Abstract
This is a fundamentally optimistic yet realistic book. As the authors point out in the introduction, the term ‘entrepreneurship’ does not often feature in the European Union (EU) documents. Yet, we are now stuck in a situation, where too much savings and money are chasing too few promising investment opportunities. If we find ways to unlock the barriers to identifying and acting on such opportunities, the EU economies may become stronger, and our chances to meet multiple economic, social, and environmental challenges of the global world may also, in turn, become stronger. It is argued by the authors, that there is a realistic chance to achieve this and we should not miss it. But - they also argue for this to occur, we need to identify what is the best angle to ask questions about development. Reintroducing entrepreneurship to the core of public policy debate may be the way to achieve it.
Accordingly, the book presents 50 policy proposals focused on the task of transforming the EU nations into entrepreneurial societies. The proposals are attributed to different levels of government: that of the EU, of country-level governments, and of regional authorities; which are carefully assigned to each level. After the introductory chapter motivating the overall framework of entrepreneurship, the authors proceed to argue and present their policy proposals in six areas, the rule of law and property rights, taxation, finance, labour regulation and social security, contestable markets, and human capital.
Some of these proposals are more detailed than others, some are non-controversial, and some other are innovative and bold. All make interesting reading that I was not expecting from a policy-oriented text. Such policy documents more often than not become devoid of new thinking in the desire to represent consensus. This is not how the book is written. It invites discussion, and the authors are never shy to follow the logic of their entrepreneurial framework to the conclusions, while not being restricted by limitations of any ideological, political, or theoretical corsets. Those who like to adopt such corsets will find the book disappointing, and this is good news.
The first policy recommendation is not really controversial, as there is now widespread understanding of the importance of the rule of law. Next, the authors argue for the new approach to patent protection to make it more flexible and shorter. I agree in principle, as long as we keep in mind that patents create markets and that way help innovative entrepreneurs, as argued by Baumol (2010).
The next chapter is on taxation, and I found it one of the most important in the book. As the authors convincingly argue, existing tax systems were not designed to support entrepreneurship, and if we identify the key barriers for entrepreneurship, we should look here. The authors call for universal social benefits, instead of those conditional on employment status, and for reducing taxation of labour. The next theme is to reduce discrepancies between statutory and effective taxation of corporate income taxes, in order to eliminate the tax advantages that large multinational companies and big ‘national champions’ firms benefit from, at cost of new, small innovative ventures. But there is far more in this section that I am unable to cover in this short review, including proposals related to taxation of private wealth, and on a more equal treatment of debt and equity finance.
The next chapter on finance is equally important. It links with taxes and also discusses pension schemes. The broad objective is to allow for more autonomy in individual investment of savings, in order to turn the latter into a wider and more direct source of entrepreneurial financial capital. It also focuses on new forms of entrepreneurial finance, on crowdfunding platforms in particular, and calls for widening their role.
The labour market reform proposals also link back to taxation and spending. The authors argue again for ‘universal insurance systems that disregard labour market status, history of attachment’ and by this ‘encourage activation, mobility, and risk taking’ (p. 74). Next comes a cluster of proposals that can be summarised under the concept of flexicurity: relaxing employment protection and constraints on labour contracts, while ensuring social protection systems that limit downside risks of entrepreneurial engagement. At the same time, there is a call for a more active labour market policy, especially retraining programmes; this links forward to the chapter on human capital.
The penultimate policy chapter is on contestable markets. Proposals to reduce entry barriers are uncontroversial. There is also a call for making public services more open to private entrepreneurial firms and a discussion of a more efficient bankruptcy law that balances better the interests finance providers against those of protecting ventures with positive prospects, whilst, at the same time, allowing for transparent and quick liquidation. However, the devil is in detail, and the topic would require further discussion.
The final policy chapter on human capital contains several proposals. Importantly, there is a call to overhaul primary and secondary education in order to ‘promote initiative, creativity, and willingness to experiment’ (p. 106). Parallel to this, there are several proposals oriented on strengthening links of formal education, especially higher education, with private businesses.
In the final chapter, the main themes are summarised in a clear way.
It is a comprehensive book that contains a range of important proposals that deserve serious discussion, with respect to taxes, finance, labour, and education in particular. I would probably add one more chapter on administrative decentralisation. A well-crafted system of strong local administration would come hand in hand with the entrepreneurial society that the authors advocate and can be another important source of innovation.
Overall, I highly recommend the book. It deserves to be read by administrators and politicians at all levels of the European governments and entrepreneurship researchers interested in policy conclusions coming from their work.