The germ of capitalism (Roman business through slave as the primordium of private enterprise) Part I. Above free labor

Abstract

Purpose The purpose of this paper is to expose the pattern and mechanism of Roman private enterprise as the rudimentary form of capitalistic business. Design/methodology/approach By means of historical analysis and theoretical reconstruction, the author retraces the background and foundations of business through slave as the initial stage of private enterprise. Findings A comprehensive view of public and private entrepreneurship at the end of Republic and the beginning of Empire is presented. The riddle of “unnaturally” dear slaves in Rome (as compared with free labor and slaves in other countries of antiquity) is scrutinized. It is shown that “excessively” high demand for them was largely determined by their institutional worth: thanks to dominica potestas, they appeared to be the key organizational resource for expanding private industrial business. The framework of private enterprise securing limited liability for owner and turning “business slave” into a kind of director is brought to light. Research limitations/implications The results of this research allow historians to retrace the origins of modern private enterprise to classical antiquity, while economists and managers get an opportunity to better understand its nature and organizational status of those owning and managing it. Practical implications Leaders and executives can draw from the paper an object lesson of how, remaining within the existing political system, legal regulation and economic traditions, to make a radical innovation whose true meaning and social potential are so immense and far-reaching that get evident only many centuries later. The findings and conclusions the author comes to may be used in educational courses on economics, entrepreneurship, management, business history and so on. Social implications An instructive model of conciliation of interests is scrutinized. “Directors” – those organizing and managing a business but not owning it – were, as well as workers, recruited by coercion and legal regimentation of their relations with proprietors. The polarization of their institutional roles was at the bottom of private enterprise from the very outset. The state created incentives for initiative and competent business men in subjection to well-offs to work hard, on one hand, and made their masters to use these incentives to public and their own profits. The benefits of all parties were taken into account, though, of course, not to the same degree. Thereby, a kind of social compromise embodied in a novel institution was attained to. Originality/value This paper is the first to demonstrate in relief the background and framework of Roman private enterprise as well as the functions and organizational status of its “director.”