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PUBP
Course Number:
784
Entrepreneurship, Economics and Public Policy
Abbreviated Course Title (24 characters max.):
Entrepr/Econ/Public Policy
Credit hours:
Program of Record:
3
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Catalog Credit Format 3: 3 : 0
Course Level: GF(500-600) ____
GA(700+) __X__
Maximum Enrollment: 25
Prerequisites or corequisistes:
For NEW courses, first term to be offered:
200670
Catalog Description (35 words or less) Please use catalog format and attach a copy of the syllabus for new
courses.: To show global capitalism as a process driven by entrepreneurship, students study the Austrian
school of economics, which views capitalism as a process of creative destruction, as well as other economists
who emphasize entrepreneurship and change. Focus is on industrial revolutions in Britain, Germany, Japan,
and the U.S., and on particular entrepreneurs.
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Syllabus (Draft)
PUBP784
Entrepreneurship, Economics, and Public Policy
Jack High
Commerce Hall, Room 261
George Mason University
Spring 2006
Objective. To understand global capitalism as a process driven by entrepreneurship. We will study the
Austrian school of economics, which views capitalism as a process of creative destruction, as well as other
economists who emphasize entrepreneurship and change. We will also study the history of capitalism, the socalled three industrial revolutions, in Britain, Germany, Japan, and the U.S. And we will study particular
entrepreneurs—historical figures such as Josiah Wedgewood and Sakichi Toyoda, as well as modern
entrepreneurial firms such as Starbucks and Zipcar. When we are finished with the course, we will have a
deeper understanding of the ways in which entrepreneurs and enterprises influence global capitalism.
Texts. The course will use three texts, all of which are available in paperback: Friedrich Hayek, Law,
Legislation, and Liberty, vol. 1; Joseph Schumpeter, Capitalism, Socialism, and Democracy, and Thomas K.
McCraw, Creating Modern Capitalism. In addition, we will use about half a dozen case studies of
entrepreneurs from the Harvard Business School.
Pedagogy. The course will be conducted partly as a lecture and partly as a graduate seminar. Each week will
consist of a lecture and a case discussion of entrepreneurs in a particular setting or country. The assigned
readings consist of theory, history, and case studies of entrepreneurs. Each student will write a paper for the
course. Masters students will write a summary of the readings; doctoral students will write a research paper on
a subject of their choosing. Both the summaries and the research papers should be about twenty pages in
length.
Grading. Grades will be assigned on the basis of contributions to the discussions (25%) and the quality of the
papers submitted (75%).
Office Hours. Mondays, 2 p.m. to 4 p.m., and by appointment
Schedule (subject to revision):
#
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Date
1/23/06
1/30/06
2/06/06
2/13/06
2/20/06
2/27/06
3/06/06
3/13/06
3/20/06
3/27/06
4/03/06
4/10/06
4/17/06
4/24/06
5/01/06
5/08/06
5/20/06
Subject
Spontaneous Order
Entrepreneurship
Entrepreneurship
Division of Labor
Money
Property
Property
Spring Break
Competition
Business Firms
Nation &State
Regulation
Inflation & Cycles
Economic Growth
Economic Growth
Papers due
Graduation
Readings
Hayek, Lavoie, Johnson, McCraw
Hebert, Kirzner, Schumpeter, Koehn
Mises, Baumol, Gunning, Botticelli
Smith, Ricardo, Mises, Khanna, Wadwhani
Smith, Menger, Mises, Moss
Mises, Hayek, Demsetz
Demsetz, Benson, Smith
Hayek, Kirzner, High
Knight, Alchian, Langlois, Chandler
Mises, Oppenheimer, Benson, Frear
Stigler, Kolko, High, Ikeda
Mises, Fetter, Hayek, White, Garrison
Schumpeter, Maddison, Holcombe, Bernstein
Baumol, Chandler, Acs, High, Bernstein
Week 1 Complexity and Spontaneous Order.
*Hayek, Freidrich (1974,76), Law, Legislation, and Liberty, vol. I, ch. 2, “Cosmos and Taxis,” pp. 31-54;
vol.II, ch. 10?
*Lavoie, Don (1985), Rivalry and Central Planning, Ch. 3, “The Knowledge Problem”
*Johnson, Steven (2001), Emergence, Ch. 1, “The Myth of the Ant Queen,” pp. 29 – 67.
Michael D. Cohen; Robert Axelrod, (1984): “Coping with Complexity: The Adaptive Value of Changing
Utility,” The American Economic Review , Vol. 74, No. 1, (March) pp. 30-42.
*McCraw, Thomas K., Creating Modern Capitalism (Cambridge: Harvard University Press, 1997), pp. 1 – 18
(i.e., the Introduction and the Prologue to Chapter 2).
*Case Study: Roberts, Michael J., “How Venture Capitalists Evaluate Potential Venture Opportunities,”
Harvard Business School Publishing, 19 pp.
Sombart, Werner, “Capitalism,” in Edwin R.A. Seligman, ed.,, Encyclopedia of the Social Sciences (New
York: The Macmillan Co., 1937 [1930]), vol. 3, pp. 195-208.
Pryor, Frederic L., Economic Evolution and Structure: The Impact of Complexity on the US Economic System
(Cambridge: Cambridge University Press, 1996)
Week 2 Complexity, Decisions, and Entrepreneurship
*Hebert, Robert F. and Albert N. Link, The entrepreneur: mainstream views and radical critiques (New York:
Praeger, 1982), pp. ??
*Schumpeter, The Theory of Economic Development (Cambridge: Harvard University Press, 1934), pp. ??
*Kirzner, The Economic Point of View (Kansas City: Sheed and Ward, 1960), Chapter 7, part I, “Economics as
a Science of Human Action,” pp. 146-62.
*Case Study: Nancy Koehn, “Josiah Wedgewood and the First Industrial Revolution,” in Thomas K. McCraw,
ed., Creating Modern Capitalism, pp. 19-48.
Knight, Fran, Risk, Uncertainty, and Profit (
Week 3 Complexity, Decisions, and Entrepreneurship (Cont’d)
*Ludwig Mises, Human Action (New Haven: Yale University Press, 1949), pp.
*Kirzner, Israel, Competition and Entrepreneurship (Chicago, University of Chicago Press, 1973), pp.
*Baumol, William, (1990) “Éntrepreneurship: Productive, Unproductive ,and Destructive,” The Journal of
Political Economy , Vol. 98, No. 5, Part 1 (Oct..), pp. 893-921.
*Gunning, Patrick J., “The Theory of Entrepreneurship in Austrian Economics,” in William Keizer, Bert
Tieben, and Rudy van Zijp, Austrian Economics in Debate (London: Routledge, 1997), pp. 172 – 191.
* Case Study: Botticelli, Peter, “British Capitalism and the Three Industrial Revolutions,” in Thomas K.
McCraw, Creating Modern Capitalism, pp. 51-93.
Dobb, Maurice, “Entrepreneur,” in Edwin R.A. Seligman, ed.,, Encyclopedia of the Social Sciences (New
York: The Macmillan Co., 1937 [1930]), vol. 5, pp. 558-560.
Say, Jean Baptiste, A Treatise on Political Economy (New York: Augustus M. Kelley, 1971 [1880]), pp. ??
Tuttle, Charles A., “The Entrepreneur Function in Economic Literature,” The Journal of Political Economy,
Vol. 35, No. 4. (Aug., 1927), pp. 501-521.
Stevenson, Howard, “A Prespective on Entrepreneurship,” Harvard Business School Publishing (August 1988),
13pp.
Acs, Zoltan
Audretsch, David
High, Jack
Etemad, Hamid
Week 4 The Division of Labor
*Adam Smith, Wealth of Nations (Chicago: University of Chicago Press, 1976 [1776]), Chapters I & II, “Of
the Division of Labour,” pp. 7-20.
*Ricardo, David, Principles of Political Economy and Taxation (Homewood, Ill.: Richard D. Irwin, 1963
[1817]), pp. ??
*Mises, Ludwig, Human Action (New Haven: Yale University Press, 1949), pp. 143-170.
* Case Study: Wadwhani, Daniel, “Jerry Rao: Diaspora and Entrepreneurship in the Global Economy,”
Harvard Business School Press, 2004, 23 pp.
*Tarun Khanna, “Diasporas: Causes and Effects,” Harvard Business School Press, 2003, 15 pp.
Week 5 Money &Monetary Calculation
*Adam Smith, Wealth of Nations (Chicago: University of Chicago Press, 1976 [1776]), Chapter IV, “Of the
Origin and Use of Money,” pp. 26-33.
*Carl Menger, “On the Origin of Money, Economic Journal, . 2, No. 6. (Jun., 1892), pp. 239-255.
*Erich Roll, “Menger on Money,” Economica, New Series, Vol. 3, No. 12. (Nov., 1936), pp. 455-460.
*Mises, Ludwig, The Theory of Money and Credit, (New Haven: Yale University Press, 1953 [1912], chapters
1 “The Functions of Money,” and 2, “On the Measurement of Value,” pp. 29-49.
*Mises, Ludwig, Socialism, pp.
* Case Study: Moss, David, “Deutsche Bank,” in Thomas K. McCraw, Creating Modern Capitalism, pp. 227263, or
Hicks, John. R., W. Weber Carl Menger and the Austrian School of Economics (Oxford: Oxford University
Press, 1973).
Caldwell, Bruce J. , Carl Menger and His Legacy in Economics (Durham, N.C., Duke University Press, 1990)
Alter, Max, Carl Menger and the Origins of Austrian Economics (Boulder: Westview Press, 1990).
Polanyi, Karl, The Great Transformation (Boston: The Beacon Press, 1957 [1944]
Weeks 6 Property Rights
*Mises, Ludwig (1932 [1922]), Socialism, Part I, ch. 1, “Ownership,” pp. 37-55.
*Hayek, Friedrich (1960), The Constitution of Liberty, Ch. 11, “The Origins of the Rule of Law.”
*Demsetz, Harold (1967): “Toward a Theory of Property Rights” The American Economic Review, Vol. 57,
No. 2, Papers and Proceedings of the Seventy-ninth Annual Meeting of the American Economic Association
(May), pp. 347-359
*Case Study: McCraw, Thomas, K., “American Capitalism,” in Thomas K. McCraw, Creating Modern
Capitalism, pp. 303-350.
Weeks 7 Property Rights (Cont’d)
*Demsetz, Harold 2002: “Toward a Theory of Property Rights II,” Journal of Legal Studies, vol. 31, June.
*Smith, Henry E. 2002, “Exclusion Versus Governance: Two Strategies for Delineating Property Rights,”
Journal of Legal Studies, vol. 31, June
*Benson, Bruce 1989. “The Spontaneous Evolution of Commercial Law, Southern Economic Journal, Vol. 55,
No. 3. (Jan., 1989), pp. 644-661.
* Case Study: McCraw, Thomas K. and Richard Tedlow, “Henry Ford, Alfred Sloan, and the Three Phases of
Marketing,” in Thomas K. McCraw, Creating Modern Capitalism, pp. 264-300.
Benson, Bruce 2004: “The Spontaneous Evolution of Cyber Law: Norms, Property Rights, Contracting,
Dispute Resolution and Enforcement Without the State”
Kukathas, Chandran 2000: “Does Hayek Speak to Asia,” Independent Review, Vol 4, #3, Winter.
Mill, John Stuart, Principles of Political Economy (Clifton: Augustus M. Kelley, 1973 [1848]), Book II,
Chapters I & II, “Of Property,” pp. 199-237.
Week 8 Spring Break
Week 9, Entrepreneurship, Competition, Market Processes
*Mises, Ludwig, Human Action , Chapter XV, “The Market,” pp. 257-327
*Kirzner, Israel, Competition and Entrepreneurship (Chicago: University of Chicago Press, 1973),
“Competition and Monopoly,” pp. 88-101.
*Hayek, Friedrich, “The Meaning of Competition,” in Individualism and Economic Order, (Chicago:
University of Chicago Press, 1948), 92-106.
*High, Jack, “Split Personality: A Brief History of Competition in Economic Theory,” in Competition
(Northhampton: Edward Elgar, 2001), pp. xiv-xlv.
* Case Study: Koehn, Nancy, “Howard Schultz and Starbucks Coffee Company,” Harvard Business School
Publishing, 2001, 40 pp.
Baumol, William, The Free Market Innovation Machine, Chapter 4, “Oligopolistic Spending and Routing
Innovation Spending: Theory of the Engine of Unprecedented Capitalist Growth,” pp. 43-54.
Week 10, Business Enterprise and Organization
*Knight, Frank (1921), Chapter IX, “Enterprise and Profit,” Risk, Uncertainty, and Profit, (New York:
Houghton Mifflin Co), pp. 264-290.
Ronald Coase (1937), “The Theory of the Firm,” Economica, 1937
Alchian, Armen and Harold Demsetz (1972), “Production, Information Costs, and Economic Organization,”
American Economic Review, vol. 62, #5, pp. 777-795.
*Demsetz, Harold (1988), “The Theory of the Firm Revisited,” Journal of Law, Economics, & Organization,
Vol. 4, No. 1. (Spring), pp. 141-161.
Chandler, Alfred, "Organizational Capabilities and the History of the Industrial Enterprise," Journal of
Economic Perspectives 6, no. 3 (1992), pp. 79-100.
Langlois, Richard, “Chandler in a Larger Frame: Markets, Transaction Costs, and Organizational Form in
History,” Enterprise and Society, vol 5. #3, pp. 355-375.
Lamoreaux, Naomi, Dan Raff, Peter Temin (2004), “Against Whig History,” Enterprise and Society, vol 5. #3.
pp. 376-387.
Foss, Nicolai (1998) “The Theory of the Firm: an Introduction to Themes and Contributions,” unpublished ms.
*Foss, Nicolai and Peter G. Klein, “Entrepreneurship and the firm: Austrian perspectives on economic
organization,” in Foss, ed., Entrepreneurship and the firm: Austrian perspectives on economic organization
(Northampton, MA : E. Elgar, c2002).
*Witt, Ulrich (1999) “Do Entrepreneurs Need Firms,” Review of Austrian Economics, vol. 11, pp. 99-109.
Williamson, Oliver, Markets and hierarchies, analysis and antitrust implications : a study in the economics of
internal organization (New York, The Free Press,1975)
* Case Study: Hart, Myra, Michael Roberts, and Julia Stevens, “Zipcar: Refining the Business Model,”
Harvard Business School Publilshing, 20 pp.
Week 11, The Evolution and Roles of Government
*Mises, Ludwig, Nation, State, and Economy (New York: New York University Press, 1983 [1919]), pp. 1-56.
*Benson, Bruce, “An Economic Theory of the Evolution and Governance and the Emergence of the State,”
Review of Austrian Economics (1990), vol. 12, pp. 131-160.
*Franz Oppenheimer, The State (New York : Free Life Editions, 1975 [1914], Chs. ??
*Frear, Jeffrey, “German Capitalism, in Thomas K. McCraw, Creating Modern Capitalism, pp. 135-182.
Rothbard, Murray N., Power & Market: government and the economy (Menlo Park: Institute for Humane
Studies, 1976), pp. ??
Mises, Ludwig, Bureaucracy (New Haven: Yale University Press, 1944), pp. ??.
Mises, Ludwig, The free and prosperous commonwealth; an exposition of the ideas of classical liberalism
(Princeton: D. van Nostrand, 1962 [19??], pp. ??
Week 12 Regulation & Antitrust
*Stigler, George “The Theory of Economic Regulation,” The Bell Journal of Economics and Management
Science, Vol. 2, No. 1. (Spring, 1971), pp. 3-21.
*Benson, Bruce L, “Rent Seeking from a Property Rights Perspective,” Southern Economic Journal, Vol. 51,
No. 2. (Oct., 1984), pp. 388-400.
*Clayton Coppin and Jack High, The Politics of Purity (Ann Arbor: The University of Michigan Press, 1999),
Chapter 1, pp. ??
*Glaeser, Edward and Andrei Shleifer, “The Rise of the Regulatory State,” Journal of Economic Literature
(2003), pp. 401-425.
*Ikeda, Sanford, Dynamics of the mixed economy : toward a theory of interventionism (London: Rroutledge
Publishers, 1997), pp. ??
Shleifer, Andrei, “Understanding Regulation,” unpublished ms. (Sep 2004), 25 pp.
High, Jack
*Case Study: Olegario, Rowena, “IBM and the.Two Thomas J. Watsons,” in Thomas K. McCraw, Creating
Modern Capitalism, 349-395
Becker, Gary, “Toward a More General Theory of Regulation,” Journal of Law and Economics, Vol. 19, No. 2,
(Aug., 1976), pp. 245-248.
Pelzman, Sam, “Toward a More General Theory of Regulation,” Journal of Law and Economics, Vol. 19, No.
2, (Aug., 1976), pp. 211-240.
Week 14 Entrepreneurship and Economic Growth
*Schumpeter, Joseph (1934 [1911]), The Theory of Economic Development, Ch. 2
*Holcombe, Randall (1998), Entrepreneurship and Economic Growth, Quarterly Journal of Austrian
Economics, (Summer), vol. 1, #2, pp. 45-62.
*Maddison, Angus (1991), Dynamic forces in capitalist development : a long-run comparative view (Oxford:
Oxford University Press), Ch.. 1, “Interpreting Capitalist Development,” pp. 1-26.
*North, Douglass C., Understanding the Process of Economic Change (Princeton: Princeton University Press,
2005), Chapter 1, “An Outline of the Process of Economic Change,” pp. 1-8
* Case Study: Bernstein, Jeffrey R., “Japanese Capitalism” in Thomas K. McCraw, Creating Modern
Capitalism, pp. 439-489.
North, Douglass C., North, Douglass C., Understanding the Process of Economic Change (Princeton: Princeton
University Press, 2005), Chapters 2-6, pp. 13-80.
Mises, Ludwig, Human Action, Chapter IX, “The Role of Ideas,” pp. 177-194.
William J. Baumol, Entrepreneurship, Management, and the Structure of Payoffs (Cambridge: the MIT Press,
1993)
Acs, Zoltan, and David Audretsch (1987), “Innovation, Market Structure, and Firm Size,” The Review of
Economics and Statistics, vol. 69, #4 (November): 567-74.
Acs, Zoltan J. and Charles P. Kindleberger (1984), The Changing Structure of The U.S. Economy: Lessons
From The Steel Industry (New York: Greenwood Press).
Week 15 Entrepreneurship and Economic Growth (Cont’d)
*Chandler, Alfred, Franco Amatori, Takashi Hikino , eds. (1997) Big business and the wealth of nations
(Cambridge: Cambridge University Press), ch. 3
*McCraw, Thomas K. (1997) Creating modern capitalism : how entrepreneurs, companies, and countries
triumphed in three industrial revolutions (Cambridge, Mass. : Harvard University Press), Introduction.
*Baumol, William, The Free Market Innovation Machine (Princeton: Princeton University Press, 2002), pp. 116.
* Case Study: Bernstein, Jeffrey R., “Toyoda Automatic Looms and Toyoda Automobiles,” in Thomas K.
McCraw, Creating Modern Capitalism, pp. 396-438.
*High, Jack (2004), “The Roles of Entrepreneurship in Economic Growth: Toward a Theory of Total Factor
Productivity,” in Henri de Groot, P. Nijkamp, and Roger Stough, eds., Entrepreneurship and regional economic
development : a spatial perspective / (Northhampton, Mass. : Edward Elgar).
Lucas, Robert (1988), “On the Mechanics of Economic Growth,” Journal of Monetary Economics , vol. 22 #1
(July): 3-42
Romer, Paul M. (1986)., “Increasing Returns and Long-Run Growth,” The Journal of Political Economy ,Vol.
94, No. 5 (Oct..), pp. 1002-1037.
Entrepreneurship and Capital Theory
Ludwig, Lachmann, Capital and Its Structure (London: G. Bell, 1956), chs. ??
Lewin, Peter
Baetjer, Howard
Kirzner, Israel, “Roundaboutness, Economic Opportunity, and Austrian Economics,”