Organizations and Markets

The Capitalist and The Entrepreneur

Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Auburn, Ala.: Ludwig von Mises Institute, 2010).

The book should be out in May 2010. Scroll down for the Table of Contents.

Update: Here is a Scribd link to the full text.

Draft dust-jacket blurb and endorsements

Entrepreneurship is a hot topic in academic, managerial, and policy circles. Yet researchers and policymakers tend to define entrepreneurship narrowly as business startups, and entrepreneurs as young dreamers with particular personality traits, not realizing that entrepreneurship is a far broader, pervasive, and more important phenomenon in the market and in the free society. In The Capitalist and the Entrepreneur, Peter G. Klein rehabilitates and expands the classical concept of the entrepreneur as a judgmental decision-maker, linking the capitalist-investor and the entrepreneur-promoter. Building on foundations laid by the Austrian school of economics, Frank Knight’s theory of uncertainty, and the modern economics of organization, Klein shows how an entrepreneurial perspective sheds light on firm size and structure, corporate governance and control, mergers and acquisitions, organizational design, and a host of managerial and financial problems. He also offers a reinterpretation of the modern Austrian school and a critique of the “opportunity-discovery” perspective in modern entrepreneurship studies. In a series of shorter essays he tackles the economics of the internet, network theory, the socialism of the intellectual class, the financial crisis, and the contributions of Carl Menger, F. A. Hayek, and Oliver Williamson.

“Peter G Klein has emerged as a thought leader in modern Austrian economics. In this collection, he presents his unique approach which stands firmly in the Menger-Mises causal-realist tradition, while also strongly drawing on the work of Oliver Williamson and other new institutionalist economists.”

— Nicolai J. Foss, Copenhagen Business School and
Norwegian School of Economics and Business Administration

“Mainstream economics has utterly failed to come to grips with the challenge of integrating the capitalist-entrepreneur into its general market model. But that may be about to change. This superb book by Peter Klein forces the issue. It is simply too logical and well reasoned for the profession to ignore. The storied entrepreneur is about to have a new chapter written in its intellectual history.”

— Henry G. Manne, George Mason University School of Law (Emeritus)

“It is clear that Professor Klein thinks social science is both feasible and worth the effort—worth his scholarly effort and worth our efforts as researchers and teachers. The book will prove useful to both advanced scholars and aspiring ones irrespective of their orthodoxy or heterodoxy. . . . Klein shows that within the community of scholarship the validity of one theoretical view does not depend upon the alienation of other viewpoints. The emphasis of the book is on major issues that are intrinsically important and recurrent. Within this book, the simple is stated simply and the difficult is stated clearly. Professor Klein offers the reader much insight that is expressed with admirable clarity and often with engaging wit. The book is bound to make an impact, especially among young scholars, in the evolving science of organization.”

— Joseph T. Mahoney, University of Illinois at Urbana-Champaign

“Peter Klein’s The Capitalist and the Entrepreneur is the work of sustained effort by a careful and creative scholar to tease out the full implications of the Austrian school of economics for understanding organizations and markets. Many of the essays are brilliant expositions of the ideas and contributions of his predecessors in the Austrian School, while others represent creative exercises in synthesis between the Austrian economists and others, such as Klein’s teacher Oliver Williamson. And still others are bold applications of Klein’s Austrian school perspective to explain real-world behavior by entrepreneurs and firms. The book is essential reading for not only those who identify with the Austrian school of economics, but all scholars who work in the fields of entrepreneurship, strategic management, and organizational theory.”

— Peter J. Boettke, George Mason University

“Peter Klein is an intellectual entrepreneur writing about entrepreneurship from an Austrian perspective. This perspective sees the creation of value inherent in novel combinations of resources and perspectives. By combining his expertise in the new-institutional economics of the firm with his insights from the economics of the Austrians, and of Knight, he has given the reader a fresh, immensely revealing perspective. These essays are informative and highly accessible and will be of interest to anyone curious about the role, consequences and essential nature of entrepreneurship.”

— Peter Lewin, University of Texas at Dallas

About the author: Peter G. Klein is an Associate Professor in the Division of Applied Social Sciences at the University of Missouri, Adjunct Professor at the Norwegian School of Economics and Business Administration, and Senior Scholar of the Ludwig von Mises Institute. His research focuses on the boundaries and internal organization of the firm, with applications to diversification, innovation, entrepreneurship, and financial institutions. He is author or editor of four books and author of over fifty scholarly articles. Klein holds a Ph.D. in economics from the University of California, Berkeley and a B.A. from the University of North Carolina, Chapel Hill. He blogs at organizationsandmarkets.com.

Table of contents

Foreword by Doug French

Introduction

1 Economic Calculation and the Limits of Organization
The Textbook Theory of the Firm
Coase and Transaction Costs
Economic Calculation and the Limits to Firm Size
Alternative Austrian approaches
Conclusion

2 Entrepreneurship and Corporate Governance
Limits of the Standard Approach to the Firm
Two Alternative Perspectives
The Contractual Approach
Building Blocks of an Austrian Theory of the Firm
Capital Markets
Toward an Austrian Theory of Corporate Governance
Conclusions

3 Do Entrepreneurs Make Predictable Mistakes?
Entrepreneurship, Profit, and Loss
Mergers, Sell-offs, and Efficiency: Theory and Evidence
Are Divestitures Predictable? Evidence from a Duration Study
Conclusions

4 The Entrepreneurial Organization of Heterogeneous Capital
Entrepreneurship, Judgment, and Asset Ownership
Capital Theory and the Theory of the Firm
The Attributes Approach to Capital Heterogeneity
Organizing Heterogeneous Capital
Concluding Discussion

5 Opportunity Discovery and Entrepreneurial Action
Entrepreneurship: Occupational, Structural, and Functional Perspectives
Entrepreneurship as Opportunity Identification
Entrepreneurial Action, Heterogeneous Capital, and Economic Organization
Applications of Entrepreneurial Action
Summary and Conclusions

6 Risk, Uncertainty, and Economic Organization
Knight, Mises, and Mises on probability
Uncertainty and the Entrepreneur
Conclusion

7 Price Theory and Austrian Economics
Central Themes of Austrian Economics Before 1974
Equilibrium in Austrian Price Theory
Knowledge, Expectations, and the Convergence to Equilibrium
A New Way Forward for Austrian Economics: Developing Austrian Price Theory

8 Commentary
A Government Did Invent the Internet, But the Market Made it Glorious
B Networks, Social Production, and Private Property
C Why Intellectuals Still Support Socialism
D Management Theory and the Business Cycle
E Menger the Revolutionary
F Hayek the Innovator
G Williamson and the Austrians