Entrepreneurs. Guarantors of a constitutional democracy based on an ethic of individual property rights?
| DOI | https://doi.org/10.1108/JEPP-08-2019-0070 |
| Published date | 05 December 2019 |
| Pages | 53-64 |
| Date | 05 December 2019 |
| Author | Gregory Price |
| Subject Matter | Strategy,Entrepreneurship,Business climate/policy |
Entrepreneurs
Guarantors of a constitutional democracy
based on an ethic of individual property rights?
Gregory Price
Department of Economics and Finance,
University of New Orleans, New Orleans, Louisiana, USA
Abstract
Purpose –The purpose of this paper is to consider if self-employed entrepreneurs, a class of individuals who
require enforceable property rights to create new firms and ideas that could increase a society’s material
living standards, constitute an individual property rights enforcement mechanism.
Design/methodology/approach –With data from the General Social Survey, the authors estimate the
parameters of mixed-effects categorical regression specifications to measure the effect of self-employment on
confidence in the US Supreme Court, raising and donating funds for social or political activities, and on trying
to persuade others to share political views.
Findings –The findings suggest that self-employed entrepreneurs are one of the guarantors of a
constitutional democracy based on an ethic of individual property rights, and public policies that are
pro-entrepreneurship help mitigate the risk of constitutional failure, and maximize society’s material living
and ethical standards.
Research limitations/implications –The results are based on cross-sectional data, which do not account
for dynamic changes in preferences.
Practical implications –The findings suggest that self-employed entrepreneurs are a enforcement
mechanism and a guarantor of an ethic of private property rights necessary for the ongoing success and
viability of a constitutional democracy based on individual property rights.
Social implications –The findings suggest that as entrepreneurs constitute an enforcement mechanism
for individual property rights, to the extent that entrepreneurialism also cultivates individual virtue
entrepreneurs also serve as guarantors of a moral and ethical society that is based on virtue, which results in
a constitutional democracy with high material living and ethical/moral standards.
Originality/value –This paper is among the first to empirically test whether entrepreneurs are an
enforcement mechanism for individual property rights.
Keywords Entrepreneurship, Property rights, Constitutional democracy
Paper type Research paper
1. Introduction
The first fundamental theorem of welfare economics (Blaug, 2007) states that under certain
assumptions, market outcomes resulting from a competitive equilibrium is Pareto optimal in
the level of goods and services produced and consumed. The assumption of the existence of
individual private property rights is crucial to this outcome. If decentralized markets are to
work, individuals must be able to exchange claims on the right to use a factor of production
or consume a good. In the absence of a well-defined system of property rights that excludes
agents from using a good or factor for which they have not paid, individual incentives to
provide the inputs that make output possible are reduced (Amegashie, 2008; Goldsmith,
1995; Lamoreaux, 2011), which can result in a compromised material living standard as the
level of goods and services is lower than it would be if individual property rights were
enforceable and well-defined.
Empirically, individual property rights are a feature of constitutional democracies, and
appears to be a source of higher living standards to alternative political arrangements
(e.g. monarchy, socialism, communism) cross-nationally (Baumol, 2002; Stroup, 2007).
However, the extent to which constitutional democracies can maintain its relative advantage
over alternative political arrangements –its ongoing success and viability –may may
require a mechanism in the polity to enforce a commitment to the ethic of individual
Journal of Entrepreneurship and
Public Policy
Vol. 9 No. 1, 2020
pp. 53-64
© Emerald PublishingLimited
2045-2101
DOI 10.1108/JEPP-08-2019-0070
Received 20 August 2019
Revised 19 October 2019
Accepted 21 October 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2045-2101.htm
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Guarantors
of a
constitutional
democracy
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