THE AUSTRIAN THEORY OF ENTREPRENEURSHIP: ORIGINALITY AND PROFESSIONAL ENGAGEMENT BY ISRAEL KIRZNER

Categories: 2020 Virtual Conference

Lucas Casonato – Economics Professor at Pontifícia Universidade Católica do Paraná (PUCPR) and Faculdade de Educação Superior do Paraná (FESPPR)

Eduardo Angeli – Professor, Department of Economics, Universidade Federal do Paraná (UFPR)

A synthesis of the Kirznerian theory is presented, as well as an analysis of some of its precursors identified by Kirzner himself. It is argued that Kirznerian theory of entrepreneurship is a product of the simultaneous presence of Misesian and Hayekian contributions contrasted to Neoclassical microeconomics.

Link to paper

YouTube video

3 Responses to "THE AUSTRIAN THEORY OF ENTREPRENEURSHIP: ORIGINALITY AND PROFESSIONAL ENGAGEMENT BY ISRAEL KIRZNER"

  1. Rafael Galvão de Almeida Posted on 06/20/2020 at 5:23 pm

    The idea of the Kirznean entrepreneur is a very interesting research program, because of how intuitive and, dare I say, beautiful proposition – his main book was expertly written and the metaphor of the entrepreneur as mediator between different consumers. I skimmed through the article and I thought it does contribute to the literature by making a robust argument for the formation of the theory, and how Mises and Hayek were the main influences. This also shows how isolated Austrian economics was before the 1990s, if Kirzner managed to write his theory based only on two authors (as far as I can see).

    That being said, I wonder how exactly Kirzner tried to relate his theory to neoclassical economics. As far as I could see Vaugh’s article, Kirzner’s ” criticisms would be aligned with it, in an attempt to discuss the nature of the common points between the two approaches”. She’s not the only to affirm this, how does it work? One thing is to use neoclassical terms in an attempt to dialogue with them, like Nordhaus did with the political business cycle, and another is building a model. Nordhaus obtained only partial success, his approach of political economy is still considered not very close to the “orthodox core”.

    As far as I could see, Kirzner didn’t use models in the neoclassical tools, like formal models. And the bibliography mostly uses references written by Austrian economists, so I can’t help but to notice a bias in this assessment, that would be solved by presenting non-Austrian sources on his influence. Thus, how successful was Kirzner in dialoguing with neoclassicals? Did they consider him an equal or just someone with “interesting and respectable insights”, but in practical terms a non-economist, like Hirschman and Myrdal? However, I admit this might be issue for another article, on the influence of Kirzner outside Austrian economics.

    • Lucas Casonato Posted on 07/29/2020 at 5:22 pm

      Hi Rafael. Thank you for your considerations.

      Your interpretation is correct. The Austrian School was confined to the works of Mises and Hayek until the time of “revival” and that is why Kirzner dedicated his career to this development – Eduardo and I dealt with this specifically in another article published in Revista Econômica (Niterói).

      Kirzner’s tried to establish a dialogue with neoclassicals, despite the lack of model building in his theory. Kirzner wrote a textbook on microeconomics that resembles the conventionalones of his time. He (rarely) made use of some equations in other works. But Kirzner’s proposed dialogue with neoclassical is based on his argument that related to the possibility of including the entrepreneurial into traditional theory. In another articles (one of them to be published by Economia e Sociedade), Eduardo and I show how this approach took place.

      As the Kirznerian critique also focused on the centrality of economic equilibrium to the economic theory, it was not very succesfull in influencing traditional economics. Kirzner was mentioned in the formulation of an orthodox competitive equilibrium model as an explanation for arbitrage, but, although an important publication, it was the only one (at least to my konwledge). My opinion is that he is respected for his ideas, but the impossibility of them being applied to a model made it marginal to the mainstream. I think that your inquiry opens space for two relevant researches, about Kirzner’s real influence on non-Austrians economists and about this difference in the ways of approaching the mainstream, by models or by directing the argument.

      If you want to discuss more about these topics, you can write me, it would be really nice to discuss this with you. Best, Lucas

  2. Lucas Casonato Posted on 07/29/2020 at 5:22 pm

    Hi Rafael. Thank you for your considerations.

    Your interpretation is correct. The Austrian School was confined to the works of Mises and Hayek until the time of “revival” and that is why Kirzner dedicated his career to this development – Eduardo and I dealt with this specifically in another article published in Revista Econômica (Niterói).

    Kirzner’s tried to establish a dialogue with neoclassicals, despite the lack of model building in his theory. Kirzner wrote a textbook on microeconomics that resembles the conventionalones of his time. He (rarely) made use of some equations in other works. But Kirzner’s proposed dialogue with neoclassical is based on his argument that related to the possibility of including the entrepreneurial into traditional theory. In another articles (one of them to be published by Economia e Sociedade), Eduardo and I show how this approach took place.

    As the Kirznerian critique also focused on the centrality of economic equilibrium to the economic theory, it was not very succesfull in influencing traditional economics. Kirzner was mentioned in the formulation of an orthodox competitive equilibrium model as an explanation for arbitrage, but, although an important publication, it was the only one (at least to my konwledge). My opinion is that he is respected for his ideas, but the impossibility of them being applied to a model made it marginal to the mainstream. I think that your inquiry opens space for two relevant researches, about Kirzner’s real influence on non-Austrians economists and about this difference in the ways of approaching the mainstream, by models or by directing the argument.

    If you want to discuss more about these topics, you can write me, it would be really nice to discuss this with you. Best, Lucas

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