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Columns and Articles by Dr. Laina Farhat-Holzman

February 13, 2010

Why Do Small Businesses Get So Little Respect?

A reader responding to my recent column on poisonous ideologies (Fascism, Communism, and Militant Islam) asked why I didn’t include capitalism. My response was that capitalism has raised more people out of poverty than any ideology ever, and does not depend upon brainwashing. I suggested he read Max Weber’s The Protestant Ethic, which traced the evolution of American capitalism. This ethic was the first ideology to validate work—that work is not an evil, but is a good thing—both for those who work and for their community. Even the notorious robber barons (Rockefeller, Carnegie, and others), after enormous financial success, became great benefactors to their communities and country. That was part of the ethic—to remember the community and share the wealth.

Why is there an underlying distaste for business among the elites of history? If we go back far enough in the past, it is apparent that warriors were honored, but merchants were not. The warriors became the aristocrats everywhere because they had the clout to steal wealth. Merchants, however, were always seen as somehow tainted by the money they reaped. In Christianity in particular, money-making was always suspect; “blessed are the poor” was the message—an idea much more honored in its absence than practice.

In the very cathedrals build with merchant money, sermons idealized St. Francis of Asissi, who scorned the wealth of his own father and chose instead to care for lepers. And the merchants never argued back, although neither the peasants nor the rulers could have survived without them.

Among the world’s aristocrats, whose ancestors were nothing but brutes, there was enormous prejudice against people who had become wealthy through “trade.” During the Renaissance, however, impoverished aristocrats stooped to marry off their children to wealthy merchants—a hypocrisy that deserves attention.

Historians have been very indifferent to the study of the merchant class and academics have usually thought of themselves as elites—a snobbery that continues today. This is what makes Weber’s work on the Protestant Ethic so welcome.

Today there is increasing attention to how to lift the world’s poor out of misery. Throwing money at them has done little, because one of the symptoms of poor countries is horrible governance. The “leaders” of such countries know where to put all this money—in Swiss banks. So what are the better ideas out there that work?

First, I would credit Mohammad Yunus, the Bangladeshi economist who started the micro-loan program; he learned that providing seed money for small enterprises to women reaps not only a lift out of poverty but pays for education for the next generation. Giving big money to leaders, as noted above, goes nowhere; and giving money to impoverished men appears to go for liquor and prostitutes, not for families. His micro-loan program has been picked up elsewhere in the world, including our own poverty belt in West Virginia, with notable success.

One American businessman, Steve Mariotti, has been living out the Protestant Ethic. A successful corporate entrepreneur himself, 20 years ago, he decided to take on the endemic poverty of the inner city by teaching in some of the toughest school districts of New York. He found that entrepreneur training captured the interest of young people who were otherwise not motivated to learn. His program, the Network for Teaching Entrepreneurship (NFTE), has reached more than 230,000 young people since its founding, and has programs in 22 states and 13 countries. This is how capitalism can work whereas all the other theoretical “isms” fail.

What would happen if such a movement were to really take root in a country like Haiti? And what about a country such as Afghanistan? If micro-loans could work in Muslim Bangladesh, why wouldn’t they work in Afghanistan? Ideologies that crush women and elevate the warrior ethic have done little to make the world a better place. Also those ideologies that demonize business and elevate communism need to be replaced by the entrepreneurial ethic. Business deserves more respect.

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Laina Farhat-Holzman is a writer, lecturer, and historian. You may contact her at Lfarhat102@aol.com or www.globalthink.net.