Archive for May, 2008

Top Business Gurus

| Peter Klein |

Did you catch the list of Top Business Gurus in Monday’s WSJ? Based on Google, Lexis-Nexis, and academic citation indexes, it puts Gary Hamel at the top, followed by Tom Friedman, Bill Gates, Malcolm Gladwell, and Howard Gardner. Our own Jeff Pfeffer checks in at #11. Click the picture below for the entire list. Hamel, Stephen Covey, Michael Porter, Clayton Christensen, and Tom Peters are obvious candidates for Guru Status, though the ranking algorithm produces some unlikely results too, such as Robert Reich and Myron Scholes.

7 May 2008 at 4:26 pm 6 comments

Attack of the Identicons

| Peter Klein |

If you troll our comments threads you may notice that each commentator is identified by a little image, what WordPress calls an Avatar. Registered WordPress users can upload custom images to serve as their Avatars. Otherwise, each commentator is now represented by an Identicon, which is not a kind of alien Transformer but a math-based image derived from a user’s IP address. Hope you like your new online self!

7 May 2008 at 9:45 am Leave a comment

Peter and Inspiration

| Randy Westgren |

Before enplaning for Vancouver, I spent a great day at the University of Missouri with Peter Klein and his (local) colleagues. I discovered that Peter and I share a common interest in the fiction of Richard Powers, a novelist whose works draw from the biological, physical, cognitive, and information sciences. Moreover, Peter acknowledged that his favorite Powers novel is The Gold Bug Variations; it’s my favorite as well. I finished my second reading on the airplane and found a passage that incites this post:

The world we know, the living, interlocked world, is a lot more complex than any market. The market is a poor simulation of of the ecosystem; market models will never more than parody the increasingly complex web of interdependent nature. (First edition, p. 411)

I agree that market models are pale abstractions compared to any ecosystem. But I have studied a great many models of ecosystems (dynamic system simulations, agent-based simulations, statistical models of species interactions, analytical models of populations) and find them to be pale abstractions of ecosystems, as well. I will propose — for refutation — that most market models I see are less interesting than ecosystem models; they are still undersocialized in the Granovetter sense. The ecological models seem to require more attention paid to the social interactions of the individuals.

Just a thought.

7 May 2008 at 12:17 am 4 comments

2008 Kauffman Data Symposium

| Peter Klein |

Next Tuesday, 13 May, is the proposal deadline for the 2008 Kauffman Symposium on Entrepreneurship and Innovation Data. I participated in the 2007 version and got a lot out of it. This year’s event takes place in Washington, DC instead of Kauffman headquarters in Kansas City.

Documents from the 2007 symposium can be reviewed at SSRN.

A personal note: While driving to last year’s symposium I found myself on Kansas City’s Volker Boulevard, named for the great philanthropist William Volker, whose support was instrumental in the rebirth of Austrian economics in the US during the 1950s and 1960s. The Volker Fund paid all or part of the salaries of Mises at NYU and Hayek at Chicago and employed Murray Rothbard as a consultant, book reviewer, and talent scout while he was writing Man, Economy, and State and America’s Great Depression. Wikipedia has some background information on the Volker Fund; you can find more in Hülsmann’s Last Knight (pp. 867-68 and passim) and Brian Doherty’s Radicals for Capitalism (pp. 181-87 and passim). In Kansas City Volker is remembered as a generous philanthropist who supported schools and hospitals, developed a program for prison reform, and was a major benefactor of the University of Kansas City (now the University of Missouri – Kansas City).

It would be nice to have a full-scale Volker biography. Anybody up to the task? Volker’s company and foundation records are housed at UMKC. Herb Cournelle wrote a short biography in 1951, Mr. Anonymous: The Story of William Volker, but I haven’t been able to locate a copy.

7 May 2008 at 12:03 am Leave a comment

From Vancouver

| Randy Westgren |

I have been hunkered down in Vancouver for several days, teaching the final module of an executive education course. One of the amusing elements of the course is that it migrates from Halifax, Nova Scotia, to Vancouver, British Columbia during the year, with intermediate stops in Calgary and Niagara Falls. Execs and instructors get to spend time in some innovative, entrepreneurial firms outside their own regions (and escape the classroom).

From the Listel Hotel on Robson Street, one can reach 29 Starbucks stores within a 2 km by 2.5 km area of downtown. There are seven Starbucks on Robson Street alone, between the 400 and 1700 blocks — a 20 minute walk. Among these are the stores at 1099 Robson and 1100 Robson; they face each other kitty-corner across Thurlow Street. One of the execs stated that this constitutes a unique phenomenon within the Starbucks chain — two stores so closely juxtaposed.

1. Has anyone seen or heard of a similar situation in another city?

2. Has someone written about this (apparent) strategy of location-packing Starbucks stores?

BTW, if you are a Starbucks-hater, there twice as many direct competitors in the same 5 square km area, including 13 Blenz Coffee outlets, which is a local competitor with international ambitions ( The best thing they do isn’t coffee; they will make you Japanese ceremonial green tea while you wait — bamboo whisk and all.

6 May 2008 at 11:20 am 6 comments

More Free Stuff: Herbert Simon and Edward Banfield

| Peter Klein |

In my list of Cowles monographs I forgot to include several classics by Herbert Simon, including his 1951 paper “A Formal Theory of the Employment Relationship,” issued by Cowles as a discussion paper in 1950. Here’s the full set of Simon materials at Cowles. Also, from a commentator over at I learn that several of Edward Banfield’s books, including The Moral Basis of a Backward Society (1958) and The Unheavenly City (1970) are available as PDFs at this site.

6 May 2008 at 9:35 am Leave a comment

A Question for the Pigou Club

| Peter Klein |

A few years ago Greg Mankiw coined the term Pigou Club, a label for those (like himself) who advocate higher Pigouvian taxes on gasoline consumption and other high-carbon-footprint activities. Personally, I don’t find the Pigouvian analysis very convincing, in this or the more general case. First, the idea of efficient Pigouvian taxes and subsidies ignores subjective value and the Hayekian knowledge problem. How can government officials possibly choose tax or subsidy amounts that compensate for the actual harm suffered by, or benefit enjoyed by, all possible third parties for all activities generating externalities? The problem is several orders of magnitude more complex than what is typically described in the the textbooks. As a mechanism design problem, it is as difficult as the general socialist calculation problem itself (and you know how I feel about that). Second, the Pigouvian approach ignores comparative institutional analysis altogether. What are the efficiency consequences of establishing, empowering, and funding a government agency to compute and implement Pigouvian taxes and subsidies? Where will the tax revenues go? How will the subsidies be financed? What are the effects of these distortions?

My preference is to treat “negative externalities” as torts, with property titles assigned by the homesteading principle rather than Coasean wealth maximization criteria. (Essentially the Rothbardian view.)

But my main beef with today’s Pigouvians is that they cherry-pick a case here and there — taxes on gasoline, primarily — without fully pursuing the implications of the analysis. If increasing gasoline taxes is efficient, why stop there? What other market failures should the state be empowered to remedy? Here’s my question, specifically:

Please name the activities you believe deserve Pigouvian subsidies. For each activity provide the efficient subsidy amount, explain how this was calculated, and say how the revenues should be raised.

I don’t recall Mankiw discussing Pigouvian subsidies on his blog. Greg, help us out!

5 May 2008 at 9:07 am 9 comments

The Sphere of Economic Calculation

| Peter Klein |

Today’s Weekend Article from the Mises Institute is “The Sphere of Economic Calculation,” an excerpt from chapter 12 of Mises’s Human Action. (Check out the super-cool graphic!) The article expands on Mises’s pathbreaking 1920 paper on the need for prices in any system that aims at a rational allocation of resources.

Mises’s theory of factor pricing and its role in cost accounting — what he calls the problem of “economic calculation” — is near and dear to my heart, having written one of my first published articles on the subject. It’s also received a bit of attention here at O&M (1, 2, 3, 4, 5).

3 May 2008 at 3:42 pm 1 comment

Are Brand Names a Modern Phenomenon?

| Peter Klein |

Not at all, says Gary Richardson, in a new NBER paper, “Brand Names Before the Industrial Revolution.” Branding has long been the target of largely uncomprehending critique from the likes of Veblen, Galbraith and sociologists such as Daniel Bell but its role in maintaining quality and reliability and securing contractual performance is now generally understood. Importantly, shows Gary (my former grad-school classmate), the use of seller-specific markers was widespread even before the Industrial Revolution and played an important role in facilitating the emergence of long-distance trade:

In medieval Europe, manufacturers sold durable goods to anonymous consumers in distant markets, this essay argues, by making products with conspicuous characteristics. Examples of these unique, observable traits included cloth of distinctive colors, fabric with unmistakable weaves, and pewter that resonated at a particular pitch. These attributes identified merchandise because consumers could observe them readily, but counterfeiters could copy them only at great cost, if at all. Conspicuous characteristics fulfilled many of the functions that patents, trademarks, and brand names do today. The words that referred to products with conspicuous characteristics served as brand names in the Middle Ages. Data drawn from an array of industries corroborates this conjecture. The abundance of evidence suggests that conspicuous characteristics played a key role in the expansion of manufacturing before the Industrial Revolution.

See also Gary’s EH.Net Encyclopedia entry on guilds.

3 May 2008 at 10:41 am 1 comment

Free E-Books

| Peter Klein |

The Mises Institute continues to have the best library of free e-books on economics and related subjects (new additions: Say’s Treatise on Political Economy, Mencken’s Notes on Democracy, the 1960 collection Essays in European Economic Thought, Lachmann’s Macro-economic Thinking and the Market Economy). Michael Greinecker points out that the Cowles Foundation monographs are also available online. Classics include Marschak and Radner’s Economic Theory of Teams, Markowitz’s Portfolio Selection, Arrow’s Social Choice and Individual Values, and, for those whose tastes run to such things, Debreu’s Theory of Value. Viva la Revolución Digital!

2 May 2008 at 9:19 am 2 comments

Is Management a General Skill?

| Peter Klein |

First Matthew Stewart, now Simon Blackburn — philosophers writing about management without actually knowing anything about management. Muses Blackburn:

People can be persuaded, and ordered, given incentives and penalties, suppressed and killed, but not managed. Human affairs can be administered, but administration is not management. One administers to people and their needs. One tries to manage them by ignoring whichever of their needs is inconvenient and by treating them as a mere means to your own ends. But, mirabile dictu, people treated like that become irritable and subversive and quite quickly unmanageable.

Daniel Davies tries valiantly to deconstruct this passage and concludes, rightly I think, that Blackburn hasn’t the slightest idea what he’s talking about. I find Davies’s own definition of “management” too narrow, focusing on routine administration and small-group leadership but excluding the activities of the general manager, but I think he gets Blackburn right. Philosophers, please stick to examining thyselves!

1 May 2008 at 9:14 am 4 comments

Newer Posts


Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts


Former Guests | posts


Recent Posts



Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).