This article is the first in a series intended to support the development and growth of small business. As a small business built to serve others like us, we believe small businesses are fundamental to a healthy market and democratic society.

We've been programmed to react emotionally to certain forbidden phrases and wicked words that make us instantly start sweating with irrational panic. The phrase "means of production" may make you see red, and desperately search out the nearest copy of Ayn Rand to raise up and protect yourself from that dreadful specter of communism. But don’t worry! It’s actually a generic term to describe the engine of any economy, how goods and services are produced. The means of production can be owned by millions of small entrepreneurs, a handful of super powerful oligarchs, or under various flavors of socialism, by all citizens via the instrument of the state. Whoever owns and controls the raw resources and means of production controls the wealth and power in a society. 

So the question is very important: who do we want to control the means of production in our society?

Small Business Is Critical for a Healthy Economy

Small business is the engine of a healthy economy and society, ensuring that ownership over the means of production remains distributed in the hands of as many individual citizens as possible. If control of the economy determines who has wealth and by extension who has power in a society, small businesses are great for protecting democracy and freedom. In addition, small businesses have a direct and personal relationship with their employees, whose daily needs and interests remain important and relevant on a human level. This is good for everyone in the community. It creates good will, collaboration, social cohesion, equality and a robust market.

Small Business in Crisis

As of 2024, small businesses under 20 employees still represent 95% of all businesses in the United States [sba.gov], however their power is diminishing as they currently employ only about 16% of the total workforce [sbecounil.org]. Unfortunately, small businesses (under 500 employees) have been struggling for the past three decades. Their share of GDP has fallen from 48% in 1998 to 43.5% in 2024 [uschamber.com]. And today, large corporations are squeezing out the competition, growing 2.5% per year, which is an alarming 178% faster than small businesses [sbecouncil.org]. 

Big corporations, with their large-scale buying and selling advantages, are swallowing up more and more capital, which is an existential threat to small businesses. Large corporations have easier access to capital for growth, to invest in infrastructure, and expand into new markets. They saturate the market with brand awareness. They control the supply chain to undercut prices at one level and starve out competitors, and then recoup any losses at another level, where they have no competition. Profitability is the only goal, whatever the method, whatever the cost.

Unfortunately, large corporations have the power to manipulate the market and even our laws, creating regulations that favor corporations and penalize smaller businesses. They have the power to dismantle laws and regulatory bodies that for decades have protected small businesses against monopolies. They’ve bought their way around anti-manopoly laws, which is devastating for small businesses and hurts citizens/consumers. The practices are inherently anti free market and a direct threat to small businesses and the independence of the American economy and democracy.

Democracy Under Attack

As small business comes under threat, so too does democracy. In his book “Less Is More, How Degrowth Will Save the World” [goodreads.com], economist Jason Hickel details the global economic fallout today resulting from the control of a small group of nobles (i.e. oligarchs) over our resources and means of production. 

Capitalism is not synonymous with “commerce” or “markets”, those existed long before capitalism. The difference is that capitalism has the unreasonable goal of endless growth at all costs. This inevitably requires a business to extract maximum value the planet and its workforce, year after year, compelling people to compete with one another in a race to the lowest possible wages. This is only possible when a small group controls the means of production, because without other options desperate people will be forced to outcompete each other. In fact, rendering people desperate is actually a necessary part of the strategy to lower wages. 

That’s exactly why we have seen real median wages plateau from $42,000 in 1975 to $50,000 in 2024, a pitiful growth of 16% over 4 decades, while productivity itself has risen 74% [epi.org]. During that same period inflation rose 366% [federalreserve.gov]. That’s why the average worker can’t reach the American Dream of owning a home and most don’t have enough to even meet their monthly needs. Americans today are more productive but poorer, because we have no control over the means of production.

As a small business, why should you care? It may seem appealing to think you too should pay as little as possible for labor, but this is actually sabotaging society and the prosperous economic conditions that small businesses need to thrive.

All of this is obviously unsustainable for a society. It creates terrible inequality, frustration, desperation and justifiable delusion with the economic and political systems that have created the problem. It’s a full blown crisis that impacts the fundamental health of democracy itself. A 2004 Princeton Study titled “Inequality and Democratic Responsiveness: Who Gets What They Want from Government?” [source] demonstrates that a policy has a 30% chance of becoming law if 100% of the public supports it, and the exact same chance if 100% of the public opposes it. In short, the democratic will of the people has statistically zero influence on what elected representatives vote. 

Not surprisingly, the policy objectives of the wealthy have a 600% higher likelihood of becoming law. Since the 2010 Supreme Court decision “Citizen’s United” removed limits on political donations for corporations, billions of dollars have flooded the political landscape and the crisis has been institutionalized. We are no longer living in a democracy.

NOTE: non-partisan groups like represent.us are working to end this blatant corruption of the political system, which threatens the very fabric of democracy and the free market small businesses need to thrive. 

This redistribution of wealth from the working class (small businesses and employees) to the top 1% is the result of an intentional, decades-long program of deregulation and dramatic tax reductions that have fundamentally transformed who owns the means of production. The bottom line is that wealth itself is power—democratic and political power—and power, held in the hands of a few, creates oppression. 

Small Business Is a Critical Solution

One of the ways to counteract the concentration of power, is to empower the continued growth and health of small businesses. The more that average citizens retain (and regain) control over the means of production, the more they guarantee their own economic, social and political independence. 

While large corporations have an unfair advantage of scale, small businesses have many advantages that must be leveraged in a strategic way. Small businesses are local, creating much higher loyalty. They are staffed by owners or employees that are much more passionate about the product and service they provide. They care about the customer because they’re directly impacted by customer satisfaction. Small businesses are closer to the demands of the market, understanding changing sentiments, and able to pivot quickly.

Success depends on many factors like market fit, product/service quality, marketing, and capital investment for growth/marketing. But with the right strategy, you can leverage these advantages to help you succeed. And with more small businesses controlling the means of production, the economy and democracy itself will be much healthier.

What’s Next

In future articles I will explore other topics at the intersection of small business, economics, taxation and politics, with the goal of encouraging the growth of small businesses and a healthy society. In the meantime, if you have a new idea or want to grow your existing business, we offer exceptional quality services for every budget, and can help you with strategy, marketing, branding, website, and more. Schedule a free brainstorming consultation to explore ideas.