In his book, The Theory of Moral Sentiments, Adam Smith said of producers: “They are led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made had the earth been divided into equal portions among all inhabitants; and thus, without intending it, without knowing it, advance the interest of society, and afford means to the multiplication of the species.” As an institution of entrepreneurship, the digital marketspace is the modern version of Smith’s invisible hand: a complex phenomenon that has not been designed by any one single person but has emerged as a result of the usefulness that it provides to individuals pursuing their goals by serving other marketspace participants through value-providing exchanges.
These value-providing economic participants are people that are not highly capitalized, not holders of special permits, and have not paid large sums in startup fees. Many are retirees, stay-at-home parents, or young adults who want to start small. All of them have much to gain from the advent of the digital marketspace. They are everyday entrepreneurs who are prospering in unprecedented ways via the marketspace.
Today, more than ever before, everyday entrepreneurs are using eCommerce and social platforms because they have lower barriers to entry, comparatively lower startup costs, minimum fees, and in many cases, no costly permits. We know it to be universally true that fees, permits, licenses, and undue barriers automatically write a portion of the population out of the economic picture.
The digital hand is the proximate cause of millions of people entering the emerging digitalpreneurs class - those who sell products and services via e-platforms on digital devices.
The dead hand, in contrast, is an emerging anti-market hand. The dead hand imposes a heavy counterweight effect by its interventionist, antimarket, anti-innovative policies that adversely affect the rising class of digitalpreneurs in the long run. The dead hand tends toward intervention; increasing regulatory requirements, requiring large amounts of startup capital, imposing licensing requirements, and other fees of entry that hamper the positive effect of digitalpreneurship for everyday people. Unlike the digital hand, the dead hand does not create wealth or create value; it seizes resources, eliminates wealth creation, and it does so by disallowing individual, privately-held resources to be employed in higher uses in the marketspace. The dead hand disrupts the fundamental entrepreneurial institutions of private ownership and freedom of exchange.
The dead hand intends to intervene in a growing and prosperous economic process with policies and regulations that have good intentions but adverse effects on this rising class of people. Just think, the resale market is expected to reach 30 billion by 2030, according to Allison Prang of the Wall Street Journal. Imagine a free space in the market where people who do not have millions of dollars in seed money or capital equipment on hand or a storefront with overhead costs can enter a market space and serve others and themselves. They may be collectors who later decide to resell their collection or they may be individual creators of products of their art, or music, or crafted furniture, etc. The dead hand does not peer beyond the tangible, measurable, and visible effects of an individual’s ability to engage and prosper in marketspace. It does not recognize the opulence of the nonvisible effects, of peaceful, energetic, and voluntary exchanges that are bettering life circumstances for many individuals in the pursuit of their purpose.
The dead hand may be getting stronger. Recently a proliferation of restraints and regulations have been imposed on marketplace sellers on social and eCommerce platforms. The dead hand seeks to assert itself against the last free-market frontier. The dead hand may be a well-meaning hand, but its force has unintended effects. In perspective, eCommerce had approximately 2.1 billion digital buyers in 2020. The rise of the dead hand will destroy this last frontier where everyday people can flourish via the economic process.
We have to ask whether eCommerce and social platforms will remain free and unhampered in the long run. In the long run, will everyday entrepreneurs (i.e., stay-at-home parents, work-from-home contractors, retirees, young adults) employ digital means to participate in the economic process? In other words, will the dead hand discourage people from using their resources to produce a product or offer superior service, thereby making either a profit or loss in marketspaces? If they profit, will they be able to save and reinvest their profit back into the business or will the dead hand take it away? Or will the dead hand make saving impossible by charging higher fees and taxes and associated permits?
We face a potential conflict. There is a rising class of digitalpreneurs and a rising dead hand that seeks to impose restrictions on them. What would hold any entrepreneur back from the utilization of this free entry? Only the dead hand that restricts market entry.
Is the digital hand the last frontier for the average person to do good business in marketspaces? The problem with the dead hand is that it imposes barriers that eliminate the incentive for many to consider selling on eBay, Esty, Poshmark, etc. A requirement for permits and upfront fees to start entrepreneurial activities will impose disincentives to conduct business in marketspaces. Why?
The dead hand and its adverse effects on future digitalpreneurs are emerging. As it emerges, we must consider the short-run and long-run consequences of disincentivizing people from voluntarily exchanging their private resources using eCommerce platforms. If the dead hand takes hold of the emerging entrepreneurial class, what kind of market remains for people to earn, save, and reinvest their savings to enter the economic process? What are the long-run consequences of alternative market decisions for entrepreneurs and their freedom to prosper using their knowledge and personal property?
In the short run, will marketspace barriers remain low over time for absorption of newcomer entry, or will the barriers to entry to eCommerce rise and increase the costs of doing good business outside the bounds of the average person’s capital investment? We may not find answers to these immediate effects the dead hand will have on digitalpreneurs, but in the long run, its effects will become apparent if the incentive to use the digital hand ensures increasing significant gains rather than losses.
