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David S. Landes, Joel Mokyr, and William J. Baumol (eds), The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times

Robert F. Hébert
p. 527-531
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David S. Landes, Joel Mokyr, and William J. Baumol (eds), The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times, Princeton: Princeton University Press, 2010, vi + 566 pages, ISBN 978-069114370-5

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Crédits : Princeton University Press

1“Enterprise” is both a noun and a verb, so at the outset it is not clear whether the editors of this ambitiously titled volume set out to explain the earliest successful business ventures or the originative actions of their creators. To paraphrase what one disingenuous U.S. politician said of the Patient Protection and Affordable Care Act of 2010 (informally referred to as Obamacare), one has to read this book in order to find out what’s in it. But reading this book is more enjoyable than poring over legislative gobbledygook. The editors, William Landes, Joel Mokyr and William Baumol, are accomplished scholars and prolific authors, so we expect no less than the achievement of their stated objective, which, in the words of Landes, is to “…offer interesting insights to the reader…[that] make for good reading as well as valuable knowledge” (6).

2Deep into this volume I encountered the following statement, which justifies the project that this book symbolizes. Susan Wolcott writes: “There is an emerging interest among economists in the effect of institutions that provide wide access to opportunity” (465). It is easy to infer that The Invention of Enterprise apparently was conceived and executed to stoke that interest. And stimulate it does, thanks to the able editorship of Landes, Mokyr and Baumol and the collective effort of scholars from the United States, Great Britain, Canada, France, Germany and Japan, each offering insights into the nature, origin and effectiveness of entrepreneurship across time and space.

3Eighteen substantive chapters on entrepreneurship are preceded by three chapters that set the stage. The foreword was written by Carl Schramm, economist, entrepreneur and former CEO of the Ewing Marion Kaufmann Foundation, a leading entrepreneurship advocacy group. William J. Baumol, Harold Price Professor of Entrepreneurship and Academic Director of the Berkley Center for Entrepreneurship and Innovation at New York University penned the preface. And David S. Landes, Coolidge Professor of History and professor emeritus of economics at Harvard University styled the introduction. Consistency is often a problem in books with multiple authors, but despite a natural disparity in focus and execution, taken together, these contributions evenly explore and amplify the cultural hypothesis advocated by Landes in his earlier work, The Wealth and Poverty of Nations (1999). For those unfamiliar with it, the cultural hypothesis maintains that culture and institutions play an important role in the formation and development of entrepreneurship and its effectiveness in different societies.

4Here is a brief “review of the troops”. Michael Hudson (Chapter 1) kicks things off with an underappreciated fact: entrepreneurship did not get on track historically until ancient people learned the important lesson that peaceful trade to acquire needed materials was less expensive than violent capture (war). Basing her analysis on Babylonian cuneiform tablets, Cornelia Wunsch (Chapter 2) shows that not only does entrepreneurial success depend on new technologies and equipment but also on the way relationships are established, how labor and profit are shared, and what manner of financing and product marketing and distribution emerge. Timur Kuran (Chapter 3) maintains that while Islamic nations were not hostile to entrepreneurship prior to Mohammad, the prophet’s effect on Islamic law prevented the introduction of the corporation by recognizing only flesh-and-blood persons. Islam also rejected anything not known in Arabia during Mohammad’s lifetime; and by promoting the myth of “timeless perfection,” it discouraged the development of dynamic, entrepreneurial tendencies. James Murray (Chapter 4) warns against sweeping generalizations about entrepreneurism, asserting that the relative absence or unimportance of the stand-alone entrepreneur in medieval Europe did not preclude economic growth, which sprang instead from the aristocracy and the Church. Despite the prominence of the Weber-Tawney thesis in the history of entrepreneurship, John Munro (Chapter 5) asserts that the origins of modern entrepreneurial capitalism are not found in what is known as “Tawney’s century” (1540-1640), but rather in the following one (1640-1740) that preceded the modern Industrial Revolution era. Examining the experience of the Dutch Republic’s golden age, Oscar Gelderblom (Chapter 6) emphasizes the importance of institutions over particular skills, and cautions against attributing economic stagnation in Holland after its golden age to entrepreneurial failure.

5Against the backdrop of Britain’s Industrial Revolution, Joel Mokyr (Chapter 7) argues that institutions determine whether entrepreneurial efforts result in the creation of wealth or its mere distribution, noting that rent-seeking societies do not necessarily have fewer entrepreneurial types than market-oriented societies. In the first of two chapters devoted to entrepreneurship in Britain, Mark Casson and Andrew Godley (Chapter 8) emphasize judgment as the key characteristic of entrepreneurism, adding that in Victorian England the most important field for entrepreneurial judgment was in large joint-stock companies that focused on major infrastructure projects in transport, urban development and financial services. In the second chapter on Britain, Godley and Casson (Chapter 9) assert that British entrepreneurs were less culpable, and entrepreneurship in the twentieth century was less a failure, than customarily believed by reigning explanations of Britain’s decline. Ulrich Wegenroth (Chapter 10) traces the development of entrepreneurship in Germany after 1815, a period of political upheaval, shifting borders, and major institutional rearrangements caused by regime changes—all factors that served to redefine the rules of the game for entrepreneurs in a way that limited their effectiveness. France’s industrial revolution lagged that of England, delayed by the French Revolution and the Napoleonic Wars that followed. Michael Hau (Chapter 11) probes the economic, cultural, religious and political obstacles to the full flowering of entrepreneurship in France during the nineteenth and twentieth centuries.

6The development of entrepreneurship in the United States commands three chapters. The first, by Louis Cain (Chapter 12), portrays the creation and development of the United States in the antebellum period as an exercise of political and economic entrepreneurship. The second, by Naomi Lamoreaux (Chapter 13) depicts the proliferation of large-scale enterprises in the post-bellum “take-off” era of the United States economy (1865-1920) as an entrepreneurial response that encouraged structural change, which in turn affected innovation and entrepreneurism, even in the face of increased government regulation. The third, by Margaret Graham (Chapter 14) analyzes the effect of increasing “corporatization” and government intervention on entrepreneurship in the United States during the last eight decades of the twentieth century.

7Turning toward the East, Susan Wolcott (Chapter 15) shows how the caste system in Colonial India influenced entrepreneurism. Wellington Chan (Chapter 16) finds an explanation for entrepreneurship in pre- and post-Mao China in that country’s institutional makeup. In the penultimate chapter, Seiichiro Yonekura and Hiroshi Shimizu (Chapter 17) explore the nature of entrepreneurship that shaped the development of Japan’s zaibatsu, its vast business conglomerates. Japanese entrepreneurs took the initiative in designing and executing the institutional reforms that reshaped the country’s infrastructure and transformed the national system from a feudal to a market economy.

8Denying any claim to professional qualifications as economic historians, William Baumol and Robert Strom (Chapter 18) nevertheless sum up the approach and content of contributions in the preceding chapters and identify specific institutions that have promoted innovative, productive entrepreneurship throughout history. In particular, they cite antitrust law, bankruptcy protection, patent and banking systems. Baumol and Strom offer little discussion of how institutions that foster productive entrepreneurship arise because they believe that, more often than not, they evolve by historical accident. Nevertheless, they claim that a study of historical accidents can yield instructive and significant insights that promote our understanding of entrepreneurship.

9Its close connection to economic growth means that entrepreneurship is almost always identified as salutary economic behavior. The writers who contributed to this volume are not guilty of such naïveté. They occasionally remind us that there is “good” entrepreneurship and “bad” entrepreneurship, i.e., productive and unproductive enterprising behavior. Innovative, but unproductive, entrepreneurship is exercised by those opportunistic persons who employ novel approaches to rent-seeking, criminal, or socially damaging activities—opportunists who, rather than expand the economic pie by creating more wealth, seek to grab a larger slice of the economic pie for themselves by redistribution of existing wealth. People who worm their way into the bribe-taking bureaucracy, or attorneys who undertake novel, potentially lucrative lawsuits, provide ready examples. Baumol and Strom find historical perspective for such behavior in earlier epochs, noting that unproductive entrepreneurship in bygone eras was a response to institutional and cultural incentives. For much of human history there was no guarantee that the individual whose efforts enlarged the size of the economic pie would gain therefrom. Indeed, history is replete with examples of the opposite, as monarchs readily expropriated the property of others. Moreover, greater social status was frequently attained by unproductive entrepreneurship because favored subjects benefited from close association with the king. These are valid points, but it is curious that the tendency of many contemporary economies, whether democratic or undemocratic, to backslide in this respect, is unremarked.

10One of my pet peeves about the study of entrepreneurship is that investigators are rarely careful about defining their subject, trusting instead on a kind of Forrest Gump definition that effectively says, “entrepreneurship is what entrepreneurship does.” This collection is no exception. The reader does not find a unified definition of entrepreneurship until the final chapter (530), where Baumol asserts that the entrepreneur is “anyone who undertakes some economic activity on her own initiative on the basis of alert observation of an opportunity to enhance her wealth, power, or prestige.” Why not present a unified definition at the beginning of this work rather than the end, especially since Baumol and Strom acknowledge that “other authors may have used … [the term] in different ways elsewhere in this book.”

11Slight literary and intellectual lapses aside this collection of essays establishes important lessons that the editors aptly bring to our attention. The first important lesson—almost self-evident from the nature of the enterprise—is that culture and institutions play an important role in the development of entrepreneurship and its effectiveness in different societies. The second, likely to be regarded as a bit more controversial, at least in some quarters, is that history is the most fertile field for the germination and collection of ideas for economic policy in the field of entrepreneurship. Speaking with perhaps more authority than justified, Baumol argues that, more than any other topic in economics, the study of entrepreneurship must rely on nonstatistical history for the bulk of its evidence. Cliometricians are forewarned!

12Having met the challenge of maintaining consistency across multiple authors, this work displays a high quality of scholarship and appealing literary style. In short, it delivers the goods. It should be a welcome addition to the personal libraries of economists, historians and informed general readers everywhere.

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Robert F. Hébert, « David S. Landes, Joel Mokyr, and William J. Baumol (eds), The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times »Œconomia, 2-4 | 2012, 527-531.

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Robert F. Hébert, « David S. Landes, Joel Mokyr, and William J. Baumol (eds), The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times »Œconomia [En ligne], 2-4 | 2012, mis en ligne le 01 décembre 2012, consulté le 23 avril 2021. URL : ; DOI :

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Robert F. Hébert

Emeritus Russell Foundation Professor of Entrepreneurial Studies, Auburn University, USA

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