Small business is the hero of modern capitalism. Owners of small firms are the virtuous strivers, the job creators and the plucky entrepreneurs who drive the economy. ‘Small businesses make a huge contribution to national prosperity and supporting Australian jobs,’ states the Labor Party in Australia. And you would struggle to find a political party in any Western democracy that disagrees. A British government official made the (unverifiable) claim that firms with fewer than five employees made 95 per cent of radical innovations. Even amid the divisive politics of the United States, as the satirist John Oliver recently noted, everyone seems to agree that ‘small business is the backbone of the economy’. In a world of international conglomerates and global capital, the proverbial Main Street proprietors get a lot of love.
For all the enthusiasm, a central puzzle remains: what, really, is the role of small business in the economy? Is looking out for small business a progressive goal? Surely, the public fascination with upstarts, bootstrappers, and innovators reflects ideals of independence, improvement, and a better tomorrow. Yet history reveals another story: a distinct and powerful small business mythology at the heart of modern political life. Beginning in the late 1970s, adulation of small business acquired a new and important role in modern capitalist countries. In particular, the Reaganite and Thatcherite movements turned to celebrating small business as a stalking horse to advance the very kind of economy that handicapped upstarts and small independent proprietors, and privileged big national and multinational corporations.
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