Just like the US economy, most private US colleges — especially Ivy League institutions — are oriented toward innovation through entrepreneurship, with more than $39 billion invested in 2016 in companies founded by alumni of Ivy League schools and Stanford University. In several disciplines, such as engineering and the sciences, the entrepreneurial direction is evident in the way courses are taught and in the material itself. Young scientists and engineers are nurtured in the entrepreneurial culture with regards to funding and overcoming challenges, as well as interdisciplinary opportunities leading to setting up their own ventures. Furthermore, they are introduced to venture capital funding, business plan drafting and the governing principles of the corporate world. It is true that by utilizing this training, there are startups that achieve brilliant outcomes that are beneficial not only to their founders, but to society as a whole. However, more often, this is not the case.
In many instances, we observe the fundamental paradox of this poisonous entrepreneurial culture that is the mismatch between what is profitable and what is beneficial. Many ideas, ventures or “breakthroughs” that are profitable are not especially beneficial for the most marginalized segments of society, or for the betterment of all, and vice versa. “Cleantech” companies are a relevant example, especially those that “commercialize fundamentally new materials and processes,” which, according to the MIT Energy Initiative, yield very little to their investors and have a failure rate of close to 100 percent, particularly after 2008. Thus, investments in companies that could achieve vital environmental results are discouraged.
Therefore, to achieve high profitability, a large number of startup ventures have one of four characteristics: (1) they aim to exploit their workers, even beyond what is “acceptable” by free market standards; (2) they aim to exploit defects of human nature; (3) they aim to increase wealth without creating a byproduct; or (4) they aim to create products and services that will render the lives of already better-off people more convenient, without any impact on those parts of society that urgently need to be improved, financially or in terms of health.
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Amazon is the most prominent example of a startup venture that has grown by focusing on extreme worker exploitation. There have been continuing allegations of extreme pressure on workers, and even the use of software to track efficiency and the amount of work each worker does. Recently, the Guardian revealed that Amazon workers at a Scottish warehouse were forced to set up tents near their workplace to avoid commuting costs. Although Amazon provides us with access to cheap products and the convenience of delivery to our homes, this is achieved at a very high cost for Amazon workers.
Looking at the most notable funding in Los Angeles for 2016, Snapchat, an application that lets users inform others of personal moments and likewise see those of their friends, received funding of about $1.8 billion in 2016 alone. Its success rests upon a human tendency to publicize our lives, inaptly peek into others’ out of curiosity, or a desire to imitate the habits of others. And it does this without remotely resolving any social problems or having social benefits as byproducts.
As far as financial ventures are concerned, the 2016 top five fintech company investments in the United States amounted to more than $600 million. These are companies that either lend or facilitate online payments and render financial services more convenient or secure.
Recently, the Wall Street Journal published a report on “Technology Companies to Watch,” in which the majority of the “companies to watch” focus on services or products that are only useful in making the lives of wealthy people more convenient or pleasant. “Smart locks,” gadgets keeping track of personal items or social applications have received funding of more than $50 million each. On the other hand, it should be noted that among these companies there is a small number which are actually doing significant work towards mitigating health risks, such as preventing common hereditary cancers (although in the absence of affordable health care, these achievements are irrelevant to some people). Furthermore, there are plenty of cybersecurity companies providing a very important service in the context of a highly-competitive market economy, but don’t necessarily improve people’s living standards.
It is evident that there are many ideas and ventures that we could live without and not impact our living standards, or that do not benefit us intellectually or in terms of health. Therefore, what an entrepreneur (as well as their venture capital investors) might rightly deem profitable is by no means synonymous to it being socially beneficial. The result is a selfish pursuit of profit and fame instead of genuine research towards improving living standards for everyone.
The trend of pursuing profitability instead of actual research and contribution to social problems is also evident in the level of education sought by the company founders. According to a recent report by Bloomberg, the largest percentage of Ph.D.-holding founders is found among biotechnology ventures at 62.9 percent, followed by pharmaceuticals at 59.6 percent and health care products at 35.3 percent. Much less money is invested in these sectors compared to software and internet enterprises, which receive at least three times more funding, and the vast majority of their CEOs have a lower level of education. Therefore, there seems to be a correlation between the scientific complexity of a company’s field and the degree to which its product or service benefits society, which discourages entrepreneurs from setting up startups that will benefit society.
The important question here is: Who determines what is socially beneficial and how? For such a definition to be articulated, a clear classification of values within society is needed. Western democracies have classified two ultimate values according to the principles on which they are built: human life and individual freedom, both social and economic. Consequently, they seem to rely on the economic manifestation of freedom to bring along other values, such as decent living standards, which includes eradicating poverty, hunger, education and health. Nevertheless, it seems the pursuit of profitability, especially the kind of profitability that is not aligned with the above social benefits, creates a phenomenon of diminishing marginal social returns. The more money is invested in ventures that do not directly combat these issues, the more entrepreneurs aim to employ the four techniques outlined above — namely, workers’ exploitation, manipulating human nature, using money to increase wealth, or simply rendering the lives of those already well-off more convenient. New startups try to abide by these principles even more than the ones preceding them, thus achieving fewer social benefits in the process, ultimately proving that social justice cannot be secured through complete economic freedom and entrepreneurship.
This process accumulates profits in the hands of the “most successful” people in our society, including individuals and private institutions, who are given the freedom to decide how these funds are to be used and the option to help — or not help — those in need. Given the fact that many of these people worked very hard to reach to this point, they tend to view those in need as doomed by their “inactivity” and undeserving of help, or they get to choose the degree, the area and the ways in which they are going to help those in need
Nevertheless, issues faced by the 43.1 million Americans living in poverty, and the 19.4 million people living in deep poverty, in the most “free” and developed country in the world are very real, as are the problems that have to be addressed and the priorities that should be set forth on a local and global scale. This means poverty and hunger eradication, quality education, affordable health care for all and environmental protection should be classified in our conscience as equally important to the values of human life and social freedom, which would automatically set aside the implications of economic freedom outlined above.
This is not to say that such values should be imposed upon us in a paternalistic manner, but only that we should strive to convince people that, according to the principles of historic materialism, the problems faced by the world and the situations around us should dictate what is to be done. Furthermore, we should strive to prove that a free market economy can only improve living standards in the short term, but will never address all values outlined above, provided that its very success relies on the existence of poverty, hunger and inhumane living and working conditions, often referred to as “incentives.”
The proposed alteration in the classification of our values and the urgency of achieving them would mean using our resources, knowledge and expertise to rigorously and immediately address these issues. Such a set of values, however, would mean one would not be able to invest in a profitable but rather a socially beneficial venture. In turn, that would require centrally quantifying all aspects of our new system of values and planning how to address each of them in a systematic manner.
This is not to imply that personal initiative, innovation and creativity are to blame. These attributes are necessary if we are to combat the aforementioned issues. It is the ways in which they are being utilized — to serve the pursuit of profit, wealth and power — which should be changed. Instead, they should be nurtured, developed and utilized to serve the eradication of poverty and hunger, achieve education and health care for all, environmental protection and complete social freedom. Cutting-edge research in engineering, artificial intelligence, robotics and biotechnology should be directed towards achieving a decent standard of living for all and spending our resources systematically instead of however the wealthy please or deem appropriate.