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The entrepreneurial spark that makes nations great

By Clem Sunter

Books have been written on why nations fail and what turns a good company into a great one. I am more interested in the issue of what makes nations great even if it is only a temporary phenomenon and they ultimately fall from grace.

Some people might cite military leaders like Alexander the Great (Greece) and Julius Caesar (Rome). Others might put it down to exceptional rulers like Elizabeth I (England) and Katherine the Great (Russia). Other possible candidates are outstanding politicians like Bismarck (Germany) and Abraham Lincoln (America).

vI am very happy to accept that the quality of leadership plays a role in making a nation great. It provides the environment in which citizens are encouraged individually and collectively to step up to the plate and achieve exceptional things. Success requires a legal framework to a society; peace and stability within society; a sound educational system and a singularity of purpose arising from patriotism; and more often than not the inspiration provided by a leader with integrity and vision.

The British spark

However, I feel that even though good leadership is a necessary condition to make a nation great, it is not a sufficient condition to make it happen.”

The greatness of nations comes down to a completely different reason in modern economic times. Take Great Britain which later this year may lose Scotland in a referendum and therefore have to be renamed. What was the spark which made the country great? It was all those entrepreneurs and inventors that jointly created the Industrial Revolution in the late 18th and early 19th Centuries: people like James Hargreaves from Lancashire who came up with the spinning jenny in 1764 which transformed the textile industry and James Watt from Scotland who invented the steam engine that changed just about everything. Luddites tried to sabotage industrial progress but Britain's leadership did not allow them to do so. In fact, additional props were added to keep the revolution going in the form of patents, property rights, joint stock companies and the stock exchange to trade the shares of those companies.

Of course, Britain had ample resources like coal and iron ore. It was more densely populated and urbanised than other societies. A sizeable merchant fleet assisted in expanding international trade.

But the fact is that the GDP per head rose very little in the centuries before the Industrial Revolution. It took off immediately afterwards and propelled the nation to the highest per capita income in the world in Victorian times. Given that Britain's population nearly doubled from eight million in 1801 to 15 million in 1850 - and doubled again to 30 million in 1901 - this was no mean feat. The entire empire and magnificence of that golden era had their root cause in the inventiveness of individuals from humble origins, not from London but from towns in the middle and north of England, and Scotland. It was the vast creation of wealth they set in motion that has subsequently been redistributed to forge a better life for all British citizens. The National Health Service and other institutions of the welfare state would not exist in the UK if the self-interest and entrepreneurial spirit of the Industrial Revolution had not preceded them.

Examples from other countries

Americans know that if they want to remain the top economy on Earth, every generation of Americans must produce world-beating entrepreneurs. Henry Ford produced the Model T, the first cheap mass-produced car, and later generations have spawned Walt Disney, Bill Gates, Steve Jobs and Mark Zuckerberg. Ironically, the person everyone is tipping as the most creative and entrepreneurial American alive today is Elon Musk who was educated at Pretoria Boys High School. He made his fortune out of PayPal and was responsible for the first successful commercial space flight. He is now producing a really smart electric car and is designing a tube train that can take people between Los Angeles and San Francisco at supersonic speed.

China has gone from the 100th ranked economy in the world in 1978 to number two today because Deng, who succeeded Mao, was practical enough to open up the economy and give enough space to local and international entrepreneurs to create wealth for themselves. The country, he believed, would share in that wealth creation and so it has.

Look at the difference between North Korea and South Korea: same people, same historic culture but South Korea being an open democracy produced new car companies and Samsung. Germany, despite losing two world wars, is now back to being the number one economy in Europe. Ask any German why and they will tell you it is the strength of their family businesses that were the origin of brands like Mercedes Benz. Meanwhile, Russia with its huge achievements in space and well educated population is still waiting for its own economic miracle. Alas, centralised government and oligarchs have closed down the space which allows entrepreneurs to thrive.

Implications for South Africa

If South Africa wants to have a step change in its economy, the entrepreneurs are the ones who will provide the spark. Our equivalent to Britain's Industrial Revolution was the mining revolution which made South Africa the premier economy on the continent in the last century. It should not be forgotten that a South African company, Anglo American, in the early 1980s was not only the largest mining company in the world, it was also the largest foreign investor in the US. De Beers' campaign of "Diamonds are forever" was rated in America as the best advertising campaign by any company in the 20th Century. It goes to show that the Oppenheimer family were true entrepreneurs.

Now that the mining boom is coming to a close except for a few rich deposits, we have to look to other areas in manufacturing and service industries to pick up the momentum again. The politicians can provide the supportive environment, but it is those individuals who come from nowhere with a bright and marketable idea that will change our fortunes. SAB, Naspers and Discovery Health are striking a new path beyond mining for the next generation of entrepreneurs to follow. One of these will surely be the next Oppenheimer - black or white - and he or she will change the course of South Africa's history more than any politician. But it is imperative that the government attracts any such person to stay here rather than emigrate to greener pastures overseas.

Think about it. Which American in this century has influenced more lives around the world than anyone else? The late Steve Jobs beats Bush and Obama any day.

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