Anastassios D. Karayiannis

Values and institutions as determinants of entrepreneurship in ancient Athens

This paper shows that in classical Athens, values and institutions encouraged many types of entrepreneurship. Successful entrepreneurs received social and political distinctions, and some entrepreneurial slaves gained their freedom. However, to deter extreme individualism, success in business was judged by the means used to acquire wealth, rather than simply the amount of wealth acquired. The system encouraged those entrepreneurs who were esteemed socially, to work hard, use ethical means, not to consume their wealth conspicuously but to share it with the rest of the people by undertaking public expenditures, and to abide by the laws and ordinances of the city-state.

Morality, Social Norms and the Rule of Law as Transaction Cost-Saving Devices: The Case of Ancient Athens

The importance of the institutional framework for economic development is widely accepted today and it is duly stressed in the economic literature. The protection of property rights, the enforcement of contracts and an efficient legal system are the pillars of the contemporary rule of law. However, formal institutions cannot function without being internalized by the citizens and without the strong backing of social norms. Morality and social norms are the major elements of the informal institutional structure, the social capital, which is also critical for social welfare and economic development. In this paper we will discuss both the formal and the informal institutional framework of Ancient Athens, which was a free market society with economic problems similar to contemporary market societies. Athenians developed a highly sophisticated legal framework for the protection of private property, the enforcement of contracts and the efficient resolution of disputes. Such an institutional framework functioned effectively, cultivating trust and protecting the security of transactions. This entire system however was based on social norms such as reciprocity, the value of reputation and widely accepted business ethics. Conformity to social norms as well as moral behavior was fostered by social sanction mechanisms (such as stigma) and moral education. The Athenian example is a further proof of the importance of morality and social norms as transaction cost-saving devices even in quite sophisticated legal systems. Their absence or decline leads inevitably to the need for more regulation and litigation and to a growing preference for clear-cut rules instead of discretionary standards. Athenian law was pioneering in the development of rules and institutional mechanisms suitable for the reduction of transaction costs, many of them surviving in the most complex contemporary legal systems.

The Historical Development of Hierarchical Behavior in Economic Thought

One of the basic ideas underlying the established conception of rational behavior is the unlimited substitutability of preferences. Economic agents are assumed to compare and reduce everything to a common denominator: utility. The most obvious example of such preferences can be found in standard consumer theory where complete substitutability of every good is assumed in the sense that a loss of some units of one bundle can always be compensated by gain of some units of another commodity (such preferences are sometimes called Archimedian—see Borch 1968). This conception of preferences has a long history in economic thought and forms the basis of the standard rational choice theory (Hicks and Allen 1934, Samuelson 1938, Hicks 1946, Houthakker 1950).

The Liberating Power of Entrepreneurship in Ancient Athens

Our objectives in this paper are threefold. First, we identify the nature of entrepreneurial climate in ancient Athens. Drawing on the analyses of Athenian writers we argue that, although philosophers, politicians, and generals enjoyed greater civil and social status relative to those pursuing wealth-creating activities, ancient Athenians were not negative to efforts at making “moderate” profits that were used also for promoting the well being of the city. Second, we inquire if and to what extent the city-state of Athens (mainly during the 5th century BC) had an active policy for encouraging metics (i.e. resident aliens) and slaves to assimilate into the Athenian society through success in business. And, finally, we characterise the degree to which metics and slaves were able to take advantage of the prevailing institutional set- up in order to achieve social advancement and individual liberty. Our main conclusion is that in ancient Athens there operated a system of economic and social incentives that had been deliberately designed to promote entrepreneurial activities.

Entrepreneurial morality: some indications from Greece

In countries with relatively small firms, entrepreneurial morality is determined by the influences that shape the values, the personality and the character of entrepreneurs as owners and managers of their enterprises. To shed some light on the processes involved we estimate an ordered probit model using data from 1643 enterprises, which were collected in Greece in the spring of 2006. We find that localized and generalized morality, the family and the educational environment, the level of education, the size of firms, and the moral factors that contribute to success in business, determine entrepreneurial morality in a statistically significant way. By contrast, even though we experimented with such other influences as the age of enterprises, the gender of entrepreneurs, the location of schools where they grew up, etc., none of them turned out to exert perceptible impacts.

A Review of Kuhnian and Lakatosian “Explanations” in Economics

In the last few decades the influence on economics of the ideas of T. Kuhn and I. Lakatos was considerable. The increasing use of terms like “paradigms” and “scientific research programmes” in almost every field of economics, is indicative of the influence of these two philosophers. Furthermore, the introduction of the ideas of Kuhn and Lakatos in economics gave the stimulus for work on the nature of growth of economic knowledge. The paper starts by presenting the main influence of T. Kuhn on theories concerned with the evolution of economic theory. It continues with a review of the main criticisms regarding the appropriateness and applicability of Kuhnian ideas for economics. The same approach is followed in the case of I. Lakatos. After a classification and discussion of the main findings, the paper attempts to offer an interpretation of the general impact of these two philosophers science on ideas relating to the development of economic theories.

Character, knowledge and skills in ancient Greek education: Lessons for today’s policy makers

The efforts to alleviate poverty by increasing social budgets have failed everywhere in the world and now the question is what else can be done to support those that are left behind. In this paper we search for illumination in the approaches to education that Athens and Sparta adopted in the peak of their power. Our findings indicate that both city-states confronted their challenges successfully because they managed to mold into the character of their citizens “ethos” compatible with the integrity of their institutions. On this ground, and given that “knowledge” and “skills” as engines of economic growth are in the interest of the individuals to accumulate, we conclude that an alternative policy to check the trend towards extreme individualism is to place priority on the character of citizens and pursue it through appropriate restructuring of educational curricula in the direction suggested by ancient Athens.

The Marshallian entrepreneur

Entrepreneurship is a broad topic of research, beginning with the analysis of Richard Cantillon in the mid-eighteenth century and extending into modern times with the inclusion of psychological, sociological and historical exegeses. Within such a modern approach to entrepreneurship lies Alfred Marshall’s relevant theory. His analysis begins with an examination of the fundamental entrepreneurial functions, proceeds to the establishment of an enterprise and extends to entrepreneurial motives, personal characteristics and the justification of profit as a special reward. This paper examines the Marshallian elements of entrepreneurship and presents the case that Marshall was the first economist to analytically advance an adequate entrepreneurial theory incorporating multidisciplinary factors. Also, it will be shown that he had developed ideas and arguments many of which have been recently advanced more fully theoretically and/or verified by recent empirical investigations.

Entrepreneurial Activities in a Veblenian Type Transition Economy

In this paper we apply a Veblenian analysis to the development of specific entrepreneurial opportunities in the highly adverse world of present day transition economies. First, we utilize a Veblenian understanding of the nature of the institutional changes currently underway in these economies in order to see what light this can shed upon the transition process. We then seek to identify particular entrepreneurial opportunities in the production sector of transition economies that flow from the above Veblenian analysis. Additional entrepreneurial venture possibilities in the consumption and service sectors of transition economies that arise from a Veblenian perspective are then developed. Some cautionary public policy notes are also offered.

Towards an Economic Approach to Imperfect Meritocracy

In this paper imperfect meritocracy is defined as the appointment in the public sector of unsuitable (in the sense of merit) individuals for political reasons. After discussing the possible causes for the emergence of an imperfect meritocracy framework, the paper then sets the basis for an economic analysis of typical politicians behaviour in such a framework. After deriving the demand for political appointments, the analysis verifies the intuitive insight that the number of political appointments falls when politicians are competent. Another main result is that the more votes an appointment carries through relatives and friends, the greater the demand for political appointments. Finally, it is shown that the demand for political appointments increases when taxation and the price index increase and that it falls when income increases. Copyright 1999 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research