The Legacy of Communism Still Influences Beliefs About Entrepreneurship Twenty-five years years after the fall of the Berlin Wall, the residents of former communist countries still tend to hold more negative views of entrepreneurship than their counterparts elsewhere.

By Scott Shane

Opinions expressed by Entrepreneur contributors are their own.

This year is the 25th anniversary of the fall of the Berlin Wall, an event which symbolizes the end of communism in Eastern Europe and the transition of several economies from centralized planning to free markets. While the economic transformation of many former communist countries over the past two-and-a-half decades is remarkable, attitude surveys of the residents of those nations show that communist ideas still lead many of them to view entrepreneurship more negatively than their counterparts elsewhere.

Karl Marx, the intellectual father of communism, believed in the "labor theory of value," which posits that the value of goods and services is proportional to the amount of labor they require to be produced. For example, if a shirt takes twice as long to make as a pair of pants, then a shirt's value is twice that of a pair of trousers.

Under the labor theory of value, if entrepreneurs want to make a profit, they must pay their workers less than the total value of their effort. Entrepreneurs are able to do this because they control "the means of production" – the inputs used to make products and services, and the locations where that production occurs, Marx argued. Combined with a surplus of workers (relative to the number of available positions), entrepreneurs' control over the "means of production" allows them to pay workers less than what their labor is worth.

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Marx's theory implies several beliefs about entrepreneurs, two of which are captured by recent attitude surveys. First, entrepreneurs are not concerned about the welfare of workers, but only about ensuring their own profits. Second, entrepreneurs will exploit the labor of others.

These beliefs were taught to generations of schoolchildren in former communist countries and continue to influence the attitudes of those countries' residents, a 2012 survey of more than 40,000 people in the 27 member states of the European Union plus Brazil, China, Croatia, Iceland, India, Israel, Japan, Norway, Russia, South Korea, Switzerland, Turkey, and the United States, reveals.

The poll shows that people living in former communist countries are more likely than the residents of other nations to believe that entrepreneurs "take advantage of other people's work." While only 20 percent of Danes, 30 percent of Norwegians, and 30 percent of Americans agreed with this statement, 91 percent of Poles, 80 percent of Latvians and 80 percent of Slovakians did. The percentage of the population that agreed with the statement averaged 54 percent in the 27 canvassed countries that were never run by communists, as compared with 70 percent in the 13 former communist nations that participated in the study.

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Similarly, people in former communist countries are more likely than those in other nations to believe that "entrepreneurs think only about their own pockets." The poll indicated that 70 percent of Croats, 67 percent of Lithuanians and 65 percent of Romanians agreed with this statement, as compared with only 18 percent of Icelanders, 26 percent of Danes and 26 percent of Norwegians. The average percentage of the population that agreed with the statement was 47 percent in the countries never run by communists, as compared with 60 percent in countries once led by them.

The research shows how long it takes to transform the economic attitudes of a populace. Twenty-five years after the fall of the Berlin Wall, the residents of former Communist countries still tend to hold more negative views of entrepreneurship than their counterparts elsewhere. Such beliefs make it harder for those nations to develop robust economic systems based upon free enterprise.

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Scott Shane

Professor at Case Western Reserve University

Scott Shane is the A. Malachi Mixon III professor of entrepreneurial studies at Case Western Reserve University. His books include Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live by (Yale University Press, 2008) and Finding Fertile Ground: Identifying Extraordinary Opportunities for New Businesses (Pearson Prentice Hall, 2005).

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