The purpose of this paper is to question the frequently heard claims of a negative relationship between inequality and intergenerational mobility (such as the “Great Gatsby Curve”…
Abstract
Purpose
The purpose of this paper is to question the frequently heard claims of a negative relationship between inequality and intergenerational mobility (such as the “Great Gatsby Curve” by Alan Krueger) and to propose entrepreneurship as the neglected prime countervailing force against the putative advantages of the rich.
Design/methodology/approach
A critical examination of evidences marshalled to support the case for a negative relationship between inequality and mobility, in terms of the appropriateness of statistical inferences and the consistency between implications and observations. The paper adopts alternative approach of Austrian economic in emphasizing the role of entrepreneurship in generating mobility.
Findings
The putative negative relationship between inequality and mobility is not supported by evidence. The result is partly that egalitarians tend to skip close examination when they run into evidence that seems to support their preconception. It is also partly that the dominant tradition in economics, based on the model of efficient allocation of given resources, induces them to overlook entrepreneurship, the prime wealth creator and generator of mobility.
Research limitations/implications
The research outlines an argument that the rich do not have advantage in entrepreneurship because it depends not on the ownership of currently valued resources, but on the discovery and exploitation of profitable opportunities. This claim is made based on Kirznerian perspective and author’s own theory of inference and learning process. However, it would be nice to able to provide empirical evidence of this claim made in the paper.
Social implications
Many policies of redistribution, based on the belief that increase in inequality (as measured by Gini coefficient) signifies a diminution of intergenerational mobility, should be re-examined since the alleged negative relationship between inequality and intergenerational mobility turns out to be untrue. For greater intergenerational mobility, entrepreneurs should be encouraged, by allowing them to experiment freely.
Originality/value
Emphasizing the role of entrepreneurship in intergenerational mobility and the dealing with the question of whether or not the rich would have advantage in entrepreneurship is original to this paper.
Details
Keywords
The English translation of Schumpeter’s essay on entrepreneurship, written around the time when he prepared the second edition of Theorie der Wirtschaftlichen Enwicklung (1926)…
Abstract
The English translation of Schumpeter’s essay on entrepreneurship, written around the time when he prepared the second edition of Theorie der Wirtschaftlichen Enwicklung (1926), from which the English translation The Theory of Economic Development (1934) was made, contains many of the ideas found in The Theory of Economic Development and in Capitalism, Socialism and Democracy (1942). Since the essay, “Entrepreneur” (1928) is relatively short, yet contains most of the central ideas developed in his later works, the essay can be regarded as a blueprint for his life’s work. The task of evaluating the significance and the value of the translation in addressing the questions of whether or not, and the extent to which, Schumpeter had changed his ideas on entrepreneurship since the first edition of Theorie (1912), however, falls on Schumpeter scholars (e.g. Elliott, 1983; Shionoya, 1997). My comment here, instead, will be limited to Schumpeter’s concept of entrepreneurship as stated in the essay.
Past decades have witnessed significant contributions to theories of the firm, innovation and economic growth from two closely related paradigms, namely, the Capabilities School…
Abstract
Past decades have witnessed significant contributions to theories of the firm, innovation and economic growth from two closely related paradigms, namely, the Capabilities School and National Innovation Systems Approach. Unlike the neoclassical models of the firm and growth, these two paradigms place emphasis on the knowledge and learning process in understanding economic development. Despite being closer to reality in their treatment of economic issues than their neoclassical school counterpart, the two paradigms have not put human agency in the forefront of their analysis. This paper constructs a theory of national capabilities in the subjectivist perspective, which is then extended to understand firm and national capabilities and competitiveness. While this paper recognizes the influence of institutions on firms' decision making, unlike contemporary evolutionary literatures, the subjectivist perspective highlights the fact that all institutions are the coordinating effort of human actions which attempt to interpret external events or make sense out of social or economic interactions.
Austrian economics and entrepreneurial studies have both expanded greatly in the last 20 or 30 years. Unfortunately, they have developed more or less independently of each other…
Abstract
Austrian economics and entrepreneurial studies have both expanded greatly in the last 20 or 30 years. Unfortunately, they have developed more or less independently of each other. Austrian economics has enjoyed a revival since 1973 or 1974. In 1973 Israel Kirzner published his classic book, Competition and Entrepreneurship, which outlined an entrepreneurial theory of the market process. In 1974 F. A. Hayek was awarded the Nobel Memorial Prize in Economics. The same year saw the famous South Royalton conference, which is the traditional origin of the “Austrian revival.” The intellectual history of entrepreneurial studies reaches back at least as far as Richard Cantillon (1755). As an intellectual movement, however, entrepreneurial studies began about the same time as the Austrian revival. The beginnings of the entrepreneurship movement might be dated to sometime before 1978 when Babson College established its Center for Entrepreneurial Studies, the first such center in the U.S. In all this time, however, there has been limited exchange between Austrian economics and entrepreneurial studies. It is high time we expanded trade across the border between Austrian economics and entrepreneurial studies.
Sages and seers in ancient India specified dharma, artha, kama and moksha as the four ends of a moral and productive life and emphasised the attainment of a proper balance between…
Abstract
Sages and seers in ancient India specified dharma, artha, kama and moksha as the four ends of a moral and productive life and emphasised the attainment of a proper balance between the spiritual health and the material health. However, most of their intellectual energy was directed towards the attainment of moksha, the salvation from birth‐death‐rebirth cycle. Kautilya, on the other hand considered poverty as a living death and concentrated on devising economic policies to achieve salvation from poverty but without compromising with ethical values unless survival of the state was threatened. Kautilya's Arthashastra is unique in emphasising the imperative of economic growth and welfare of all. According to him, if there is no dharma, there is no society. He believed that ethical values pave the way to heaven as well as to prosperity on the earth, that is, have an intrinsic value as well as an instrumental value. He referred the reader to the Vedas and Philosophy for learning moral theory, which sheds light on the distinction between good and bad and moral and immoral actions. He extended the conceptual framework to deal with conflict of interest situations arising from the emerging capitalism. He dedicated his work to Om (symbol of spirituality, God) and Brihaspati and Sukra (political thinkers) implying, perhaps, that his goal was to integrate ethics and economics. It is argued that the level of integration between economics and ethics is significantly higher in Kautilya's Arthashastra than that in Adam Smith's Wealth of Nations or for that matter in the writings of Plato and Aristotle.
Gene Callahan and Andreas Hoffmann
In this chapter, we explore whether various true, endogenous social cycle theories share common patterns and characteristics.We examine a number of prominent social theories…
Abstract
In this chapter, we explore whether various true, endogenous social cycle theories share common patterns and characteristics.
We examine a number of prominent social theories describing cyclical patterns, and attempt to abstract an ideal type common to all of them, based on the idea of two populations disrupting each other and adjusting to the other’s disruptions.
At the core of such theories we typically find a variation of a two-population model. In these theories, cycles emerge when one of the populations seems to disrupt the other population’s plans, leading to recurring adjustments and disruptions that constitute the cycle.
Finding such commonalities in the world of theories can be useful for several reasons. For one thing, noticing that two theories share certain traits may help us understand each of them better. Furthermore, we show that agent-based modelers using modern object-oriented programming techniques can benefit from finding common patterns in theories.