“Small and medium sized businesses are at the heart of our economic recovery,” according to Australian Prime Minister Scott Morrison. That he should put small enterprise at the heart of his economic plans is hardly surprising, especially with an election just around the corner.
It should, however, make us consider whether and why we ought to place such importance on small businesses. And if we are going to support them, it should lead to the second question of what we, as a society, expect from them.
Around the world, small business occupies a central place in both the imagination of the public and the rhetoric of our politicians. Shortly before the previous election, Morrison talked about a small garden supply business. It was, according to Morrison, “supporting their local community. But it’s also supporting so many Australians in so many important ways.”. Without really elaborating why, he continued to describe small business as “the heroes of our economy”.
From an economic perspective, economists have highlighted that small businesses simply do not drive the Australian economy, in neither employment nor wage growth. They have used this to argue that the public attachment to small business isn’t rational and that we need to stop offering tax incentives to small businesses – they should compete on the same playing field as other businesses. And yet, there appears to be an emotional connection to small business that all the major parties can’t seem to ignore. Despite the critiques of economists, the attachment of politicians, of all major parties, and the public to small business does not seem to be going anywhere.
One policy response could be to double down on the economists’ advice—research why people are so attached to small business and try to help them see things more “rationally”. This, however, assumes what people value can only be measured in a limited number of ways—more jobs or better paying jobs. The public, however, is more complicated than that.
Economic anthropologists, for example, often consider people as being situated within many different value systems, of which only one is the “rational” economics associated with the West. Guyer, in her excellent book Marginal Gains, shows how people can navigate between many different value systems – whether they’re monetary, hierarchical or of social values – and they make gains by playing these systems off against one another.
Where Guyer works in West Africa, with hundreds of years of instability and integration into diverse economic systems, people are at times playing literal measures of value off against one another. While that may seem far away from a country like Australia, it is not really different to what Morrison is doing with regard to small business. He is playing off the economic gain of a few (business owners and maybe a few extra employees) against the social values of an electorate that has an attachment to the romantic image of small business. All with the hopes of being re-elected. Gains do not have to be in dollars and cents.
Given this interchange of different values, both economic and social, what does this mean for policy? Again, one option would be to try and reduce the number of variables – do as the economists do and try to reduce everything to number of jobs and how well-paid they are. An alternative approach is to avoid simplifying everything down into simple economic measures (e.g., number of new jobs multiplied by dollars earnt). Instead, we can directly address the many competing value systems and attempt to incorporate social complexity. As an anthropologist, we could ask more questions about why people seem to have such an attraction to small business: Why do people think they’re “the heroes of our economy”? And if we can’t change people’s minds, can we do anything to make this judgement more likely to become true?
The Social Economy
The concept of the social economy, or sometimes the social and solidarity economy, is an approach that encourages analysts to think more holistically about the economy. Common outside of English-speaking academia, those studying the social economy examine the diverse motivations people have for engaging in economic activity beyond the simple profit motive.
A social economy approach therefore asks why people are engaged in specific enterprises. Are they simply out to make the most money they can? Many people do. Or do they see themselves as providing an essential service their community is missing? Are they providing employment for otherwise disadvantaged groups? Do they simply take pride in producing artistic or high-quality goods and the only money they need is enough to cover their living expenses?
None of these motivations have to be mutually exclusive. Many people like to imagine they can “do well by doing good”. This is how small business is often cast. It’s what Morrison is implying when he says that small businesses are heroes. Sure, they’re making money, but they’re supposedly doing so much more.
There are also many things people do that are not traditionally considered to be “economic” but without them the economy would simply stop. Housework, childcare, and care for the elderly are quintessential examples. Notably, they’re all also forms of work typically associated with femininity. Anthropology has a long history of revealing how women’s labour has been and continues to be obscured in economic discourse, at the same time revealing how it underwrites economic activity.
Similarly, when people think about unpaid economic activity, their minds tend to go to volunteer work. This is not unreasonable. From volunteer firefighters doing dangerous work every summer to working bees that keep schools tidy, people engage in all sorts of labour that, under other circumstances, would have to be paid (and would be quite likely expensive, too).
In both cases, however, there is an assumption that because these tasks are unpaid, they are somehow apart from the rest of the economy. There is a long history, especially in the West, of assuming that money and altruism can’t go together – that if you’re making money, there are no other motivations involved. What Maurer calls the “money-as-acid hypothesis”. Once money is involved, it will somehow naturally displace any other concerns.
While not a uniquely Western perspective, anthropologists have shown how this is not shared among many other cultures and that often money and personal concerns (such as community, kinship, and love) often go hand in hand. If, again borrowing from Morrison’s words, we expect small businesses to support their local community and Australia, it is important to think about what we mean by ‘support’. Is it simply generating a few extra jobs on the way to expanding a business? Or do we expect more before we can label an enterprise as “supporting Australia”?
Supporting Our Heroes
There is, of course, an important question about why we care about the motivations of small business owners. From a purely utilitarian perspective, the motivations of small business owners shouldn’t matter – if they’re creating a few extra jobs en route to enriching themselves and aren’t being too exploitative, who are we to complain?
This line of arguing, however, takes us back to the original dilemma – politicians and the public appear to have a serious attachment to the idea of small business, and so the many tax breaks that they receive are too popular to go anywhere. Instead, if we pursue a social economy approach, we can ask what it is specifically that people approve of in small business and work to encourage those particular behaviours.
The typical small business structure, for example, is designed to maximise profits for the owners. While being a sole trader, partnership or a proprietary company is typical for small enterprises in Australia, these are not the only structures.
Australia has a long history of cooperatives, for example. In regional Australia, there has been a rebirth of cooperatives as towns have been buying up the local pub and running them as cooperatives to stop them shutting down. The same has been true for local shops.
There are also social enterprises like Streat, for example – a not-for-profit hospitality business that not only provide jobs but focuses on upskilling hard-to-reach youth so they can go on and have a career. Businesses are often run for reasons other than profit.
These business formats are largely unsupported by the government, however. Cooperatives and social enterprises often struggle to get access to financial capital. Rebecca Scott is the co-founder and CEO of Streat. She has detailed at length how hard it was for them to access financial capital as the enterprise grew. There was a cultural clash between her team and investors. The former wanted to prioritise social outcomes, while the latter were very concerned with getting a return on their money.
More broadly, if small businesses do not generate more employment than other enterprises nor pay higher wages, they are only profit-making schemes and ought to be taxed as such. Tax benefits should be reserved for formally registered social enterprises with mission statements that establishes the purpose of the business as being something other than simple profit, businesses that are really part of the social economy.
While the government is creating financial instruments for cooperatives and mutuals to raise financial capital without diluting voting rights, more can be done. This is especially the case for micro-enterprises that can start with as little as a single coffee cart. Money can be redirected from profit-seeking small businesses to social enterprises in the form of accessible, low-cost loans, tailored to the sector.
These schemes, combined with greater awareness of alternative business structures, offer the opportunity to encourage small business owners to match the rhetoric that surrounds them. This is not bringing about the end of capitalism as the earliest and strongest proponents of the social economy hope for. These measures might hopefully, however, help bring about some small changes to make our economy more humane.
Whether it’s the grocery store of a country town selling local products, an inner-city café providing a route out of homelessness, or a cooperative that buys agricultural supplies in bulk for struggling farmers – these are all businesses that we want to see at the heart of our communities.
To borrow from the Prime Minister – these are the businesses that can be the heroes of our economy. With better education, directed tax incentives, and better access to capital, we can make them the heroes of our economy.
[Image of the record sale is public domain.]
[Image of the vacuum cleaner is public domain.]