Does capitalism produce an entrepreneurial class?

This paper probes the conditions under which we might expect an entrepreneurial middle class of independent shopkeepers, merchants, professionals, and small manufacturers to expand or decline with capitalist development. We highlight the predictions offered by structural and Marxist accounts of middle class formation and apply them critically to four cases, including the early American Republic, industrializing England, Tsarist Russia, and the U.S. South during the antebellum–postbellum transition. Our empirical analyses and review of the historical literature suggest that the exogenous imposition of capitalist institutions often fails to propel entry into entrepreneurial activity and may even backfire, as cooptation or resentment among traditional elites generates barriers to small business proprietorship. When middling entrepreneurs exhibit greater agency with respect to the creation of capitalist institutions, their prospects tend to improve but the ability of scholars to draw causal linkages between structural change and the middle class are impaired, owing to problems of endogeneity. Paralleling institutional studies of organizations, the paper also underscores the importance of myth and ceremony – over mere numerical prevalence – in the ‘making’ of an entrepreneurial middle class.