Georgios (George) C. Bitros

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.

From riches to rags or what went wrong in Greece

The economic and social progress Greece achieved in the early post war decades decelerated after 1974 because all institutions sustaining the effi-cient operation of democracy and free markets were deliberately and gravely eroded. Under the impetus of hard core socialists provisions introduced in the 1975 constitution, economic policies extended further in the direction of unfettered statism, thus destroying the international competitiveness of the Greek economy. Some researchers have attributed the economic decline of Greece to its entry into the EU. I look into these allegations and find that they have little or no basis on the available evidence.

Investment, Replacement and Scrapping in a Vintage Capital Model With Embodied Technological Change

This paper analyzes and compares two alternative policies of determining the service life and replacement demand for vintage equipment under embodied technological change. The policies are the infinite-horizon replacement and the transitory replacement ending with scrapping. The corresponding vintage capital models are formulated in the dynamic optimization framework. These two approaches lead to different estimates of the duration of replacements and the impact of technological change on the equipment service life.

The inflation-productivity trade-off revisited

Our aim in this paper is threefold. First, to test the robustness of the relation between total factor productivity growth and inflation to the specification of the estimating model; second, to test the stability of their relationship in the short run and in the long run, and third, to investigate the direction of causality between these two variables. To accomplish the first objective, we esti-mate a generalized Box-Box cost function using data from the two-digit Standard Industrial Clas- sification of manufacturing industries in Greece during the period 1964- 1980. The results show that: a) the acceleration of inflation from 1964- 1972 to 1973-1980 reduced total factor productiv-ity growth in a way that was both statistically significant and sizeable, and b) even when the ef-fect of inflation is separated from the effects of technical change and economies of scale, the choice of functional form is most crucial. With respect to the second objective, somewhat to our surprise, we find that the inflation-productivity trade-off prevails even in the long run. And, fi-nally, regarding the third objective, it emerges that in the great majority of two-digit manufactur-ing industries the causality runs from inflation to productivity. On these grounds we conclude that for a precise estimation of the relationship under consideration it is imperative to sort out the three effects involved, do so by adopting the most general flexible functional form for the cost function, and run the appropriate stability and causality tests.

European Union Failures in Greece and Some Possible Explanations

The European Union (EU) failed repeatedly to hold Greece accountable for violations of the Treaties it signed over the past five decades. In particular, the EU not only did not express reservations in the face of these violations, but on two crucial occasions, in 1979 and again in 2000, it even rewarded Greece with concessionary decisions, which contributed significantly to its present calamities. Hence, there arises the following question: How can we explain these EU failures in the case of Greece? The objectives of this paper are twofold: First, to highlight the circumstances which prompted the EU Authorities to treat Greece as a special case, and second, to sketch briefly the rudiments of an answer to the preceding question.

The theorem of proportionality in contemporary capital theory: An assessment of its conceptual foundations

It is ascertained that the theorem of proportionality, which maintains that replacement investment is a constant proportion of the outstanding capital stock, has several fundamental shortcomings. It derives from a model founded on assumptions that are highly restrictive and unlikely to hold in reality. It is alien to the thinking of researchers in industrial organization and other neighboring fields to economics that treat the durability of capital goods as a choice variable. It ignores several thorny conceptual and methodological issues, and, perhaps most important, it may have restrained seriously the progress towards developing models based on more realistic approaches of production. However, despite its shortcomings, the theorem continues to dominate the contemporary theory of capital, most probably because of (a) its simplicity and (b) the lack of a model that might yield a better theorem in terms of standard criteria, like explanatory and predictive power, fruitfulness, etc. For this reason, attention is drawn to recent research which shows that a model centered on the heterogeneous structure of capital and the useful lives of its components is both feasible and exceedingly rich in theoretical and empirical implications.

Models for ranking European Institutions of higher learning with an application to data from Greece

Monitoring the success of colleges and universities can be useful to many interested parties and for many purposes. For example, it can assist administrations to identify the strengths and weaknesses of their institutions and take corrective actions. It can enlighten the decisions of funding authorities, as transparency and accountability in public life are becoming subjects of wide social concern. And of course it can provide prospective university students and their parents with the data they need to make informed educational decisions. In this paper we propose a flexible analytical framework for ranking institutions of higher learning and apply it to date from 19 Department of Economics, Business Administration, and European International and Economic Studies that operated in Greece in 1998. Our results suggest that the proposed model is robust with respect to several criteria. In particular, the rankings in each category remain unchanged for a wide range of the weights employed to sum the contributions of research, teaching and other activities of the faculties. The top departments retain their relative positions in their categories irrespective of whether the rating criterion is research or teaching, thus ascertaining the finding that good teaching goes hand in hand with good research. And last, but not least, it is found that market ratings of the various departments, as represented by the evaluations of graduates their employers, and other interested parties, are consistent with the rankings based on academic criteria.

Scale, Scope and Entrepreneurship

To exploit the economies of scale and scope in multi-product technologies, enterprises in advanced capitalist countries grew in the last 150 years in three directions. By substituting in the place of traditional entrepreneurs professional managers, they developed organisational capabili-ties to co-ordinate effectively activities that were widely dispersed geographically and function-ally. They promoted rapid innovation by resorting to systematic Research and Development ef- forts. And, finally, they enhanced control over their markets by introducing innovations whose application required large-scale investment. In the course of these transformations the material standards in the respective countries rose to unprecedented levels. But simultaneously they led to losses in market co-ordination be-cause these transformations increased market imperfections. As a result the economies of scale and scope appear to be negatively related to the ratio of co-ordination to innovation in the econ-omy. Hence, to the extent that policy makers strive to achieve the priorities of citizens, they are advised to allow for the implications of this relationship to the best of available information.

A Model of and Some Evidence on the Interrelatedness of Decisions Underlying the Demand for Capital Services

The objective in this paper is to investigate systematically the existence and nature of interactions among the decisions for gross investments, capital scrappage, and maintenance expenditures. For this purpose, a three-equation model is proposed and implemented econometrically, using date from the locomotives and freight cars of the Class-I railways in the United States during the period 1944-1970. The results obtained suggest that, for the assets studied, the aforementioned decisions exhibit substantial interactions that are in accord with most a priori considerations. The structural estimates of the model, for example, show that, among other things: (a) gross investment is related positively to scrappage and negatively to maintenance expenditures, depending on the particular asset considered;(b) scrappage and maintenance expenditures of both locomotives and freight cars are associated inversely, and (v) maintenance expenditures are also significantly influenced by either current or lagged gross investment.

Thinking Ahead of the Next Big Crash

The real estate bubble which burst in 2008 in the USA was not exclusively the result of “animal spirits”, “crowed madness” or “irrational exuberance”. It resulted primarily because of the specific policies that the government, the Federal Reserve Board, and the regulators pursued. Actually, on account of these policies, the surprise is not what happened. The surprise would have been if it had not happened. The reason for this assessment is that such central bank notions as “commitment” and “credibility” are pious pronouncements that do not amount to much when the push by organised interest groups comes to shove by politicians. In the face of this development, the urgent question is how to forestall the Federal Reserve Board from creating or coalescing to the creation of the next asset bubble, the crash of which may bring down the international monetary system. According to this paper, the solutions range from introducing an extended list of far-reaching institutional reforms to the monetary system in place, to upgrading the constitutional status of the Federal Reserve Board by transforming it into a fourth power of government, much like the judicial, to replacing it by a market based system of money provision and circulation. Which of these solutions is appropriate depends crucially on whether the Federal Reserve Board has control or not of either the money supply or the policy interest rate. But what is utterly inappropriate is not to do anything and wait until the next big crash.