The invention of enterprise : entrepreneurship from ancient Mesopotamia to modern times

585 Pages·2012·3.31 MB·English

by  Baumol

THE INVENTION OF
ENTERPRISE
KAUFFMAN FOUNDATION SERIES ON
Innovation Entrepreneurship
and
Boulevard of Broken Dreams: Why Public Efforts to Boost
Entrepreneurship and Venture Capital Have Failed—
and What to Do About It, by Josh Lerner
THE INVENTION OF
ENTERPRISE
ENTREPRENEURSHIP
FROM ANCIENT MESOPOTAMIA
TO MODERN TIMES
Edited by
David S. Landes, Joel Mokyr, & William J. Baumol
PRINCETON UNIVERSITY PRESS • PRINCETON AND OXFORD
Copyright © 2010 by Princeton University Press
Published by Princeton University Press, 41 William Street, Princeton,
New Jersey 08540
In the United Kingdom: Princeton University Press, 3 Market Place, Woodstock,
Oxfordshire OX20 1SY
All Rights Reserved
Library of Congress Cataloging-in-Publication Data
The invention of enterprise : entrepreneurship from ancient Mesopotamia to modern times /
edited by David S. Landes, Joel Mokyr, and William J. Baumol.
p. cm. (The Kauffman Foundation series on innovation and entrepreneurship)
Includes bibliographical references and index.
ISBN 978-0-691-14370-5 (cloth : alk. paper)
1. Entrepreneurship—History. I. Landes, David S. II. Mokyr, Joel. III. Baumol,
William J.
HB701.I58 2010
338'.0409—dc22 2009034315
British Library Cataloging-in-Publication Data is available
Published in collaboration with the Ewing Marion Kauffman Foundation and
the Berkley Center for Entrepreneurial Studies, New York University
This book has been composed in Sabon
Printed on acid-free paper. b
press.princeton.edu
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
Contents
Foreword
Carl J. Schramm vii
Preface
The Entrepreneur in History
William J. Baumol ix
Acknowledgments
William J. Baumol and Robert J. Strom xv
Introduction
Global Enterprise and Industrial Performance: An Overview
David S. Landes 1
Chapter 1
Entrepreneurs: From the Near Eastern Takeoff to the
Roman Collapse
Michael Hudson 8
Chapter 2
Neo-Babylonian Entrepreneurs
Cornelia Wunsch 40
Chapter 3
The Scale of Entrepreneurship in Middle Eastern History:
Inhibitive Roles of Islamic Institutions
Timur Kuran 62
Chapter 4
Entrepreneurs and Entrepreneurship in Medieval Europe
James M. Murray 88
Chapter 5
Tawney’s Century, 1540–1640:
The Roots of Modern Capitalist Entrepreneurship
John Munro 107
Chapter 6
The Golden Age of the Dutch Republic
Oscar Gelderblom 156
Chapter 7
Entrepreneurship and the Industrial Revolution in Britain
Joel Mokyr 183
vi • contents
Chapter 8
Entrepreneurship in Britain, 1830–1900
Mark Casson and Andrew Godley 211
Chapter 9
History of Entrepreneurship: Britain, 1900–2000
Andrew Godley and Mark Casson 243
Chapter 10
History of Entrepreneurship: Germany after 1815
Ulrich Wengenroth 273
Chapter 11
Entrepreneurship in France
Michel Hau 305
Chapter 12
Entrepreneurship in the Antebellum United States
Louis P. Cain 331
Chapter 13
Entrepreneurship in the United States, 1865–1920
Naomi R. Lamoreaux 367
Chapter 14
Entrepreneurship in the United States, 1920–2000
Margaret B. W. Graham 401
Chapter 15
An Examination of the Supply of Financial Credit to
Entrepreneurs in Colonial India
Susan Wolcott 443
Chapter 16
Chinese Entrepreneurship since Its Late Imperial Period
Wellington K. K. Chan 469
Chapter 17
Entrepreneurship in Pre–World War II Japan: The Role and
Logic of the Zaibatsu
Seiichiro Yonekura and Hiroshi Shimizu 501
Chapter 18
“Useful Knowledge” of Entrepreneurship: Some Implications of the History
William J. Baumol and Robert J. Strom 527
List of Contributors 543
Index 545
Foreword
The importance of history to understanding entrepreneurship cannot be under-
estimated. Through history, we see the power, the resilience, and the complexity of
this phenomenon. We gain a better understanding of the changing nature of entre-
preneurial activity over time. We learn more about the complex web of social and
institutional influences on entrepreneurship. And we develop a broader awareness
of the impact of entrepreneurship over time—on individuals and on society as a
whole.
Historical work in this area complements the increased attention to entrepreneur-
ship among economists in recent years. Among many other topics, economists have
elucidated a great deal about firm formation, growth, and death; the institutional
influences on entrepreneurship; the demographic and personality characteristics
of entrepreneurs; and the important role of entrepreneurship in economic growth.
While economic theory and models offer a great deal of insight, history offers a dif-
ferent lens to view entrepreneurship. It allows us to understand specific examples at
a deeper level, to probe the varied nature of the activity, to understand the environ-
ments in which entrepreneurs have thrived, and, perhaps most importantly, to see
patterns and understand the evolution of innovation and entrepreneurship through
the years.
The Ewing Marion Kauffman Foundation, the world’s leading foundation in in-
creasing understanding of and encouraging entrepreneurship, has directed significant
resources in recent years toward the study of entrepreneurship among academics,
with a particular focus on economics and history. Recognizing that entrepreneurship
has long been absent from both history and economics textbooks, we initially sought
to create a place for a new discipline among academics. The work we have seen in re-
cent years has gone far beyond our early goals. Interest in the study of entrepreneur-
ship has flourished throughout the academic community, and the wealth of informa-
tion gleaned has both taught us a great deal and inspired us to learn more. At the
Kauffman Foundation, we believe that if the public is to understand the importance
of entrepreneurship to economic growth today, people will need to learn more about
the role entrepreneurship played in economic growth throughout history.
This volume, in particular, breaks new ground as the first book to trace the his-
tory of entrepreneurship throughout the world since antiquity. Spanning the ages
and covering the globe, this volume takes us from Mesopotamia and Neo-Babylon
to the present. It offers insights from the Middle East, Asia, Europe, and the United
States. The work presented in this volume testifies not only to the prevalence of en-
trepreneurial activity throughout history, but also to the changes in this activity over
time and to its role in economic change and growth more generally.
While the entrepreneurial activity described during each historical period var-
ies greatly, commonalities and themes emerge. At a detailed level, this work gives
us great insight into the variables that affect entrepreneurship. We see the varied
viii • foreword
impact of culture and religion on this important phenomenon, in some cases inspir-
ing individuals to pursue entrepreneurial dreams and in others making these dreams
nearly impossible. We gain a greater understanding of the institutions that drive
entrepreneurship, from contract law to the patent system. We understand the tension
between productive entrepreneurship that enhances the growth of the economy and
unproductive entrepreneurial activity that exploits opportunities for personal gain.
And, finally, we see the distinction between the replicative entrepreneurs who simply
create more new businesses like those they see around them and the truly innova-
tive entrepreneurs who create new products and services and change the very nature
of the market. It is this understanding that allows for the public policy lessons we
draw from history. We come to learn how to promote innovative, productive entre-
preneurship today by discovering the catalysts for and the impediments to entrepre-
neurial activity in the past.
On a broad scale, these accounts go even further: they offer us a window into
the seemingly innate impulse for innovation and entrepreneurship that cuts across
cultures and time periods. The diversity of the accounts is illuminating, but it is the
commonalities that ultimately offer us a means of understanding human nature and
the entrepreneurial impulse. We see here that people have been inspired to create, to
innovate, and to market their productive abilities since the early years of recorded
history. And we understand that it is this drive that has allowed our society to reach
its current level of sophistication and complexity.
This comprehensive consideration of entrepreneurial activity throughout re-
corded history strikes out in new directions and encourages us to move further down
this path. Each of these chapters, in fact, is an entrée into a much deeper, more
complex story of entrepreneurs in a particular time and place. Learning more about
each of these unique periods will give us a better understanding of the drivers of
entrepreneurship, the barriers that impede it, the impact it creates, and, ultimately,
human nature.
This volume also serves as an outstanding second contribution to the new Kauff-
man Foundation Series on Innovation and Entrepreneurship. A collaborative effort
between the Kauffman Foundation, the Berkley Center for Entrepreneurial Studies
at New York University, and Princeton University Press, this series of books will
explore entrepreneurship and innovation from a wide range of disciplines and ap-
proaches. As one of the earliest works in this important collection, this volume both
sets a high standard for the quality and depth of work in the series and suggests a
broad research agenda for other historians. Indeed, further research on entrepre-
neurship is not only necessary for insight into policy matters; it is this study that
allows us to understand who we are and how we have arrived at this point in time.
Carl J. Schramm
Preface
The Entrepreneur in History
Wherefore rejoice? What conquests brings he home?
What tributaries follow him to Rome. . . ?
—Julius Caesar, Act 1, Scene 1
The Central Objective of the Book
For readers who are not historians, history can nevertheless make fascinating read-
ing. For one thing, the plots are often more improbable and more daring than a
work of fiction. But entertainment is not the purpose of this book. Rather, it was
written to investigate several hypotheses that are of considerable importance for the
general welfare of society, hypotheses that, unfortunately, resist testing by standard
procedures such as statistical analysis or controlled experiment. Only history seems
to offer any promise of providing evidence for their verification or rejection.
In brief, the first hypothesis asserts that the practical utilization of inventions and
their indispensable contribution to economic growth (at the very least, the rate of
such growth and hence the level of per capita income) will be well below the levels
they might otherwise have achieved without the intervention of entrepreneurs. But
the entrepreneur’s contribution is much more than this. If entrepreneurship were just
“another factor,” far more inventions would have been born to blush unseen. That
is, without them, we would have basically nothing of the unprecedented growth
miracle of the recent centuries. The second hypothesis goes in a direction rather dif-
ferent from the first. It asserts that entrepreneurial activities are not always produc-
tive and growth enhancing. Indeed, they may sometimes sabotage growth and pros-
perity. The third hypothesis is that the direction taken by entrepreneurial activity
depends heavily, at any particular time and in any particular society, on the prevail-
ing institutional arrangements and the relative payoffs they offer to entrepreneurial
activities that promote growth and those that do not, or those that even handicap
it. The research underlying this book was undertaken out of general interest in the
subject, but also with the goal of shedding light on these three hypotheses.
The remainder of this preface will go a bit further in explaining the hypotheses
and the reasons why history is the most promising way to test them; that is, why
the more standard procedures used in empirical testing are not likely to work in
this arena.