Foss and Klein Critique of Kirzner

28 July 2010 at 11:57 am 2 comments

| Peter Klein |

The Spring 2010 issue of the Journal of Private Enterprise contains a Kirzner symposium, including a paper by Nicolai and me, “Alertness, Action, and the Antecedents of Entrepreneurship.” We critique Kirzner’s concept of the “pure entrepreneur,” arguing that alertness is a historically contingent attribute of real-world business people — what Mises calls “promoters” — but not essential to the entrepreneurial function itself. We also suggest that Kirzner is inconsistent on the issue of antecedents, simultaneously holding that the entrepreneur-as-discoverer exists outside any particular institutional environment, and that certain public policies inhibit entrepreneurial discovery by blocking profit opportunities. Some of the material in the paper is familiar to readers of our other works, but our critique of the Kirznerian pure entrepreneur, in the context of ideal types, goes beyond previous arguments.

Oh, some of you may be more interested in the rest of the special issue, which leads with Dan Klein and Jason Briggeman’s broadside, “Israel Kirzner on Coordination and Discovery,” followed by a lengthy response from Kirzner himself. (Our paper is really an addendum.) Pete Boettke and Dan D’Amico, Steve Horwitz, Gene Callahan, Bob Murphy, and Martin Ricketts round out the Kirzner symposium.

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Entry filed under: - Klein -, Austrian Economics, Entrepreneurship, People, Public Policy / Political Economy.

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2 Comments Add your own

  • 1. John S Cook  |  28 July 2010 at 1:08 pm

    I read the Foss & Klein critique with interest. I think you are getting closer to what I now believe after some decades of thinking about the role of information in economics.

    Some ideas that underpin conventional microeconomic theory are reducible to absurdities and provide no sensible guidance to a knowledge economy or an information society.

    When ‘innovation’ is said to drive socioeconomic progress, it is simply tautological to say that an economy must be open to new ideas. If people learn by doing or through experience, the status of human capital changes in some way. Thus an economy where innovation occurs is not — by definition — in a state of ‘equilibrium’ with no inherent tendency to change.

    A system open to new learning and able to reappraise prior learning cannot be said to ‘optimise’, ‘maximise’ or ‘minimise’ in any absolute sense of choosing ‘best’ options. Hindsight allows the possibility of seeing that things might have been decided differently and done better. Decisions remain open to review, and reviews themselves can be subjected to further reviews. In the absence of these possibilities, ideas about ‘learning through experience’, ‘learning by doing’ or ‘learning from mistakes’ make no sense.

  • 2. David Hoopes  |  28 July 2010 at 3:47 pm

    I’d be interested in what those of you better versed in Mises and Hayek think about the discussion between D. Klein, Briggeman, and Kirzner. I’ve not read enough of Mises, Hayek, or Kirzner to decide whether D.Klein and Briggeman are accurately portraying Kirzner. Obviously, Kirzner thinks they get a great deal wrong.

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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).

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