Organizations and Markets

Kirzner on Kirzner

14 January 2009 at 11:42 pm Peter G. Klein 1 comment

| Peter Klein |

In a recent paper I wrote that much of the contemporary entrepreneurship literature on opportunity identification

misses . . . the point of Kirzner’s metaphor of entrepreneurial alertness: namely that it is only a metaphor. Kirzner’s aim is not to characterize entrepreneurship per se, but to explain the tendency for markets to clear. In the Kirznerian system, opportunities are (exogenous) arbitrage opportunities and nothing more. Entrepreneurship itself serves a purely instrumental function; it is the means by which Kirzner explains market clearing.

Some readers have challenged me on this point. In my defense, I call upon none other than Israel Kirzner, whose newest paper, “The Alert and Creative Entrepreneur: A Clarification,” appears in the February 2009 issue of Small Business Economics (working-paper version here). Kirzner seeks to clarify the nature of his classic contribution, concerned that he has been misinterpreted by friend and foe alike. Writes Kirzner: 

[M]y own work has nothing to say about the secrets of successful entrepreneurship. My work has explored, not the nature of the talents needed for entrepreneurial success, not any guidelines to be followed by would-be successful entrepreneurs, but, instead, the nature of the market process set in motion by the entrepreneurial decisions (both successful and unsuccessful ones!). . . . This paper seeks (a) to identify more carefully the sense in which my work on entrepreneurial theory does not throw light on the substantive sources of successful entrepreneurship, (b) to argue that a number of (sympathetic) reviewers of my work have somehow failed to recognize this limitation in the scope of my work (and that these scholars have therefore misunderstood certain aspects of my theoretical system), (c) to show that, despite all of the above, my understanding of the market process (as set in motion by entrepreneurial decisions) can, in a significant sense, provide a theoretical underpinning for public policy in regard to entrepreneurship.

Kirzner devotes the bulk of his attention to the contrast between Kirznerian and Schumpeterian entrerpreneurship, while my paper focuses on the differences between Kirzner and Knight. Still, I’m gratified that Kirzner appears to view today’s applied entrepreneurship literature, in relation to his own work, the same way I do.

Entry filed under: - Klein -, Austrian Economics, Entrepreneurship.