There are two recent Entrepreneurship related posts on the Mises blog; last night a post congratulating Professors Klein and Koss for their winning paper in the Journal of Private Enterprise,
the other from today’s Mises Daily recommending Huerta de Soto’s Socialism, Economic Calculation, and Entrepreneurship.
The Huerta de Soto book ‘presents an application of Israel M. Kirzner’s theory of entrepreneurship to the theory of the impossibility of socialism’; while the the Klein & Koss paper puts forth several critiques against Kirzner’s concept of the entrepreneur.
I’m hoping that some of the community members might have some insights to share regarding these two stances. In your opinion, are the Klein/Koss critiques of Kirzner valid, and if so, does Huerta de Soto’s applications of Kirzner to socialism suffer as a result?
twas hoping someone from the community was already familiar with these topics and had some insights to share.
I just recently got ahold of Kirzer’s Hobart Paper No. 133 (How markets work: disequilibrium, entrepreneurship, and discovery) and the DeSoto book. Hopefully I’ll time to work them and the Klein paper into to my schedule by the end of the weekend.
One initial question, having only been briefly exposed to the material, is regarding Klein/Koss’s criticism of “Kirzner’s denial that the entrepreneur must own capital.” If Klein/Koss are correct, how can the very first capital formation occur? (I’m thinking along lines similar to Mises regression theorem that shows how money must first arise from a commodity with pre-existing value.)
To me it seems that a discovery process must occur prior to even the first capital formation. For instance, take a model of primitive Crusoe who only knows how to obtain food with his personal energy. (picking fruit, physical altercations with animals, etc) Through a discovery process he eventually finds that using a blunt object, say a rock, greatly enhances his ability to obtain food. (easier to crack open coconuts, easier to knock out / kill animal pray, etc) Further discovery processes would lead to the crafting and shaping of the rock to form a wide variety of tools. (knives, spearheads, etc)…
Any thoughts? I’ll report back once I’ve had a chance to digest the material.
I wish I could comment more exhaustive, but I’m not familiar with De Soto’s, so I can’t comment on that.
Let me say this. I agree with Klein’s criticisms, i.e. that Kirzner’s theory of entrepreneurship doesn’t grasp the whole essence of entrepreneurship. I had a personal conversation with him on Mises U, and as far as I got him, he says that Kirzner isn’t necessarily wrong - there is such a thing as ‘alertness’; it’s called arbitrage - but that it’s not the essence of entrepreneurship. The essence is action in uncertainty.
That being said; there is no (fundamental) concept between endorsing a critique of Kirzner and a Kirznerian approach to socialism. If what Kirzner says is correct as far as it goes, it is useful as far as it goes. Again; I can’t comment more in depth and I’m not entirely sure if this comment is relevant, but this would be my take on it, given the knowledge I have.