The idea is that capitalism-- that is the free market system of economics that governed most western societies from the time of the industrial revolution to now-- has traditionally been marked by the need for massive amounts of capital to operate a business. (Hence the name “capital-ism”.) Consider starting a factory 50 years ago, or attempting to commercialize a new product, or even opening a small store. You were often looking at heavy investments of capital to even start your business unless you tapped into a franchise or similar entity. Today, you need only an internet connection, a business plan, and a much smaller investment to get started.
Here’s how an abbreviated version of how economist Arnold Kling, the originator of this thesis, describes his theory:
The reduced significance of capital means that the cost of entry is lowered in many industries. Today, we see this in the shops that people have set up on eBay or in the blogs that compete with traditional pundits.
...When a new project can be hatched in a basement on a small budget, fast failure is more efficient than organized planning.
...Under capitalism without capital, we should encourage people to be self-educating and self-starting, not state-parented [or, I hasten to add, dependent on big industry.]
…Another characteristic of capitalism without capital is less bureaucracy. As observers from John Kenneth Galbraith to Amar Bhide have pointed out, corporate bureaucracy emerges to regulate risk-taking in an environment in which new projects are very expensive. Think of a new airplane or a new fabrication plant for computer chips.
When a new project can be hatched in a basement on a small budget, fast failure is more efficient than organized planning. Galbraith, writing in an era when the economy was dominated by heavy industry and oligopolies, saw entrepreneurship as little more than a quaint myth. Bhide, writing more recently, sees the entrepreneur as thriving in circumstances of high ambiguity and low capital intensity -- situations that have become increasingly prevalent in the computer age, particularly with the advent of the Internet.
The industrial economy required planning and bureaucracy. The Internet economy instead is better described by Friedrich Hayek's terms spontaneous order and competition as a discovery procedure.
So what does all this have to do with KECI or this network? It’s simple: we’re an organization dedicated to helping business owners take advantage of capitalism without the capital. “Fast failure” may be more efficient than “organized planning” on the scale that Kling was discussing, but there still has to be some planning. KECI, a network of coaches for small businesses in KY, help businesses plan. We also open up our networks and rolodexes, we provide moral support, we’re that “free” shoulder entrepreneurs can lean on as they try to navigate this bold new economy. 20 years ago, 50 years ago, we’d have been virtually irrelevant. But today, successful companies can be spawned out of garages and basements and we are there to help these businesses along.
But in order to maximize our ability to help, we have to consider taking advantages of the same tools that businesses can now use in lieu of massive capital outlays on advertising and communications. We can set up a virtual network that allows us to communicate 24/7 for free. We can create our own web sites in the form of blogs that allow us to get our messages out to a larger audience, again for free. The network, the blogs, they serve the following purposes:
* They allow us to communicate in a far easier manner than traditional, cumbersome list-serves.
* They allow us to share ideas and seek help in a much easier format.
* Because communication is so easy, Ning and blogger.com allows us to correspond with one another more frequently than we might have previously.
* This blog will allow us to communicate our ideas, success stories, etc. with the rest of the world. As we put our stories online, the search engines will take notice, thereby driving more traffic our way. It’s probably not too difficult to imagine this group becoming a hub for discussion of best practices throughout the world of entrepreneurship.
All the above should sound like fun to most and having fun is important to what we do. Most importantly, however, success in these simple to use IT areas will better allow us to do our job and serve small businesses in our region and promote the concept of entrepreneurship as economic development.
All we need now is content and involvement. Who’s interested?