Cover

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Title Page, Copyright

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Contents

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pp. v-vi

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Foreword

Carl J. Schramm

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pp. vii-viii

The importance of history to understanding entrepreneurship cannot be underestimated. Through history, we see the power, the resilience, and the complexity of this phenomenon. We gain a better understanding of the changing nature of entrepreneurial 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...

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Preface

William J. Baumol

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pp. ix-xiii

For readers who are not historians, history can nevertheless make fascinating reading. 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...

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Acknowledgments

William J. Baumol, Robert J. Strom

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p. vi

The idea for this book arose in a conversation between Bob Strom and Will Baumol when the former accepted an invitation to teach a course in entrepreneurship. As we discussed material for the course and approaches that would place the topic in historical context, the idea for this book emerged. As neither of us is a historian, the need for help was clear. We were determined to seek editors who were second to none...

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Introduction

David S. Landes

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pp. 1-7

Western entrepreneurship and technological progress go back centuries and have changed the world for the better. That, at least, is one assessment of the historical record—one with which not everyone would agree. Some scholars there are who, disapproving of Western triumphalism or solicitous of Asian (mostly Chinese) pride and prowess, would date the Industrial Revolution as a late phenomenon in the history of entrepreneurship and treat it as lucky accident (or unlucky, depending on one’s sense of values). It could have happened...

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1 Entrepreneurs: From the Near Eastern Takeoffto the Roman Collapse

Michael Hudson

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pp. 8-39

A century ago economists could only speculate on the origins of enterprise. It seemed logical to assume that entrepreneurial individuals must have played a key role in archaic trade, motivated by what Adam Smith described as an instinct to “truck and barter.” When a Mycenaean Greek site from 1200 BC was excavated and storerooms with accounting records found, the building accordingly was called “a merchant’s house,” not a public administrative...

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2 Neo-Babylonian Entrepreneurs

Cornelia Wunsch

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pp. 40-61

The Neo-Babylonian empire under the so-called Chaldaean rulers1 lasted nearly a century, from 626 to 539 BC. It ended when Cyrus the Great conquered Babylonia and made it part of the much larger Achaemenid Persian empire. Its center and power base was southern Mesopotamia, from where it controlled large parts of the Near East. Babylon, its capital, was situated on one branch of the Euphrates River, circa 75 km to the south of the modern-day Iraqi capital Baghdad. From 626 BC on Nabopolassar gradually...

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3 The Scale of Entrepreneurship in Middle Eastern History:Inhibitive Roles of Islamic Institutions

Timur Kuran

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pp. 62-87

At least from the nineteenth century onward, certain observers have viewed Islam as a religion that discourages entrepreneurship by fostering fatalism, conformism, and conservatism.1 Leading Muslim reformers of the nineteenth century, including Jamal al-Din al-Afghani (1839–97), believed that this view confuses a perverted form of Islam, which counsels passive resignation to events, with authentic Islam, which holds individuals responsible...

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4 Entrepreneurs and Entrepreneurship in Medieval Europe

James M. Murray

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pp. 88-106

The first use of the word entrepreneur comes to us from the late Middle Ages when this French loan word was used to describe a battlefield commander. Only very gradually was the word’s meaning extended to the battlefield of business. Along the way it was used to describe the “director or manager of a public musical institution,” before the late-nineteenth-century economist Richard T. Ely rather sniffily wrote in his Introduction to Political Economy

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5 Tawney’s Century, 1540–1640: The Roots of Modern Capitalist Entrepreneurship

John Munro

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pp. 107-155

One of the very most remarkable features of the Industrial Revolution era is that Non-Conformists or Dissenters—those Protestants who refused to conform to the officially established Church of England—accounted for a remarkably high proportion, perhaps one half, of the scientists and inventors listed in the Royal Society (founded 1660) and the related Lunar Society of Birmingham (founded 1764).2 Even more important for the history of entrepreneurship...

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6 The Golden Age of the Dutch Republic

Oscar Gelderblom

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pp. 156-182

The Dutch Golden Age is an icon of premodern economic growth. The revolt against Philip II and his successors in the late sixteenth and early seventeenth centuries coincided with an unprecedented economic boom and cultural flowering. Between 1580 and 1650 the Dutch became the dominant player in European trade—an achievement based on their large-scale commercial agriculture and fisheries, marketoriented manufacturing, and low-cost shipping...

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7 Entrepreneurship and the Industrial Revolution in Britain

Joel Mokyr

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pp. 183-210

The “new economic history” has had little patience with entrepreneurial explanations of major economic developments. Ever since the emergence of a cliometric literature on the economic history of modern Britain in the 1970s, economic historians trained in economics have debunked the view that Britain’s late-nineteenthcentury decline could be explained in some way by social factors that led to “entrepreneurial failure.”1 In this chapter I will...

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8 Entrepreneurship in Britain, 1830–1900

Mark Casson, Andrew Godley

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pp. 211-242

This chapter examines the role of entrepreneurship in the growth of the Victorian economy over a seventy-year period, beginning at a time when the Industrial Revolution was approaching maturity (see the previous chapter) and ending when the overseas British Empire was approaching its zenith (see the following chapter). While the factory system was the major technological innovation of the Industrial Revolution (1760–1830), the introduction of railways, and the switch from sail to steam in oceangoing shipping, were the...

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9 History of Entrepreneurship: Britain, 1900–2000

Andrew Godley,Mark Casson

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pp. 243-272

In 1900 Britain was at the apogee of confidence in the justness and might of its role as world leader. Its rise to mastery through the Victorian Age had been squarely based on economic success. And this had emerged through its early dominance of world textiles markets—cotton and woolens—and then the iron and steel industry, coal, shipbuilding, and other pre-mass-production forms of mechanical engineering— the so-called staple industries. In 1900 British...

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10 History of Entrepreneurship

Ulrich Wengenroth

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pp. 273-304

The history of entrepreneurship in Germany is as tortured as the history the country inflicted on its neighbors and on itself. For much of the nineteenth and twentieth centuries, entrepreneurs in Germany were confronted by the consequences of political upheaval, shifting borders, major institutional rearrangements in the wake of regime changes, and all the limitations and temptations that went with frequent redefinitions of the rules of the game. With six...

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11 Entrepreneurship in France

Michel Hau

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pp. 305-330

For decades, there have been two schools of thought about the business development of France in the nineteenth and twentieth centuries: the pessimists’ and the optimists’. The pessimists emphasize that British GNP grew faster than the French during the nineteenth century and exceeded the French by 50 percent at the beginning of the twentieth century. The optimists focus attention on the performance of French small-scale output in the secondary sector...

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12Entrepreneurship in the Antebellum United States

Louis P. Cain

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pp. 331-366

What became the United States of America was born of entrepreneurship. When independence was gained, American disposable incomes were among the highest in the world, but, early in the colonial period, entrepreneurial failure was as likely as success (Hughes and Cain 2007, 51). Indeed, Jamestown, the first permanent colony, an entrepreneurial venture of the Virginia Company of London, became the first government bailout of a private North...

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13 Entrepreneurship in the United States, 1865–1920

Naomi R. Lamoreaux

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pp. 367-400

The half-century or so following the Civil War was a period of extraordinarily rapid economic growth in the United States. Real gross domestic product (GDP) multiplied more than seven times between 1865 and 1920, and real per capita product more than doubled. As the much higher growth rates of total compared to per capita GDP suggest, the economy expanded more by adding new inputs than it did by increasing productivity. Nevertheless, the rate of...

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14 Entrepreneurship in the United States, 1920–2000

Margaret B. W. Graham

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pp. 401-442

The special genius of the twentieth-century U.S. economy has typically been characterized as the harnessing of technology by entrepreneurs working within the large vertically integrated American corporation, at first wholly a private sector phenomenon, and then in cooperation with an increasingly interventionist federal government.1 By the 1970s no sector of the U.S. economy, whether public or private, for-profit, or not-for-profit, was unaffected...

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15 An Examination of the Supply of Financial Creditto Entrepreneurs in Colonial India

Susan Wolcott

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pp. 443-468

In 1968 William Baumol called for a renewed focus on the “determinants of the payoff to entrepreneurial activity.” Understanding the allocation of entrepreneurial talent was crucial, as “the entrepreneur is the key to the stimulation of growth.” In a 1990 paper, on a less optimistic note, he argued that an inappropriate payoff structure, one that rewards unproductive entrepreneurship, is empirically associated with very slow growth. India, particularly colonial India, is a...

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16 Chinese Entrepreneurship since Its Late Imperial Period

Wellington K. K. Chan

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pp. 469-500

Until the last decade, the image of China for most of us was that of a country full of people, underdeveloped, poor, and communistic. Indeed, for at least one century, from the late nineteenth to the late twentieth centuries, China’s share of the world’s gross product dropped precipitously, from around 8 or 9 percent to no more than 4 or 5 percent, while its population as a share of the world’s total stayed fairly constantly at approximately 20 to 24 percent. Yet...

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17 Entrepreneurship in Pre–World War II Japan: The Role and Logic of the Zaibatsu

Seiichiro Yonekura, Hiroshi Shimizu

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pp. 501-526

This chapter is the story of the path followed by an economy that came to be characterized, if not dominated, by a relatively small number of very large firms, the zaibatsu. Part of the story is the burst of growth that followed a long period of isolation, in a country suddenly opened up by the military threat of an invading force—the 1853 incursion of Admiral Perry and his fleet. This was followed by a thorough reconfiguration of the structure...

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18 “Useful Knowledge” of Entrepreneurship: Some Implications of the History

William J. Baumol and Robert J. Strom

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pp. 527-542

The term “useful knowledge” in the title of our chapter is not meant to imply that the utility of historical study of entrepreneurship is in any sense questionable. Rather, we seek to remind the reader that our orientation in this book mirrors the interest of Ben Franklin, America’s first great entrepreneur-inventor, in knowledge that has practical applications. Just as Franklin sought to promote useful knowledge that would improve the quality...

Contributors

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pp. 543-544

Index

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pp. 545-566