When most of us think of entrepreneurship we focus on the relatively recent phenomenon born in Silicon Valley garages. By understanding the forces that have made entrepreneurs ubiquitous throughout the world and through all of history, we have a very relevant catalog of what our innovative entrepreneurs have tried in order to improve their standing and wealth, for better and worse. Let’s use it.
Today, the gig economy theoretically gives workers more freedom and satisfaction in how they work. But many gig workers are unhappy with their work and their prospects for growing their income. What few realize is that gig economies are nothing new nor are the problems that come with it.
Gig work is just a variation of the share-cropping system that James Drax, an entrepreneurial colonist, made obsolete by 1650. He produced sugar on a mass scale by using and abusing slave laborers that he controlled rather than letting sharecroppers work small parcels of land. His breakthrough was being able to supervise hundreds of slaves in producing large quantities of high-quality sugar—a very tricky process. Soon after, in the 1700s, the first factory entrepreneurs copied his techniques by creating large buildings to house dozens of textile machines, effectively ending the letting-out system which allowed for home-based subcontracting work.
Today, nobody knows Drax but most entrepreneurs that make or grow things anywhere around the world are copying what he did. Equally relevant, most businesses use techniques that originated and were perfected by entrepreneurs that relied on large numbers of nameless workers, working with the least amount of worker protection they could get away with, and paid as little as possible. Drax stacked the deck against treating workers well, an idea and a system that persists today.
Gig entrepreneurs are poised to repeat history, for worse. A swarm of entrepreneurs created companies over the past decade that revolved around workers using their own vehicles, homes, or equipment to deliver services to strangers. They have been compensated as a revenue share, with no benefits, rather than being paid by the hour with minimal benefits. Ill-conceived legislation currently being debated in many state legislatures would turn gig workers into minimum wage and minimal benefits employees—Drax-style workers. This puts gig workers in a double bind as both options (gig work or becoming an hourly employee with no benefits) relegate today’s gig workers to settling for far less than a living wage. In the not-too-distant past taxi and grocery delivery drivers were members of the middle class, not people living with their parents or multiple roommates.
It doesn’t have to be this way. Unfortunately, we have lost sight of the valuable teachings history has to offer. Entrepreneurship goes back 9,000 years to hunter-gatherers, and it is filled with insights into how we can improve our well-being today. Here are three takeaways from that history, which in turn can help us improve working conditions and help gig workers achieve middle-class lifestyles.
Entrepreneurs have craved the support of their rulers and governments dating back to 4,000 years ago in ancient Mesopotamia. And they have foregone immediate profits to curry the favor of the powerful. Why? Supportive rulers and governments deliver more wealth to entrepreneurs over a lifetime than they receive from a single product or service.
The flip side is that, for all of history, entrepreneurs have hidden profits and skirted around regulations they felt came from rulers and governments that did not support their efforts. Some entrepreneurs, not all, would gladly accept lower profits and make factory or gig work safer and more rewarding if it meant that the city was given some kind of formal recognition for their innovations.
Giving entrepreneurs additional access and freedom to start other ventures in areas of the country that still mistreat gig workers. The exemplary entrepreneurs who accept lower profits to help gig workers achieve middle-class lifestyles will stimulate other entrepreneurs nearby to similarly benefit their workers.
A city or region could actually become the center of a new swarm of entrepreneurs focused on innovating the software, equipment, and systems that would enable gig workers to be entrepreneurs themselves. This would create a double benefit by helping expand the middle class while also creating higher-paying and higher tax-generating tech jobs.
The history of entrepreneurship is filled with examples of governments enticing entrepreneurs to instigate new swarms focused on something the government wanted. Wartime industries are a classic example but so are Rome’s laws that gave citizenship to immigrants—it doesn’t have to be money.
Very recently the U.S. government did this very successfully with project Warp Speed which created a swarm of entrepreneurs (e.g., the founders of Moderna and BioNTech) who developed very effective Covid vaccines in record time. This could be accomplished very affordably by the government.
Cities or states could offer incentives in the form of minimal profit guarantees to the first entrepreneurs to deliver technologies these gig workers could benefit from using. City and states would offer profitable contracts for the first few entrepreneurs for the first few years, thereby reducing the risk to innovative entrepreneurs — a huge incentive — and making the cost to taxpayers negligible when offset with the higher income tax base.
Rome was particularly effective in turning its gig workers into a middle class by supporting them in forming a guild that was responsible for certifying the skills needed to perform specific tasks, like loading and unloading grain and piloting ferries. This turned gig workers into professionals and entrepreneurs. They could market their skills individually to other entrepreneurs or wait in groups for work to come to them, but they negotiated their minimum wages so their bargaining power in the marketplace was vastly increased.
Derek Lidow is the author of THE ENTREPRENEURS: The Relentless Quest for Value (Columbia Business School Publishing) and a professor of the practice at the Keller Center for Innovation in Engineering Education at Princeton University. He is also the author of Startup Leadership: How Savvy Entrepreneurs Turn Their Ideas Into Successful Enterprises (2014) and Building on Bedrock: What Sam Walton, Walt Disney, and Other Great Self-Made Entrepreneurs Can Teach Us About Building Valuable Companies (2018) as well as more than a hundred articles on innovation, entrepreneurship, and leadership. Lidow also has practical experience as the founder of a leading market research firm and CEO of a global semiconductor company.
Related on Ethos: