Skip to main navigation menu Skip to main content Skip to site footer
##common.pageHeaderLogo.altText##

Original Research Articles

Vol. 9 (2021): Yearly Continuous Publication

Entrepreneurship and Equilibrium

DOI
https://doi.org/10.30800/mises.2021.v9.1395
Submitted
March 10, 2021
Published
2021-07-22

Abstract

Neoclassic economic theory regards equilibrium, whether general or partial, as a crucially important foundation of the dismal science[1]. In the view of mainstream economists, the general equilibrium framework not only an investigation of the economy in terms of its perfect qualities, but also is suitable as an end or goal of action. The Austrian school, in contrast, sees equilibrium (or the evenly rotating economy - ERE) merely as a tendency for economic activities to move us in that direction, but it is never attained. Praxeological economics has thus concentrated not on equilibrium, but on the process by which the market moves toward it. Since the process of shifting resources to meet these ends cannot be achieved spontaneously, entrepreneurship plays a key role. In Mises and Rothbard’s view, entrepreneurship involves uncertainty bearing which beyond the alertness emphasized by Hayek and Kirzner; on the other hand, unlike Lachmann looks the economy as a kaleidoscope and rejects the ERE, Mises and Rothbard regard the ERE as an indispensable way to understand the economy.

 

[1] As Frank H. Hahn said “Whatever economics is used or thought about, equilibrium is a central organizing concept.” (Hahn 1984: 43). Many economists and philosophers of science consider mathematical neoclassical general equilibrium theory as one of the peak achievements of economics (Rosenberg, 1992). Tieben (2012) stated that policy-makers and theorists of all schools of economics all use some form of equilibrium theory to develop their ideas and support their main theoretical and political claims. Lawson (2005) indicated that the equilibrium concept is a major cause of controversy between different schools of economic thought. A.W. Bob Coats even deems it the case that “economics has been dominated throughout its history by a single paradigm – the theory of economic equilibrium via the market mechanism.” (Coats 1969: 292).

References

  1. Anderson, William, Walter E. Block, Thomas J. DiLorenzo, Ilana Mercer, Leon Snyman and Christopher Westley. 2001. “The Microsoft Corporation in Collision with Antitrust Law.” The Journal of Social, Political and Economic Studies 26, no.1: 287-302.
  2. Armentano, Dominick T. 1972. The Myths of Antitrust, New Rochelle, N.Y.: Arlington House.
  3. Armentano, Dominick T. 1982. Antitrust and Monopoly: Anatomy of a Policy Failure, New York: Wiley.
  4. Armentano, Dominick T. 1989. “Antitrust Reform: Predatory Practices and the Competitive Process.” Review of Austrian Economics 3:61-74.
  5. Armentano, Dominick T. 1999. Antitrust: The Case for Repeal. Revised 2nd ed., Auburn AL: Mises Institute
  6. Armstrong, Don. 1982. Competition vs. Monopoly. Vancouver: The Fraser Institute.
  7. Arrow, Kenneth J. and Gerard Debreu. 1954. “Existence of an Equilibrium for a Competitive Economy.” Econometrica 22(3): 265-290
  8. Barnett, William II, Walter E. Block and Michael Saliba. 2007. “Predatory pricing.” Corporate Ownership & Control 4(4), Continued – 3: 401-406.
  9. Barnett, William, Walter E. Block and Michael Saliba. 2005. "Perfect Competition: A Case of ‘Market-Failure’” Corporate Ownership & Control 2 (4): 70-75.
  10. Block, Walter and William Barnett. 2009. “Monopsony Theory.” American Review of Political Economy. 7(1/2): 67-109.
  11. Block, Walter E. 1977. "Austrian Monopoly Theory -- a Critique." The Journal of Libertarian Studies. I (4): 271-279.
  12. Block, Walter E. 1982. Amending the Combines Investigation Act, Vancouver: The Fraser Institute.
  13. Block, Walter E. 1994. "Total Repeal of Anti-trust Legislation: A Critique of Bork, Brozen and Posner.” Review of Austrian Economics 8(1): 35-70.
  14. Boettke, Peter J., Steven Horwitz and David L. Prychitko. 1986. “Beyond equilibrium economics: reflections on the uniqueness of the Austrian tradition.” Market Process, 4(2):6-25.
  15. Boudreaux, Donald J., and DiLorenzo, Thomas J. 1992. "The Protectionist Roots of Antitrust." Review of Austrian Economics 6(2): 81-96.
  16. Coats, A.W. 1969. “Is there a ‘structure of scientific revolutions’ in Economics?”, Kyklos 22(2): 289-296.
  17. Costea, Diana. 2003. “A Critique of Mises’s Theory of Monopoly Prices.” The Quarterly Journal of Austrian Economics 6(3): 47-62.
  18. Cowen, Tyler and Richard Fink. 1985. “Inconsistent Equilibrium Constructs: The Evenly Rotating Economy of Mises and Rothbard.” the American Economic Review 75(4): 866-869.
  19. DiLorenzo, Thomas J. 1985. “The origins of antitrust: an interest-group perspective.” International Review of Law and Economics 5: 73-99.
  20. DiLorenzo, Thomas J. 1996. "The Myth of Natural Monopoly." Review of Austrian Economics 9(2): 43-58.
  21. DiLorenzo, Thomas J. 1999. “The Truth about Sherman.” November 8. https://mises.org/library/truth-about-sherman
  22. DiLorenzo, Thomas J. and Jack High. 1988. "Antitrust and Competition, Historically Considered." Economic Inquiry 26(1): 423-435.
  23. Garrison, Roger. 1991. “New Classical and Old Austrian Economics: Equilibrium Business Cycle Theory in Perspective.” Review of Austrian Economics 5(1): 91-103.
  24. Gunning J. Patrick. 2005. “Mises on the Evenly Rotating Economy.” the Review of Austrian Economics 3:123-135.
  25. Hahn, F.H. 1984. Equilibrium and Macroeconomics, Oxford: Basil Blackwell.
  26. Hayek F. A. 1949. Individualism and Economic Order, Routledge and Kegan paul.
  27. Henderson, David R. 2013. “The Robber Barons: Neither Robbers nor Barons.” The Library of Economics and Liberty. March 4. https://www.econlib.org/library/Columns/y2013/Hendersonbarons.html
  28. Hicks, J.R. 1939. Value and Capital: An inquiry into some fundamental principles of economic theory. Oxford: Clarendon.
  29. High, Jack. 1984-1985. "Bork's Paradox: Static vs. Dynamic Efficiency in Antitrust Analysis," Contemporary Policy Issues 3: 21-34.
  30. Hull, Gary, ed. 2005. The Abolition of Antitrust. New Brunswick, NJ: Transaction Publishers
  31. Kaldor, Nicholas. 1972. “The Irrelevance of Equilibrium Economics.” the Economic Journal, 82: 1237-1255.
  32. Kirzner, Israel M. 1967. “Methodological Individualism, Market Equilibrium, and Market Process”, IL Politico 32(4): 787-799.
  33. Kirzner, Israel M. 1973. Competition and Entrepreneurship, Chicago: University of Chicago Press.
  34. Koppl, Roger. 1995. “The Walras Paradox”, Eastern Economic Journal 21(1): 43-55.
  35. Lachmann, Ludwig M. 1943. “The Role of Expectations in Economics as a Social Science”, Economica 10. No. 37:12-23.
  36. Lachmann, Ludwig M. 1994. “Carl Menger and the Incomplete Revolution of Subjectivism”, In Expectations and the Meaning of Institution, edited by Don Lavoied, 207-211. London: Roubledge.
  37. Lange, Oskar, R. 1938. “On the Economic Theory of Socialism”, in On the Economic Theory of Socialism, edited by Benjamin E. Lippincott, University of Minnesota press.
  38. Lawson, T. (2005). “The (confused) State of Equilibrium Analysis in Modern Economics: an explanation.” Journal of Post Keynesian Economics 27, no.3: 423-444.
  39. Lerner, Abba, 1937. “Statics and Dynamics in Socialist Economics”, the Economic Journal, 47, no.186: 253-270.
  40. Lucas, Robert. E, 1978. “Asset Prices in an Exchange Economy,” Econometrica 46: 1429-1445.
  41. Lucas, Robert.E., Jr., and E. C. Prescott. 1971. “Investment under uncertainty,” Econometrica 39: 659-681.
  42. Marshall, Alfred. 1920, Principles of Economcs, 8th edition, London: Macmillan.
  43. McChesney, Fred. 1991. "Antitrust and Regulation: Chicago's Contradictory Views," Cato Journal 10, no.3: 775-798.
  44. McGee, John S. 1958. "Predatory Price Cutting: The Standard Oil (New Jersey) Case," The Journal of Law and Economics 1:137-169.
  45. Mises, Ludwig von. [1922] 1981. Socialism: An Economic and Sociological Analysis. Translated by J. Kahane. Indianapolis: Liberty Fund.
  46. Mises, Ludwig von. 1949, Human Action. London. William Hodge. Reprinted 2008 by Mises Institute.
  47. North, Gary, “Tenured Austrian Economists vs. Murray Rothbard” https://www.garynorth.com/public/10768.cfm
  48. Rosenberg, A. 1992. Economics: Mathematical Politics or Science of Diminishing Returns, Chicago: University of Chicago Press.
  49. Rothbard, Murray N. 1995. “The Present State of Austrian Economics”. Journal des Economistes et des Etudes Humaines 6, no. 1: 43-89.
  50. Rothbard, Murray N. (2004 [1962]). Man, Economy and State, Auburn AL: Ludwig von Mises Institute.
  51. Samuelson, Paul A. 1947. Foundations of Economic Analysis. Cambridge: Harvard University Press.
  52. Shugart II, William F. 1987. "Don't Revise the Clayton Act, Scrap It!" Cato Journal 6, no.3: 925-932.
  53. Smith, Jr., Fred L. 1983. "Why not Abolish Antitrust?" Regulation, Jan-Feb, 23. http://cei.org/op-eds-and-articles/why-not-abolish-antitrust
  54. Tan, K.2008 “The First Fundamental Theorem of Welfare Economics.” https://www.math.uchicago.edu/~may/VIGRE/VIGRE2008/REUPapers/Tan.pdf (unpublished)
  55. Tieben, Bert, 2012. The Concept of Equilibrium in Different Economic Traditions: A Historical Investigation. Massachusetts: Edward Elgar Pub.
  56. Tucker, Jeffrey. 1998A. “Controversy: Are Antitrust Laws Immoral?” Journal of Markets & Morality 1, no. 1: 75-82.
  57. Tucker, Jeffrey. 1998B. “Controversy: Are Antitrust Laws Immoral? A Response to Kenneth G. Elzinga.” Journal of Markets & Morality 1, no. 1: 90-94.
  58. Walras, Leon. 1954. Elements of Pure Economics, or the Theory of Social Wealth, American Economic Association.

Downloads

Download data is not yet available.