Good capitalism and state intervention in private enterprise

In his book Protestant Ethics and the Spirit of Capitalism, Max Weber argued that capitalism had as its involuntary genesis the Protestant reforms of the Catholic Church, initiated by Luther and later by Calvin. This is because such theology established a "renovating morality" in which man, under the prototype of the "self-made man", should fulfill himself in life through work, industry and enterprise, and thus achieve salvation. Thus, he concludes, Protestant countries are richer than Catholic countries, because while in the former, work, enterprise, savings and wealth are rewarded as works of life, in the latter this is seen as something negative and unnecessary, since we will receive our daily bread by praying.

Over the centuries, we have seen how the work/fulfillment relationship migrated from the sphere of religions to the sphere of state intervention in the economy. Thus, Colombia, being a predominantly Catholic country, was (and is) the cradle of great businessmen and tireless entrepreneurs who made their companies their great works of life, thus generating infinite progress for the regions and for the millions of people involved with them. Then came the State with its intervention and unnecessary over-regulation in order to maintain fiscal sustainability (Legislative Act 003 of 2011), and with it discouraged and drove away those who took on the immense and titanic task of creating companies in this country.

The Great Pyme Survey, conducted by the National Association of Financial Institutions (Anif) reveals a great drop in the performance of this segment which, according to Dinero magazine, constitutes the largest block of the national business sector. Such survey concludes that businessmen in Colombia are pessimistic and demotivated by the uncertainty regarding the direction of the country and the policies that will affect the future of their businesses.

Below are some recent court rulings and government policies that, far from favoring the creation and continuation of business in Colombia, have discouraged it.

In labor matters, two recent rulings (C-005 of 2017 and C-636 of 2016) of the Constitutional Court have generated uncertainty for entrepreneurs when hiring. In the first one, the maternity leave was extended to parents, not being able to terminate their employment contracts without the authorization of the Ministry of Labor if their wife or spouse was pregnant or in maternity period, and in the second one it was established that the fact of arriving to work under the influence of alcohol or psychoactive drugs did not give rise to a just cause for dismissal if it did not prevent the performance of the work. What these ultra-protectionist rulings end up generating is a decrease in the direct hiring of personnel under labor contracts.

In corporate matters, Bill 070 of 2015 was "sunk" in Congress, which would reform the corporate regime in order to extend to the companies of the Code of Commerce (S.A.'s, S.C.A.'s, Ltda's, etc.) certain benefits of the S.A.S. and would simplify the legal regime for sole proprietorships. The absence of this regulation means that the corporate regime is still obsolescent, and (except for the S.A.S. and the companies of Law 1014/2006) companies must still create companies by public deed, with a defined duration date, with a specific corporate purpose, among other meaningless specificities.

In tax matters, the recent approval of the tax reform by means of Law 1819 of 2016 did nothing to stimulate the creation of companies or the generation of employment. On the contrary, by eliminating the small business tax regime (law 1429/2010), and by indicating that companies under the Zomac regime must carry out 100% of their activities in the former conflict zones, it discouraged the creation and formalization of small businesses. With respect to large industry (whose effective tax rate can amount to 75% of profits), this reform, far from improving competitiveness, created a situation in which it is more convenient to serve the domestic market by producing outside the country.

Given that the company is the engine of the economy, and the economy is the lifeblood of the country, there should be a comprehensive reform of the legal-business regime in Colombia (labor, exchange, corporate and tax) in order to motivate the creation and maintenance of companies in the country.