No Industrial Revolution in Ancient Greece?

One of the oldest and hardest puzzles in economic history is the failure of Ancient Greek Eastern Mediterranean civilization to make some kind of breakthrough to more rapid development of labor-saving technology, to faster technological progress, and to an industrial revolution. There have always been three theories as to why this did not happen:

The “insufficient density” theory–not enough thinkers, not enough tinkerers, not enough ability to shape metal finely and precisely for the set of those interested in scientific progress and technological development to reach critical mass.
The “lack of a market economy” theory: those who would have sought wealth and power through entrepreneurship and enterprise in a modern market economy instead, because trade was small in volume and under the thumb of politics, went into the army or into politics. This misallocation of talent stalled human progress.
Fuzzier explanations based on the role of slavery in classical civilization and on the elective anti-affinity between the existence of slavery on the one hand and elite interest in boosting productivity on the other.

In 2002, there appeared an article in the Economist shedding light on Greek metalworking prowess and interest in astronomical models. According to the article, few corroded lumps — the last remnants of an elaborate mechanical device – were extracted by accident by a Greek sponge diver in 1900. The Antikythera mechanism, as it is now known, was an astronomical computer capable of predicting the positions of the sun and moon in the zodiac on any given date according to Yale scientist Derek Price. Price believed that the mechanism was strongly suggestive of an ancient Greek tradition of complex mechanical technology which, transmitted via the Arab world, formed the basis of European clockmaking techniques. This fits with another, smaller device that was acquired in 1983 by the Science Museum, which models the motions of the sun and moon. Dating from the sixth century AD, it provides a previously missing link between the Antikythera mechanism and later Islamic calendar computers, such as the 13th century example at the Museum of the History of Science in Oxford. That device, in turn, uses techniques described in a manuscript written by al-Biruni, an Arab astronomer, around 1000AD.

The origins of much modern technology, from railway engines to robots, can be traced back to the elaborate mechanical toys, or automata, that flourished in the 18th century. Those toys, in turn, grew out of the craft of clockmaking. And that craft, like so many other aspects of the modern world, seems to have roots that can be traced right back to ancient Greece.

Therefore the evidence chips away somewhat at first theory.

The Greek word oikonomia (οἰκονομία) designates mainly the oikos (οἶκος), meaning the home or hearth. Xenophon’s dialogue Oeconomicus is concerned with household management and agriculture. The Greeks had no precise term to designate the processes of production and exchange and no word describing or being equivalent of market-based economy.

However as famous American historian Murray Rothbard pointed out, Xenophon outlined the important concept of general equilibrium as a dynamic tendency of the economy by stating that when there are too many coppersmiths, copper becomes cheap and the smiths go bankrupt and turn to other activities, as would happen in agriculture or any other industry. He also saw clearly that an increase in the supply of a commodity causes a fall in its price. These thoughts correspond to the collective wisdom of modern market economy, chipping away on the second theory. There are other sources arguing the power of the market mentality attained in Ancient Greece.

There is no countering the third theory – not from my side at least!

Prodigy Communications rises high and falls low

Consider the case of Prodigy Communications Corporation. Prodigy was founded in 1984 as a joint venture among IBM, Sears, and CBS to offer “videotex” services, such as news, advertisements, shopping, and communication, from a PC. With the initial low penetration rates of PCs and modems in homes, however, it was not until 1989 that Prodigy services were first marketed. By that time many of the services we know today were already available, including email and, in 1994, access to the World Wide Web by pioneering sales of “dial-up” connections to the net. Indeed, when Prodigy first went online, it was praised as the network of the future.

At its height in 1994, Prodigy had 2 million subscribers and innovative services. Yet this first mover that could fairly be credited with creating primary demand for online services fell to a distant third behind AOL and CompuServe just two years later. Why did the front-running Prodigy fall from grace? The company made a series of operational and organizational mistakes from which they could not recover. For example, when customer usage of email accelerated in 1993 the company imposed a 25 cents charge for each email above the 30-email limit each month. Customer reaction was swift – complaints surfaced on Prodigy bulletin boards and 18,000 customers joined the “Cooperative Defense Committee” to protest the user fees. Prodigy responded by abruptly closing some customer accounts without explanation or prior notification. The company did not do much better in managing customer expectations of online chat rooms, banning discussions of any sex-related topic, including AIDS.

With Windows becoming the standard operating system for PCs, Prodigy focused on developing their own non-Windows compatible proprietary interface. Prodigy also suffered from the bureaucratic and political headaches of operating under two large, established corporate parents (CBS had dropped out in 1986), who were often in disagreement on strategy. This became particularly evident after AOL began their “free trial” marketing campaign that saw them send millions of diskettes to potential customers. Prodigy’s response was hampered by the continuing efforts of IBM and Sears to extricate themselves from the business, one in which they had invested some $1.2 billion by the time they sold the company to a group of investors in 1996. Internally, conflict between senior executives with large-company perspectives and younger employees driven by technology and entrepreneurship created havoc.

In the end a company that was first to see, and capitalize on, the huge opportunity that became the Internet changed hands and wound up being part of the AT&T empire. As of now, there is still a small group of former Prodigy employees in AT&T.

Source: Journal of Business Strategy, July/August, 2001.

Introducing failures

Hello, my name is Hayk and I am going to talk about failures. Why failures? What failures? Why me?

Failures because there is countless number of websites, individuals out there on the Web, at business conferences, during political rallies, and simply at any avenue where human activity takes place that talk about successes. It is normal. Success is something we all aspire in our everyday lives, in achievement of our goals. We are inspired, motivated and driven by successes of others. Our line of thinking is simple – if we find “secret formula” or get a glimpse of major factors causing success, be it personal or professional, we might then be able to imitate or adopt it to extent where our own affairs will improve and we will feel ourselves achieving our objectives and gaining higher grounds. Failures, on the other hand, are not easy to cope with, learn from, or let go. Failures are taken at their negative face value and as such are usually shun and rubbed under carpet. Many prefer to forget than to review and learn from them. Sites documenting failures are scarce, if any, biased, and full of stereotypical and prejudgmental conclusions. This blog will attempt to balance things out.

Failures I will discuss here vary in subject matter, scope and nature. Personal, business, political failures will feature here. I will draw on history, politics, economics, psychology, physiology, etc.

Well, I am no expert in failure management (I coined the term, it seems?) nor I am expert in history, economics or any other discipline I am going to talk about in this blog. What makes me qualified to talk about failures? Well, nothing, really. I am merely going to document failures in as balanced and objective way as possible. I will leave “lessons learnt” and “conclusions” to you. I am a mere scribe, if you prefer.

So let’s begin, then?