a client (aka, a job), but that's no different than a major manufacturer needing to take on projects they don't like so they can pay the bills. Even large companies have to agree to abide by terms of contracts they sign.

(I often advise professional programmers to look at themselves as contractors who are engaging in fair trade with an employer of skill for money, rather than assuming a subservient position to employers)

Now given all that you describe, will everyone be well off? No - because you missed one of the largest factors in an economy's success... the rule of law. If law is arbitrary or corrupt, hard worker or not, the independent contractor may not be able to get ahead. But if the law is fair and just, that combined with the elements you describe will lead to a very wealthy society. You will not get equality in wealth. Some business will do better than others. And some people may have health issues that prevent them from succeeding (mental illness, for example). But you would see a very vibrant economy if everyone had an entrepreneurial instinct and serious work ethic.

One last point - Poor is relative. In the US, poor might mean a small apartment in a bad section of town, second hand clothing, and a four year old iPhone. In other parts of the world, 'poor' may mean they have nothing - at all, period. So when you say 'poor', you need to define better what you mean by it.