As we have seen over America's long economic history, entrepreneurial capitalism generates impressive innovation and renewal, as well as rising prosperity. Upstarts continue to develop new products and services, enter existing markets or create new ones, and challenge incumbents. Those that succeed in becoming industry leaders then face their own pressures to adapt. That process creates cycles of broad growth and productivity over a sustained period, as well as social mobility and even churn among politically powerful elites. Even if messy at times, this remarkable record has stood out globally for centuries, and has been in many respects the secret to America's economic success.

Since the fall of the Berlin Wall, and in the light of several decades of Silicon Valley's emergence as a global model, the consensus that entrepreneurship is a key driver of economic growth and development has taken root around the world. In fact, entrepreneurship and the benefits of investing in and encouraging start‐up enterprises may be America's most powerful current export. Over the past several years, the growth in early‐stage and venture capital investing has skyrocketed in many countries across the globe, and the number of unicorns based outside the United States has grown dramatically. Venture capital had a record year in 2021, including inside the United States, but it was also the first year in which more than half of all venture investments were made outside it.

Along with this success, another parallel consensus has emerged. This is the view that, however successful, capitalism as a whole and even dynamic entrepreneurial capitalism must be tweaked, adjusted, reimagined, or even saved.¹ Behind this view is the recognition that the system does not distribute opportunities, benefits, and rewards fairly, that some of the destruction from creative destruction is too severe, and that business contributes disproportionately to climate change without bearing enough of the costs. All these are serious social and economic challenges that both the private and the public sectors must work to address.

While some of the foregoing suggests a grand convergence across the world in acknowledging these issues, the manner with which each country encourages entrepreneurship while ameliorating the negative fallout is quite varied. As discussed in previous chapters, there are several different flavors of capitalism, each intertwined with the local political system. Countries vary in how they enable entrepreneurship while grappling with social issues. And, of course, in many cases the desire for political power and control trumps those goals altogether.

Fundamentally, America's strength is the result of its political economy and its supportive cultural factors. This includes an adversarial, competitive political and economic system and a liberal or relatively hands‐off approach to government, which have largely enabled the upstart‐incumbent dynamic, avoided prolonged cronyism, and allowed innovation to find its way into the marketplace. Alongside this is the country's reliance on the individual – not just as citizen but as entrepreneur, social entrepreneur, consumer, and, increasingly, as shareholder – to make decisions instead of government. While the effects are uneven and imperfect, individual interests rather than special interests largely determine outcomes. The drawbacks, as critics often point out, are that promoting economic growth and productivity gains can leave significant social challenges in its wake.

Americans instinctively distrust both big government and big powerful corporations, and efforts to limit one can often enable the other. The key challenge and opportunity in the United States is how to address issues such as inequality, inclusivity, and sustainability without killing the golden goose of entrepreneurial prosperity. The best approaches are those that require limited government involvement while leveraging America's inherent entrepreneurial energy. We can tackle key social issues either directly or as a byproduct of innovation, while counting on the broad tools available to individuals as consumers and shareholders. This is also especially critical in the current divisive political climate, in which extremes on both ends of the spectrum result in markedly different views on the role of government and a stalemate in many important areas. Much of the country still shares a common middle‐ground understanding. America has always had a messy way of working through these challenges, but the balance that has led to the country's success may becoming harder to maintain.

The Continuing Balance

In order to maintain itself, the American institutional framework will need to continue to adjust to changes in the market brought about by entrepreneurially driven innovation and the dynamism between upstarts and incumbents. The balancing act between property rights and the right to compete has evolved with changes in the nature of property and competition over the past two centuries, and it will continue to do so. While property once meant only real property or government‐issued charters, for example, it now includes limited corporate protections from regulation and even rights to a degree of political participation.² Similarly, as technology developed, the bounds of what could be patented morphed to include software menus and business methods.³ The issue has become even more complicated as notions of property have merged into claims that incumbent companies possess their own inherent right to compete.

A thorny set of questions continually arises regarding “proprietary advantage,” or the competitive advantages that firms seek to establish in the marketplace without any government support. This includes debates over whether manufacturers can dictate certain prices, distribution, use or repair of products downstream, or what a technology platform can require from third parties in terms of standards, billing, or fulfillment. The tension can even be seen in the employment market, as the use of confidentiality and noncompete agreements forces a balance between how far a company can assert property rights vis‐à‐vis former employees.

The ability of large technology platforms or marketplaces to collect enormous amounts of data from their networks has led to new questions about the classic balance between property and competition. One issue is the ownership and use of the data itself. Many of these firms have begun to look more like utilities, and consumers increasingly demand at least some ownership rights in their data. A related issue is the degree to which these firms can use the data from their platforms to create new products and services. In fact, many large firms such as Microsoft, Google, and Amazon have asserted their own right to compete or innovate to stay ahead of new market entrants, even if many of the ideas come as a result of the participation of third parties on their networks.

Finally, some marketplaces claim they are only intermediaries and use that position to isolate themselves from the liability of product or service providers themselves. Napster was unable to do this in the area of copyright infringement, but firms such as Facebook, Uber, and Airbnb have done this successfully to preserve their business model. In all these cases, the messy work of the American political economy continues.

The Foundations for Continued Success

Amid the internal divisiveness and external threats, it is easy to overlook the key features of American entrepreneurial capitalism and to seek reforms that might undermine it. Yet the building blocks to keep entrepreneurship thriving while also addressing the social issues more effectively are right in front of us.

Limited Government. America's separation of powers, federalist structure, independent judiciary, and individual rights have all combined to allow competing interests to balance themselves out over time and with some sense of process. The division of power, as well as the competition of interests articulated in Madison's Federalist 10, has not only kept political power in check, but it has also enabled upstarts to challenge incumbents. The danger is in allowing interest groups to become so powerful that they weaken the balancing act. Lobbying, whether from large companies or small business associations, not to mention financial institutions and private equity firms, continues to rise. The size of the American economy, along with the range of economic interests and political inputs, makes it harder for a small group to dominate here, as compared to many other countries. But the ability of certain groups to defend their interests with very specific policies still often results in protectionism or inequitable policies in areas such as taxation. One approach would be to reduce the role of money in politics; the better one would be to reduce the role of politics in money by limiting governmental involvement in the economy when possible.

As Jefferson reportedly said, “That government is best which governs least,” but we still need state and federal governments to have some role in promoting economic activity. Most observers agree that government should not “pick winners” – favor specific companies through subsidies or ownership. On the opposite end, even libertarians recognize the need for strong government to apply the rule of law equally. In setting standards and enforcing contracts, governments are essential for properly functioning markets.

Between those extremes, governments have an enormous field of action. Infrastructure development is one important area, as can be seen throughout U.S. history from the Erie Canal to the interstate highway system to the internet. These investments not only spawn growth generally, but they also upset vested interests and create new opportunities for upstarts to jump in. Basic research has been another significant area; the country's investment in science helped create pathbreaking innovation in areas ranging from telecommunications to genomics. These types of new technologies can often translate into commercial applications that alter the playing field and enable upstarts, setting the foundation for further growth.⁴

The more difficult areas are in fields such as regulation. The hard part is that these are the areas in which special interests are most active and unintended consequences can be most significant. Even the details of standard setting and contract enforcement may affect innovation and competition. Almost every law and regulation will have differing impact on upstarts and incumbents and may alter the balance in favor of one or the other. Licensing, taxes, bankruptcy, intellectual property, antitrust, employment, safety, environmental – even jurisdiction and federalism – the list goes on. When technology is changing rapidly, it is hard for government to keep up.⁵ And the more the government is involved, the more interest groups get engaged.⁶ In these areas, America's separation of powers may be its best attribute, because it helps create guardrails and allows issues to self‐correct over time.

To the extent they have been involved in the economic sphere, policymakers have done best when they have leveraged the respective strengths of upstarts and incumbents to the needs of the time, especially with carrots rather than sticks. Upstart entrepreneurs were essential to building infrastructure and developing the country in most of the 19th century. The young republic needed to attract human and financial capital, and it focused on securing property rights to enable new endeavors. As the country and its companies grew in size, government facilitated new legal mechanisms to promote stability, consolidation, and efficiency. At certain break points, policy changed to enable new structures, platforms, or technologies – the right to compete. In the first three‐quarters of the 20th century, the federal government took advantage of large‐scale industrial capacity and managerial expertise to meet global imperatives. But here, too, a shift eventually occurred, and deregulation and other policy responses opened new forms of competition and innovation.

The more government can harness or unleash the power of both new and established companies, rather than solve problems itself, the better. One example of effective government policy to support innovation has been consumer tax rebates for electric vehicles, which helped jump‐start new technologies while forcing incumbent companies to adapt. Incentives such as these not only helped launch Tesla, but they eventually made Ford and GM better as well. By the same token, once special provisions serve their purpose they need to be retired. Section 230 of the Telecommunications Act of 1996 is a good example of legislation that was effective in supporting the growth of the internet era but now may have run its course. Some incentives, such as those to invest in “opportunity zones,” may be successful in generating investment but their effectiveness must continue to be monitored.

A Bias for Market Access and Consumer Choice. Since its beginning, the American legal system has favored innovation and market access over stability and rent‐seeking. By abolishing primogeniture and perpetual trusts, boosting the rights of debtors, setting time limits on patents, and allowing the careful use of eminent domain, legislatures and courts promoted vigorous competition – in essence, the right to compete. Innovations have found daylight, while incumbents have had to stay on their toes.⁷

Much of the current policy debate relating to regulation and market access involves innovation and competition at the local level, and it echoes the struggles seen in earlier times. Tesla fights states over dealer franchise laws, Uber and Lyft intrude on local taxicab privileges, and Airbnb tussles over local hotel rules. These battles look similar to those of Swift fighting local meat inspectors and Singer developing a captive service network in the late 19th century. When local stores, service providers, or artists complain about the dominance of Amazon or Google or Apple, we tend to support the underdog as a cultural preference, but that often changes when cost or convenience are at stake.

Antitrust policy is often thornier. To many Progressives, reading Robert Bork's Antitrust Paradox (1978) is akin to reading Mein Kampf. Some blame Bork and other members of the Chicago School for ignoring or even abetting corporate consolidation and concentration and their broader implications. Yet over the last few decades, Bork's emphasis on consumer welfare has resulted in lower prices and often more choice. And the notion of putting consumers first was at the heart of Ralph Nader's movement as well. In fact, reducing government intervention when new technologies are developing and venture capital is readily available should actually help achieve Progressive goals. When one considers that most antitrust actions are the result of well‐heeled companies seeking either to pry open market access for themselves or to protect their own market positions from other large companies, it is hard to see antitrust as more than interest group politics writ large or to argue with consumer welfare being the ultimate standard. Similarly, many claims about incumbents killing off nascent industries are hard to back up when new innovations are launched and find their way into the market every day. And even when consolidation and concentration have appeared, new entrants have often shown up to disrupt them. The tension between barriers to entry and market access is at the core of the upstart‐incumbent dynamic. While government has a role to play in making sure rules are followed and illegal behavior is addressed, it should tread lightly in this area, especially where technology change is happening quickly.

Whether or not consumer welfare remains the antitrust standard, however, more should be done to understand the real issues associated with consumer choice, ownership of data, and switching costs in the digital era – these are essential for the right to compete and consumer decision making. In the 2001 Microsoft case, the government won commitments from the company to enable some degree of market access for competitors; those proved ineffective, but at least they raised the issue. Meanwhile telephone number portability under the Telecommunications Act of 1996 proved enormously effective. In recent years, more thought is going to the subtleties in consumer choice. Opening up billing systems, increasing disclosure requirements and privacy regulations regarding web‐browser cookies, understanding the impact of “opt‐in” versus “opt‐out” marketing, and making it easier for consumers to stop automatic app subscription renewal – all of these regulations appear to support consumer benefit and choice and should be developed further going forward. But, as noted earlier, policymakers should be mindful of unintended consequences and be ready to adapt.

Inclusive Entrepreneurship. The success of the entrepreneurial economy has brought with it increased demands to broaden opportunity. Women, veterans, Blacks, Hispanics, and other groups are significantly underrepresented in the boardroom at the executive level, in the investor world, and in the start‐up community, though this is beginning to change. Companies are increasingly recognizing the wealth of talent within these groups and their responsibility in leading change, and consumers, employees, and investors are demanding it. Similarly, the lion's share of technology ventures has been concentrated in San Francisco, Boston, New York, Austin, and a handful of other cities. And the graduates of a small number of colleges and universities tend to lead most of the biggest companies. The opportunity here is not just about making the system fairer. There are many underserved markets throughout the country, and founders with diverse backgrounds are most likely to be able to find them. And, as new products and markets develop, many large incumbents might also get on the bandwagon, as we have seen in areas such as organic foods and electric vehicles.

One persistent issue has been the challenges faced by small business. For most of the country's history, starting a small business was the path to a good life, and it was an inclusive affair. Over the years, many first‐generation immigrants got their start with local enterprise. With technology firms increasingly dominating commerce and service industries, however, many traditional small business opportunities are waning.

In fact, a new set of opportunities is emerging. Many of the platforms, from Amazon and Etsy to Uber and Angie, create marketplaces for third‐party providers, and therefore open windows for small entrepreneurs. Similarly, the “gig economy” allows individual workers to sell directly to consumers rather than through traditional intermediaries or employers. During the pandemic alone, more than one million new businesses opened on Shopify, and 2021 was a record year for new business applications in the United States. Uber has disrupted the owners of taxicab medallions but has given many more drivers control of their destiny and better working conditions. By encouraging continued innovation and competition, we may continue to find unexpected new channels for entrepreneurship to flourish.

Decentralized Access to Finance. America has a strong tradition of supporting enterprises of all sizes with capital, and access to funding has generally been available across the full corporate life cycle. Small businesses, start‐up innovators, growth companies, and big corporations have all generally been able to secure financing to commence, expand, innovate, and improve their efficiency and profitability, supported by a robust stock markets with the promise of liquidity for investors. The financial system's most important feature has been its decentralized nature – not relying on a handful of dominant institutions – and its ability to raise equity capital rather than relying on debt.

The United States has many of the largest money‐center banks in the world ready to lend to large corporations, and during J.P. Morgan's heyday they were especially powerful. But the country also has a long history of small banks helping local enterprises to form and grow. While small banks can be inefficient and risky, they have been vital in enabling small companies to develop and thus open opportunities to more people. Though the number of local banks has declined steadily over the past decades, there has been recent attention to community banking, particularly in underserved communities, and other new sources of capital and microfinance have been increasing. The tradition of decentralized banking started early in the country and it remains important.⁸

America's public credit markets are often overlooked, but they also play a crucial role in helping innovators to scale. Civil War and railroad finance depended on public markets in the 19th century, while the development of the money market in the 20th century helped take control of the credit supply out of the hands of powerful banks. It also facilitated capital flowing in from abroad. Even more significant was the high‐yield “junk bond” market in the 1980s, which enabled a degree of entrepreneurship unlikely in countries dominated by such banks. Companies such as MCI would probably not have been able to challenge AT&T without this market.

The relative abundance of equity capital and the strong public equity market in the United States is especially significant. The New York Stock Exchange is nearly as old as the country itself and has been a key enabler of the American entrepreneurial economy. The dream of an IPO has special allure for entrepreneurs and it ensures that investors will have the ability to sell their shares eventually. It also helps young firms raise more capital to grow and provides opportunities for the broad public to participate in the innovation economy. Strong equity markets also induce companies throughout the world to either locate in the United States or use it as base for its financial operations. It has helped make America the place where foreign technology ventures want to test and scale up their innovations and find an exit for their equity stakes.

Finally, readily available, risk‐tolerant, early‐stage equity has been essential to funding entrepreneurship, and it is one America's greatest features. While the venture capital explosion since the 1990s is the most obvious example, this tradition dates back much longer. Early investors included the Brown family of Rhode Island, who moved capital from shipping into manufacturing, and the China traders of a century later who helped develop the American West. The Whitneys, Cabots, and other wealthy families in the early 20th century, motivated to keep their capital active, funded a great many new industries, including aviation. But the phenomenon is more than just successful entrepreneurs moving their resources to the next big thing. America's legal and financial systems have also been effective in enabling this type of investment. This includes the broad definition of fiduciary duty and the “prudent man standard” that was adopted in the 19th century, and flexibility in the pension system to allow risky equity investments in the 20th.

As noted earlier more must be done to broaden access to capital even further. Women, certain minority groups, veterans, people with disabilities, and towns and cities off the beaten venture capital path obtain far less financing than the primarily white and Asian males on both coasts and in Texas. Meanwhile, most venture capital firms lack diversity. Fortunately, institutional investors and venture capital firms are beginning to prioritize closing this gap – less because of dictates and more because they recognize the enormous untapped talent and that diverse perspectives often lead to better outcomes.⁹ Policymakers may also have a role to play here and some incentives might help, but in most cases this dawning understanding of the market opportunity may be the most potent tool for making progress in this area.

Evolving Shareholder Capitalism. Beyond entrepreneurship per se, critics are challenging the nature of corporations themselves, including their purpose and mission, involvement in the political sphere, and how they are governed. America has a strong tradition of shareholder control, rather than control by banks or the government, and this has been essential to enabling dynamism. Thus, it is important that changes to corporate missions and governance come through shareholders, not government directives.

For most of the 20th century, it was actually managers and not shareholders who controlled these entities. They weren't seriously challenged until the 1970s, when Milton Friedman argued that the social mission of the corporation is to make money for its owners and Michael Jensen highlighted the “agency costs” of corporate management.¹⁰ Those owners regained power in the 1980s with the emergence of corporate raiders, private equity firms, and hedge funds that could concentrate shareholding to force changes. Most recently, activist shareholder groups have become successful in influencing large companies to become more competitive – and thereby more productive and dynamic.

The objectives of shareholder‐centered capitalism are now being questioned, as new activists push for greater corporate attention to environmental, social, and governance (ESG) issues. As noted in the previous chapter, the recent proxy contest involving ExxonMobil shows how activists with experience and a plan to make the company better can garner votes. A series of public letters from Larry Fink, the CEO of asset manager BlackRock, have suggested that social concerns should become central to corporate governance. These letters are particularly noteworthy because his firm is one of a handful that hold large positions in many firms. BlackRock and other intermediaries have shown themselves to be thoughtful in balancing investor interests with those of other stakeholders and the community more broadly. The debates around corporate mission and the trade‐offs around certain ESG goals are healthy and will become more heated. Ultimately, management teams will become more responsible for balancing these goals and accountable for delivering on them. America's emphasis on shareholder control of the corporation is likely to prove more effective than bank or government mandates in the boardroom in balancing economic and social goals in the marketplace.

One area to be careful about is the increasing intersection of politics and corporations. Many on the left have been concerned about the Citizens United Supreme Court decision, which allowed large firms to spend money in areas related to campaign finance. Similarly, many on the right are concerned about the “woke corporation,” with companies aggressively pushing state or local governments on political issues like voting rights. The net result is the rise of what has been characterized as the “political CEO,” and predictions that companies will need to choose between being “red” or “blue.” In the current divided political environment, companies can help to navigate the various issues, including leading progress in both economic and social outcomes. But they should avoid being dragged into politicized areas – we need them to focus on their main role of propelling or supporting dynamic growth.¹¹

Workforce Development, Flexibility, and Broadened Equity Ownership. A knowledgeable and flexible workforce is a country's most important asset, and government can play a more direct role in developing the future workforce. Both upstarts and incumbents depend on capable employees and contractors to deliver on their strategies. And with technology changing rapidly, a broadly capable workforce will both support unknown future businesses and suffer less from the creative destruction that upstarts cause. Moreover, an educated consumer population will enable quicker adoption of innovations and new technologies, which will not just help them as individuals but benefit the economy as a whole.

The federal Morrill Act of 1862 and the GI Bill in the 1940s and ’50s were both instrumental in developing an entire generation of well‐trained workers and professionals. Beneficiaries of the latter act fed into the core of engineers and scientists that drove technological development for decades, and the bill itself has been characterized as the “Erie Canal of the new, post‐industrial economy.”¹² State governments added to the Morrill subsidies to develop public universities that greatly expanded higher education. Government‐subsidized community colleges and vocational schools expanded access still further. With the costs of a college degree having exploded in the past few decades, reforms are again on the agenda. There are also opportunities to do more in areas such as community colleges and vocational and trade schools, especially through partnerships with the private sector.

On the flip side, a workforce that is not flexible and adaptive may constitute a barrier to growth and innovation. The fear of “technological unemployment” goes back centuries to the infamous Luddites in England, who destroyed textile machines. With artificial intelligence, robotics, and other new technologies this fear has resurfaced. Ameliorating this risk with concepts such as guaranteed income can go only so far. We need to continue to test and explore education systems and limited incentives for apprenticeships, continued training, retraining, and mid‐career “re‐skilling.” This is one area in which some European countries may offer useful examples.¹³

The most powerful tool in generating wealth and alleviating inequality is stock ownership, and the workplace has proven to be an important context for this. Silicon Valley's success has come partly from equity‐based compensation, which kept costs low for upstarts as they built their businesses and then shared some of the wealth if they succeeded. Microsoft purportedly created over two thousand millionaires a few years after its 1986 public offering, with similar stories at other companies. Since that time options have become the norm in venture‐backed firms, and millions of employees have benefitted. Government should encourage the practice through additional tax incentives.¹⁴ But start‐ups are not the only ones that have used to stock ownership to assist employees in wealth creation. Fourteen million people now have stakes in employee stock ownership plans, and participation in “broad‐based equity grants” has risen from one million people in 1990 to nine million today.¹⁵ Simple innovations, such as automatic enrollment and payroll deduction for contributions to 401(k) plans, have had a powerful impact in this area.

America has a great tradition of stock ownership, and the percentage of Americans who own stock is among the highest in the world. Firms such as Merrill Lynch, Charles Schwab, Fidelity, and Vanguard have made investing easy and low cost, and new companies such as Robinhood are doing the same today with new technology for a younger demographic. But stock ownership needs to be dispersed more broadly, particularly for people not working in start‐ups or for large corporations. With the rise of the gig economy, we need portable and flexible savings and investment vehicles to assist these groups. A combination of government policy and entrepreneurial energy might do the trick. Boosting the earned income tax credit, creating incentives for individual investment among certain underrepresented groups, and utilizing ideas such as “baby bonds” or “birthright funds,” are a few other areas to explore.¹⁶

Finally, the balance between property rights and the right to compete is always tricky in the workplace. One current area of controversy is noncompete agreements, with good arguments on both sides of the debate. Upstarts and venture capital firms oppose these agreements, which discourage employees of established companies from launching or joining competing ventures. Incumbents argue on the basis of property rights, saying they have invested in their workforce and much of the knowledge or contacts developed or shared during the employee's tenure would be transferred at no cost to competitors. The impact of these agreements on trade secrets is also an important factor. Several states, including California, have prohibited these agreements, but it is unclear whether other states will or should follow that lead. A similar debate in many states involves “the right to repair,” as independent shops seek access to critical technology in areas such as automobiles and cell phones, while manufacturers limit those activities to select dealers.

Social Entrepreneurship and Philanthropy. Successful entrepreneurs are increasingly applying their resources and experiences to tackle challenges in the social sector. Rather than resist this “social entrepreneurship,” policymakers should help direct these energies creatively in areas such as education, environmental sustainability, and poverty relief.

America is already witnessing the largest wealth transfer in history, with $68 trillion in assets likely to be transferred between generations over the next 25 years.¹⁷ Some politicians see that as an opportunity to increase revenues and level the playing field through larger inheritance taxes and even a wealth tax. But positive approaches that reward philanthropy and socially minded investments are more likely to both foster growth and reduce inequality. Policymakers might look at concepts such as Warren Buffett's “Giving Pledge,” and encourage the new generation of entrepreneurs to donate ever larger portions of their resources to charity.

An important corollary is that more needs to be done to make sure philanthropy is effective and public‐spirited. Today, a meaningful amount of philanthropic dollars goes to support either political causes (indirectly) or ego agendas. One area that warrants more attention is community foundations, as they combine a clear public purpose with less political or bureaucratic friction. There are roughly 700 community foundations nationwide, including in many big cities and Silicon Valley. These organizations connect donors with changemakers to channel resources for local needs, and in some cases they help develop entrepreneurial approaches to issues that complement government. Finding ways to encourage or entice donors to work with or through community foundations or similar intermediaries will increase the likelihood that our country's growing philanthropic resources will be deployed efficiently, effectively, and with a clearer public purpose.¹⁸

The Culture of Success – and Respect. Americans on both the left and the right value entrepreneurship, and its importance in our country is one of the few things that almost everyone agrees on. The nation's culture embeds a deep appreciation for the “underdog” and the achievement of the American Dream, particularly the small business variety. At the same time, there is grudging respect for mega‐wealthy entrepreneurs such as Vanderbilt, Gates, Musk, and Bezos, especially when they begin as small upstarts and challenge incumbents. As a result, the country's political, legal, and institutional mechanisms have supported entrepreneurship and allowed it to reach its highest levels. These engrained elements of the culture and institutions enabled upstarts to strive and thrive even in the era of big business and “company men,” and for innovation to find its way into the market. As we have seen, this sets America apart from most other countries, where people hesitate to start businesses, to challenge incumbents, or even to be too successful lest they generate jealousy or ire. This holds them, and their economies, back.

This culture cannot be taken for granted, especially now with widespread resentment brought about by heightened economic inequality and disruption impacting many workers and small businesses. Respect for entrepreneurship is closely tied to the egalitarian nature of American society and the sense that opportunity is open to anyone, and some see that as waning. As a result, instead of celebrating entrepreneurs, some are beginning to exude disdain toward them. Extremes on both the left and the right are guilty of unproductive rhetoric. In order to sustain a system that has proven effective in generating wealth and progress over generations, successful entrepreneurs, corporate leaders, policymakers, and others must lead in ways that unite the country around the long‐standing values of success and opportunity and leverage those strengths to solve challenges, rather than engage in divisive posturing.

The Entrepreneurial Future

America has been a nation of entrepreneurs from the very beginning, but many of the most exciting opportunities lie ahead. Energy, materials, and health care, for instance, are a few areas that continue to show great possibility for major innovation, while new approaches in education and social services are addressing important needs. New fields, from space travel to stem cell research and development, are still in the early stages of attracting upstarts. Entrepreneurial approaches to such areas as privacy, security, environmental sustainability, and food supply security are highly promising. And there continue to be many large, underserved markets and segments of the population waiting to be fully addressed. We are just starting to see the range of opportunities that might come about by making the system more inclusive. Globally, the developing world offers vast opportunities both in markets and in talent.¹⁹

The country is well positioned to succeed, and the experience of the past 250 years, and the last four decades in particular, should be a reason for optimism about the future. But a dynamic economy by its nature results in winners and losers, and that is never easy. At the same time, America's democracy is at times messy and difficult. This combination of ever‐changing economic competition and imperfect political and legal mechanisms can cause frustration, but it is also our greatest strength. While some countries can play catch‐up or even outperform for some periods, our reliance on competing interests, and ultimately on consumers, generally prevails over time.

Perhaps the most encouraging sign is the increasing power of individuals not just as citizens but as commercial entrepreneurs, social entrepreneurs, consumers, and shareholders. At a time when the political climate is divisive and in spite of the pandemic, Americans continue to find ways to move forward. Few countries around the world have shown an ability to replicate this spirit and energy, and it is why our political system is the most durable and our economic progress the most sustained.

Nevertheless, America must address the social issues more effectively to keep the system intact and to enhance its moral authority and global leadership. As noted earlier, this does not mean big government stepping in to solve the problems. In fact, one should be wary of relying on government intervention beyond a certain point. Instead, we should continue to look to entrepreneurs to solve problems and to citizens‐consumers‐shareholders to play important roles in driving change. Leveraging the country's great tradition of entrepreneurial energy to address challenges will not only ensure the country's future success but build on the entrepreneurial revolution that it has sparked around the world.