Shifting Resources to Higher Value Uses

entrepreneurship

Fri Feb 01 18:13:00 -0800 2008

The following quote is often attributed to the economist Jean Baptiste Say, writing in the 19th century:

"The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield."

(I say “often attributed to” because I was unable to find the original source. I first saw it in The 80/20 Principle, and have since seen it in other works.)

I love this line, because it’s a perfect definition of the word “entrepreneur,” without saying anything about founding a company, running a business, or making money. Entrepreneurism is an approach to the world, not an occupation.

You can be entrepreneurial in the most mundane of situations. Let’s say you’re out taking a walk with your spouse. They underdressed and are shivering. You overdressed and are carrying your jacket in your hand, since you’re too warm to want to wear it. If you moved the jacket (an economic resource) from an area of lower productivity (your hand) to an area of higher productivity (keeping your spouse warm), you’ve just acted as an entrepreneur. Both parties end up wealthier, in the broad sense of wealth == happiness.

Although entrepreneurship is usually about making trades that make all parties involved better off, charity is also a fundamentally an entrepreneurial activity. When you give $20 to a charity to help the poor, it’s because you believe that that $20 will be more valuable to a poor person than to yourself. This is why there are no charities for billionaires: a billionaire will most likely value that $20 much less than you do.

Just a note on the etymology: entrepreneur comes from French, where entreprendre is the verb for “to undertake,” or perhaps simply “to do.” So entrepreneur means “doer.” Makes perfect sense to me, even if it does make it a pain in the ass to spell.