November 4, 2014

Austrian Economics and Entrepreneurial Studies

Austrian Economics has been a long standing view that didn't get much attention until the 1970's. Israel Kirzner, F. A. Hayek, and Ludwig von Mises are all huge contributors to the Austrian school of thought for Economics. The question I wanted to answer was what does Austrian Economics have to do with Entrepreneurship? We live in such a capitalistic society and only understand economics from the Keynesian view, I want to explore how Austrians view our capitalistic/entrepreneurial society.

I found an article explaining how Mises believed entrepreneurship defies any rules and systematization. The article discuses how this thought is used to discredit entrepreneurship and show how Austrians cannot benefit from it. I am not sure I agree with that idea. I think Mises is trying to say more about the market and how it is too structured. You cannot predict what the market will do simply by studying the model and if we do, then we do not allow room for new ideas and innovation, i.e. entrepreneurship. In a perfect, equilibrium market, an entrepreneur would not exist. If things change then the equilibrium is out of sync.

Kirzner even based some of his ideas on that of Mises'. The article shows a barrier between scholars of entrepreneurship and Austrian Economics. I personally do not think that was the intention by Mises or by Kirzner. There may not be enough collaboration between the two fields of study but I definitely think it is interesting people use the works of Mises and Kirzner to say Austrians discourage entrepreneurship. I think it is the exact opposite.

Finally after reviewing other articles I have found support for my view. I truly believe the Austrian School of thought is not that entrepreneurship is bad but that it is a way to create different markets and profits. I think Kirzner would have supported entrepreneurship as a discovery process and not as a barrier causing markets to fail. Market failure seems like neoclassical thinking and I would venture to say Kirzner, Hayek, and Mises would have been more inclined to explore market success.


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