Kirzner, Entrepreneurship, the ERE

From: A
Sent: Monday, October 08, 2018 11:55 AM
To: Walter Block <wblock@loyno.edu>
Subject: Kirzner and Business Cycle

Dear Dr. Block,

I have a slight objection to Kirzner’s entrepreneurship theory and wanted to hear what you think. Kirzner says entrepreneurs bring the market closer to equilibrium, rebuking Schumpeter, but is this always necessarily true? Suppose a newly invented machine created a surplus of a given good. Or suppose a new good is introduced and demand becomes so high that the entrepreneur miscalculates and creates a surplus. From how I see it, Kirzner’s theory doesn’t consider long run effects in this regard. So perhaps the proper theory would be a combination of Schumpeter’s and Kirzner’s theory, while considering long run effects. Let me know what you think.

By the way, is New Orleans in the path of the hurricane? According to predictions, the hurricane eye will come right through Tallahassee where I live. There is a bright side to a potential power outage. I have plenty of Mises books, both from the used, new and free section to read, over 50 at this point that I haven’t started. Best Regards, A

Dear A:

I agree with Israel on this. He’s talking about successful, profit-making, entrepreneurship. Yes, firms that lose money will destabilize us move us away from equilibrium, or the ERE, but the market tends to weed them out, and expand profit making enterprises. So, overall, Kirzner is right, and Schumpeter wrong.

While we’re on the subject of Israel Kirzner, I support Murray Rothbard’s criticism of him. Israel talks of the pure entrepreneur, who has no capital whatsoever, and thus cannot suffer any losses. Murray, much more reasonably, talks of the capitalist-entrepreneur, who has some skin in the game, and can thus either earn profits, or suffer losses.

Happy reading of Mises. The hurricane missed us in New Orleans.

Best regards,

Walter

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2:28 am on March 12, 2019