Sparta had a great army, lots of places had great olive oil, and plenty of city-states had plebiscite democracy. So why was life in Athens so great?
[Josiah] Ober's hypothesis is that Athens's participatory institutions essentially turned the city into a knowledge-generating and knowledge-aggregating machine, and also supported the effective deployment of useful knowledge over time. Athenian institutions and culture functioned so that the right useful knowledge made it to the right people at the right time, resulting in the production of consistently better-than-average decisions. Athenian institutions and culture also functioned to provide an effective balance between innovation, on the one hand, and, on the other, learning or routinization, which brings efficiency. To overcome the problem of dispersed and latent knowledge, the Athenians used "networking and teaming." To overcome alignment problems, they built up stores of common knowledge through extensive publicity mechanisms and an emphasis on "interpresence"--frequent and large public gatherings--and "intervisibility" in public spaces, the capacity of all members of an audience to see each other as well as the speaker; and these stores of common knowledge worked particularly well to sustain systems of reward and sanction able to motivate ordinary citizens. To minimize transaction costs in areas such as trade, they standardized rules and exchanged practices and widely disseminated knowledge about them. The Athenians invested more resources than did their competitors in ensuring that their laws did not contradict each other, and in archiving and widely publishing final versions.
One particular example that the reviewer Danielle Allen (aka The Smartest Classicist I Know) examines is a ship-building competition authorized by the citizens of Athens: not only did public competitions like these encourage innovation in building, but since they were publicly judged, they helped disseminate expert knowledge throughout the populace, as the people learned what made one ship better than another.
Allen also looks long at what lessons American democracy can learn from Athens; one big (if obvious) conclusion is that the polis is a lot more nimble than an empire or even a republic, but from the interconnected micropolitical structures of the polis, one might actually be able to sustain a the macropolitics of a democratic republic:
As Ober notes, the immediate usefulness of the Athenian model pertains not directly to nation-states that are vastly larger than the city-state of Athens, with its population of approximately 250,000, but to the wide variety of smaller scale organizations that make up the sub-units of any given nation-state. To unleash the full value of participatory democracy at the level of the nation-state, a citizenry would do best to focus on tapping participatory democracy at the local level and throughout the variety of organizational types that make up modern society. Then there would be the further question of how well each of these sub-units is connected to the rest. If participatory democratic practices on a smaller scale and in various contexts do indeed increase the knowledge resources of the citizenry of a nation-state as a whole, then the structures of representative government, too, should function better.
It's a very Athenian conclusion, that democracy is a function of knowledge (and vice versa), but I think it's a welcome one.