Bernard Arnault is the primordial “wolf in cashmere”. He is Europe’s richest entrepreneur and is comfortably enfolded in a $100bn fortune. Lloyd Best stated that entrepreneurship is an act that cannot be unduly concerned with those orthodoxies and cautions in which failure is implicit. Best believed that entrepreneurship is a bold stroke and that entrepreneurship discerns no exceptional challenge in the risks it takes and costs to be incurred. Mr. Arnault, whose family owns half of LVMH, is taking over Tiffany & Co. He is paying $16.9bn, including net debt, equivalent to approximately four years’ sales at Tiffany. He intends to own even the robin egg blue colour associated with a Tiffany & Co. gift box which has become a coveted international icon of elegance and sophistication and a cherished sign that a magical moment has arrived. The American marque will become the 76th maison of the Parisian conglomerate enthroned alongside Veuve Clicquot, Dior, and Louis Vuitton (LV).
From the gritty town of Roubaix in northern France, Arnault turned the family owned construction business to real estate and then to the luxury industry. In the 1980s, Arnault played a bold stroke. He grabbed Dior as a shaving of a bundle of distressed assets and then quickly seized control at LVMH. LVMH achieved nearly double the industry’s growth rate in the past two decades. In 2018, it sold €46bn-worth of extravagance. Entrepreneurship, as bordered by Best, is not a defensive paddling-off petrified by the validity of your own vision and sentiments. Nor is it a tarrying in self-doubt, waiting for the limping props, of scientific inquiry and quantitative methods. It entertains no notion of winning or losing. Entrepreneurs are right in advance of the evidence.
Entrepreneurs comprehend what is certain even before it happens. Others understand it only after. Claiming with certainty and boldness that the entrepreneurial opportunity was obvious even though they themselves could not recognise it. It is always lucid to the luminaries only in hindsight and they contend that it was common sense. But common sense is uncommon as Gramsci advises, so it is reasonable to believe that they are in fact correct.
Entrepreneurs must be distinguished from merchants whose stock in trade has always been negative lists, protective tariffs, income tax holidays, duty-free inputs, initial and investment allowances and imperial preferences in metropolitan markets. This is why Best said that “The first act of entrepreneurship must be intellectual and philosophical.” In 1947 Trinidad, the Economics Committee, chaired by Sir John Shaw, recommended that the state should aid the establishment of industries rather than hinder their development by fiscal policy which aimed merely at customs and excise revenue. On the recommendation of the Shaw committee, legislation was enacted to grant duty-free imports of plant and equipment, protective tariffs and exemptions from income tax.
The new suite of laws included: The Aid to Pioneer Industries Ordinance, 1950; the Income Tax (In Aid of Industry) Ordinance, 1950; and the Cement Industry (Development) Ordinance, 1951. This marked a period of incentivising industry by legislation. It was followed by an epoch from 1951 to 1961 when marine fields doubled crude oil output and Trinidad and Tobago became an offshore oil-refining centre. The period from 1962 to 1973 was one of continued growth tainted by widespread unemployment and social discontent which became a Gladwellian tipping point that lit the fuse of the 1970 February Revolution. It was a sub-period of Tropical Capitalism.
Unlike Sir Arthur Lewis, Best argued that the way ahead was to deregulate and to alter the conditions of competition knowing that entrepreneurship results in rents and profits for enduring initiative only inside the context of appropriate moral philosophy and public policy frameworks. In the French and Dutch Caribbean, it is convenient to purchase a LV handbag in St. Barthelemy or Aruba or a Longchamp pocketbook in Barbados. Best consequently envisioned franchise-in-reverse with MacDoubles and RotiHut becoming targets of investment facilitation. This however would require clearing away a whole apparatus of mercantilist restrictions at the level of ideas. After all, luxury was once little more than a slim cottage industry dominated by a handful of family owned businesses in Europe. Today, it is the preserve of select conglomerates like Kering which is the home of Balenciaga and Gucci, and Richemont which owns Cartier and Montblanc.
Since Bernard Arnault took over three decades ago, the rise of LVMH has been dazzling. He has managed to spend extravagantly to get people to buy beautiful foreign things that they do not need. The acquisition of Tiffany & Co. cements LVMH at the pinnacle of the luxury market from which it will oversee a structurally favoured sector that is buoyed by income inequality and economic globalization. In the last five years, share prices have risen threefold including a 60% run since January 2019. LVMH is now worth about €206bn and vies with Royal Dutch Shell as the most valuable asset of the EU. Culture is always about making things different from what they are, the future unlike the present. Today, the future is open to suggestions and we in the West Indies are a voice where once there was none.
