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Two Mindsets: Entrepreneurial and Bureaucratic

Written by Gary North on October 16, 2014

What I write here is an extension of Ludwig von Mises’s little book, Bureaucracy.

We do not know the future with much precision. Therefore, everyone is to some extent an entrepreneur. An entrepreneur is a person who buys low and sells high. He forecasts the future, devises a plan to deal with the future, and then implements the plan. Each of us does this every day, and each of us does this throughout his life.

Yet there are varying degrees of the entrepreneurial mindset. We hear of the great entrepreneurs, such as Thomas Edison and Henry Ford, who systematically implement revolutionary new ways of accomplishing things. We do not hear about the vastly larger number of people who attempted to do this, and then failed. We hear only of the major successes, and a few spectacular failures.

Most people lack the entrepreneurial spirit. A handful of people possess it at a very young age. Virtually all formal education, meaning classroom education, is conducted by salaried bureaucrats. They are in jobs that require almost no entrepreneurship, and they are in cultures that generally discourage entrepreneurship. They have had very little experience with entrepreneurship. They do not understand it, and a large number of them are hostile to it, especially at the collegiate level in the social sciences.

So, from the day that a young person enters the classroom at perhaps the age of five or six until he earns his Ph.D. at the age of 25 or 30, he performs in terms of a system of sanctions that inherently discourages entrepreneurship. It rewards conformity to specialized exercises, such as taking examinations, writing term papers, and answering questions verbally in a discussion setting. Formal education is formal. It is structured. It is structured in terms of a limited number of questions, an acceptable set of practices to answer these questions, and a highly limited range of answers that are considered acceptable.


I suppose the fundamental difference between the entrepreneurial person and the non-entrepreneurial person is the commitment to a salary. The entrepreneur knows that he must invest time and money in a plan whose outcome is at best statistically predictable. Generally, however, it is not statistically predictable. It is uncertain. All of his efforts may be wasted entirely. He may have a spectacular failure. He may have a failure with other people’s money. This much is sure: the failure will be visible to others. So will any major success.

(For the rest of my article, click the link.)

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