Thanks chloe. I’m glad I’m not the only one for whom conceiving it in that way makes sense.
I gave chapter 2 a read today. Really fascinating stuff. I like how he describes the Austrian theory of the firm, and it never occured to me to treat the overall firm as an investment the returns of which must be maximised for the owner. Is this incorporated into older Austrian works like MES, or is it an newer refinement of Austrian theory?
Glad you like it too! I think the firm-as-investment conception is expressed in a very general form in Human Action, chapter 15, section 10.
I consider them more as ‘roles’, rather than defined people.
A person starting a small business (lets say, a corner dairy), which they then work in, can combine the roles of entrepreneur (taking risks to predict and meet the demands of consumers), capitalist (putting their own money into it) and labour (they work in their own shop).
Trulib:
Good point.
As I understand it, we will end up defining entrepreneur and capitalist by emphasizing a given aspect(s) of action while de-emphasizing other aspects.
E.g., entrepreneur means action w/r/t uncertainty or the future = ends. Capitalist means action w/r/t capital employed = means.
I would argue that not only can these functions be embodied in the same person, as Grayson suggests, but that these functions are embodied in each and every action. The terms refer to aspects of action.
As a related example, I disagree with Mises’s notion, or at least implication, that a genius does something categorically different from any other actor. A genius may do something now, that almost everyone doesn’t understand until later. Or, a genius may do something now that others find impossible to do. But he does nothing categorically different than other actors. The content of his action is different, that is all.
In the theory of action—at least the pure, praxeological theory of action—entrepreneurs and capitalists do not do anything categorically different from one another. We emphasize various aspects of action as entrepreneurial (directed toward the future) and capitalistic (employing means).
Adam
Adam, I agree completely. And I would add that the term laborer refers to another aspect of action. Laborer means action w/r/t human energy = means. (If the human body is considered capital, does this make the laborer into a special case of capitalist?)
Trulib:
Here is a relevant passage from Kirzner, written when, as I understand it, he was under the direct influence of Mises. I think this represents a view which Kirzner himself partially rejected some thirty years later, but the point is that in this passage we can glimpse again Mises’s conception of a general science of human action as contrasted to a science of the ‘economic,’ ‘catallactic,’ or ‘market exchange’ aspects of action:
"Economic theory has traditionally dealt with the phenomena
of the market, prices, production, and monetary calculation. In
these spheres of human activity, theorists have developed constructions
that help to explain the regularities these phenomena evince
and to bring into clear focus the tendencies for change in these
phenomena consequent upon given autonomous changes in the
data. Writers on economics have striven to present precise definitions
of the scope of this discipline. From the point of view
of praxeology, the earlier attempts suffered from their tendency
to seek for the defining criteria in the nature of the specific affairs
with which market phenomena are concerned. The consequence
of these searches was the series of formulations examined
in the earlier chapters of this book. The subject matter of economics
came to be connected with the material things that are the
objects of traffic in the market; it came to be linked peculiarly
with the use of money in market transactions or with the specific
social relationships that characterize the market system. Where
writers came closest to the recognition that these criteria were
only accidental characteristics of the affairs upon which economic
analysis could be brought to bear, where they were able to glimpse
the congenerousness of the specifically economic type of analysis
with the underlying actions of men, they were unable to follow
this clue to the conclusion to which it pointed. Precisely because
those features in action that made it susceptible of economic analysis
seemed common to all human activities, these writers were
driven back to look for some other defining characteristic. And
this meant again the search for some arbitrary quality to justify
selecting the particular slice of pie that made up economic theory;
but it meant in addition the relegation yet further into the background
of the true recipe of that larger pie from which their
conception of economics was being arbitrarily hacked."
(Kirzner, The Economic Point of View, p.182-183)
Here, Kirzner—in my opinion, virtually writing on behalf of Mises—expresses that writers in economics were repelled from considering their science a general one encompassing all forms of human action (not merely a science of the market-related forms of action), for the very reason that such a science seemed to them too general.
I think probably this situation still exists today, and Austrian theorists are still trying to come to terms with it.
“If the human body is considered capital, does this make the laborer into a special case of capitalist?”
I think that as the science of human action becomes more general, the terms that had defined meanings in the context of a science of only the market-related aspects of human action begin to lose their meaning. In the most general theory of human action, we would not speak of capitalist and laborer any more so than we would speak of teacher and student. The more general the science, the less it would refer to specific social roles.
That is my understanding.
This brings up a question to me, and if anyone know’s where I can find an answer (or at least a refutation) I would be obliged if you would share it but… I have heard the argument that X buys a cow cuz he finds the cow more valuable than his money. Im just wondering, why is it “more” valuable, and not “just as” valuable?
How would ‘just as valuable’ be conceivably true? The mere fact that he prefers to give up the money to the cow, means that he prefers the cow to the money, i.e. ‘more’ and ‘less’.
What I am saying is, perhaps he doesnt spend the money on the cow because he prefers the cow over the money. He sees the value of the cow and the money as the same value, hence why he is willing to spend on it. Its not the cow that is his object necessarily, as it is the cow FOR the price that is what he desires. Assuming a limited income (as most average people have), he would buy less of a cow, rather than adjust his values and pay more for it.
Kind of a noob, so… lol forgive me