Entrepreneurship: State of grace or human action? Schumpeter’s leadership vs Kirzner’s alertness.

Ferlito, Carmelo (2015): Entrepreneurship: State of grace or human action? Schumpeter’s leadership vs Kirzner’s alertness. Forthcoming in: European Journal of Economic and Social Syestems (2015)

Abstract

Joseph A. Schumpeter developed a very well-known theory of entrepreneurs and entrepreneurship, centred on the concept of ‘new combinations’. According to him, innovation and entrepreneurship are destructive elements driving the system beyond an equilibrium position and setting in motion a competitive process, in order to reach a new equilibrium point. Though Austrian, Schumpeter was never a member of the Austrian School of Economics. However, his position as regards entrepreneurship is widely commented on by Austrian School members. In particular, Israel M. Kirzner devoted his research activity to develop an alternative concept of entrepreneurship rooted in Misesian human action and the concept of ‘alertness’. This paper aims to analyze and compare the two positions, in an attempt not so much to stress differences but to find possible common paths for further developments of the concept of entrepreneurship.

• Item Type: MPRA Paper
• Language: English
• Keywords: Schumpeter, Kirzner, Entrepreneur, Entrepreneurship, Innovation, Austrian School of Economics.
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B1 - History of Economic Thought through 1925 > B13 - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Stockholm School); B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B25 - Historical ; Institutional ; Evolutionary ; Austrian; B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B53 - Austrian; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L26 - Entrepreneurship; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes

References

Becker, M.C., Knudsen, T., and Swedberg, R. 2011a. "Introduction". In The Entrepreneur. Classic Texts by Joseph Schumpeter. M.C. Becker, T. Knudsen and R. Swedberg, eds. Stanford: Stanford University Press. Pp. 1–42.

Becker, M.C., Knudsen, T., and Swedberg, R., eds. 2011b. The Entrepreneur. Classic Texts by Joseph Schumpeter. Stanford: Stanford University Press.

Boettke, P.J., Horwitz, S., and Prychitko, D.L. [1986], 2002. "Beyond Equilibrium Economics: Reflections on the Uniqueness of the Austrian Tradition". In Modern Austrian Economics. Archeology of a Revival, vol. II, The Age of Dispersal. P.J. Boettke and S. Boehm, eds. London: Pickering & Chatto. Pp. 121–132.

Bostaph, S. 2013. "Driving the Market Process: ‘Alertness’ Versus Innovation and ‘Creative Destruction’". The Quarterly Journal of Austrian Economics 16 (4): 421–458.

Caporali, D. 2010. Il ciclo economico per Schumpeter e Spiethoff: analogie scientifiche. Thesis in Economics. Verona: Università degli Studi di Verona.

De Vecchi, N. 1993. Schumpeter viennese. Torino: Bollati Boringhieri.

Del Vecchio, G. 1928. "Untersuchungen zur Theorie des Unternehmergewinnes". In Die Wirtschaftstheorie der Gegenwart, vol. III. H. Mayer, ed. Wien: Springer. Pp. 281–292.

Ebner, A. 2006. "Schumpeterian Entrepreneurship Revisited: Historical Specificity and the Phases of Capitalist Development". Journal of the History of Economic Thought 28 (3): 315–332.

Ferlito, C. 2011. "Sylos Labini’s Unpublished notes on Schumpeter’s Business Cycles". The Quarterly Journal of Austrian Economics 14 (1): 88–129.

Ferlito, C. 2013. Phoenix Economics. From Crisis to Renascence. New York: Nova Publishers.

Ferlito, C. 2014. "The Natural Cycle: Why Economic Fluctuations are Inevitable. A Schumpeterian Extension of the Austrian Business Cycle Theory". Journal of Reviews on Global Economics 3: 200–219.

Gioia, V. 1996. "Arthur Spiethoff: “teoria storica” e analisi del ciclo". Nuova economia e storia 4: 347–374.

Gioia, V. 1997. "Historical Changes and Economics in Arthur Spiethoff’s Theory of Wirtschaftsstil (Style of an Economic System)". In Methodology of the Social Sciences, Ethics, and Economics in the Newer Historical School. From Max Weber and Rickert to Sombart and Rothacker. P. Koslowski, ed. Berlin and Heidelberg: Springer. Pp. 168–190.

Huerta de Soto, J. [1992], 2010. Socialism, Economic Calculation and Entrepreneurship. Cheltenham and Northampton: Edward Elgar.

Hülsmann, J.G. 2000. "A Realist Approach to Equilibrium Analysis". The Quarterly Journal of Austrian Economics 3 (4): 3–51.

Kirzner, I.M. 1963. Market Theory and the Price System. Princeton: D. van Nostrand.

Kirzner, I.M. 1973. Competition and Entrepreneurship. Chicago: University of Chicago Press.

Kirzner, I.M. [1960], 1976. The Economic Point of View. Kansas City: Sheed and Ward.

Kirzner, I.M. 1982. "Uncertainty, Discovery, and Human Action: A Study of the Entrepreneurial Profile in the Misesian System". In Method, Process, and Austrian Economics. Essays in Honor of Ludwig von Mises. I.M. Kirzner, ed. Lexington, D.C.: Heath and Company. Pp. 139–159.

Kirzner, I.M. 1992. The Meaning of Market Process. Essays in the development of Modern Austrian Economics. London and New York: Routledge.

Kirzner, I.M. 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach". Journal of Economic Literature XXXV: 60–85.

Kirzner, I.M. 1999. "Creativity and/or Alertness: A Reconsideration of the Schumpeterian Entrepreneur". Review of Austrian Economics 11: 5–17.

Kirzner, I.M. 2000. The Driving Force of the Market. Essays in Austrian Economics. London and New York: Routledge.

Kirzner, I.M. 2008. "The Alert and Creative Entrepreneur: A Clarification". IFN Working Paper 760. Research Institute of Industrial Economics.

Kurz, H.D. 2010. "The Beat of Economic Heart: Joseph Schumpeter and Arthur Spiethoff on Business Cycles". MPRA Paper 20429.

Lachmann, L.M. 1986. The Market as an Economic Process. Oxford and New York: Basil Blackwell.

Langlois, R.N. 2002. "Schumpeter and the Obsolescence of the Entrepreneur". University of Connecticut – Department of Economics Working Paper Series. Working Paper 2002-19.

Mathews, J. 2006. "A Strategic and Evolutionary Perspective on Entrepreneurial Dynamics: Reconciling Schumpeter with Kirzner". Paper presented at the DRUID Summer Conference 2006 on Knowledge, Innovation and Competitiveness: Firms, Networks, Regions and Institutions, Copenhagen, Denmark, June 18-20.

McCaffrey, M. 2009. "Entrepreneurship, Economic Evolution, and the End of Capitalism: Reconsidering Schumpeter’s Thesis". The Quarterly Journal of Austrian Economics 12 (4): 3–21.

McCaffrey, M. 2013a. "On the Theory of Entrepreneurial Incentives and Alertness". Entrepreneurship. Theory and Practice, January: 1–21.

McCaffrey, M. 2013b. "Conflicting Views of the Entrepreneur in Turn-of-the-Century Vienna". History of Economics Review 58: 27–43.

Michaelides, P., and Milios, J. 2005. "Did Hilferding Influence Schumpeter?". History of Economics Review 41: 98–125.

Michaelides, P., and Milios, J. 2009. "Joseph Schumpeter and the German Historical School". Cambridge Journal of Economics 33: 495–516.

von Mises, L. [1949], 1998. Human Action. A Treatise on Economics. Auburn: Ludwig von Mises Institute.

O’Driscoll, G.P., and Rizzo, M.J. [19985], 1996. The Economics of Time and Ignorance. London and New York: Routledge.

Reinert, H., and Reinert, E.S. 2006. "Creative Destruction in Economics: Nietzsche, Sombart, Schumpeter". In Friedrich Nietzsche (1844-1900). Economy and Society. J. Backhaus and W. Drechsler, eds. Heidelberg: Springer. Pp. 55–86.

Rothbard, M.N. [1962] (2004). "Man, Economy, and State. A Treatise on Economic Principles". In Man, Economy, and State. A Treatise on Economic Principles with Power And Market. Government and the Economy. M.N. Rothbard. Auburn: Ludwig von Mises Institute. Pp. 1–1046.

Santarelli, E. 1984. "L’influsso dell’analisi schumpeteriana della funzione imprenditoriale e del credito nel pensiero economico italiano tra le due guerre". Giornale degli Economisti e Annali di Economia 4: 506–529.

Santarelli, E., and Pesciarelli, E. 1990. "The emergence of a vision: the development of Schumpeter’s theory of entrepreneurship". History of Political Economy 22 (4): 677–696.

Schumpeter, J.A. 1935. "The Analysis of Economic Change". The Review of Economics and Statistics 17 (4): 2–10.

Schumpeter, J.A. 1947. "The Creative Response in Economic History". The Journal of Economic History 7 (2): 149–159.

Schumpeter, J.A. [1934], 1983. The Theory of Economic Development. An Inquiry into Profits, Capital, Credit, Interest and Business Cycle. New Brunswick and London: Transaction Publishers.

Schumpeter, J.A. [1942], 2003. Capitalism, Socialism and Democracy. London and New York: Routledge.

Schumpeter, J.A. [1939], 2005. Business Cycles. A Theoretical, Historical, and Statistical Analysis of the Capitalist Process. Chevy Chase and Mansfield Centre: Bartleby’s Books and Martino Publishing.

Schumpeter, J.A. [1954], 2006. History of Economic Analysis. London and New York: Routledge.

Schumpeter, J.A. [1964], 2008. Business Cycles. A Theoretical, Historical and Statistical Analysis of the Capitalist Process, Abridged. With an introduction, by Rendigs Fels, digital edition, un document produit en version numérique par Didier Lagrange.

Schumpeter, J.A. [1928], 2011a. "The Entrepreneur". In The Entrepreneur. Classic Texts by Joseph Schumpeter. M.C. Becker, T. Knudsen and R. Swedberg, eds. Stanford: Stanford University Press. Pp. 227–260.

Schumpeter, J.A. [1928], 2011b. "The Entrepreneur in Today’s Economy" In The Entrepreneur. Classic Texts by Joseph Schumpeter. M.C. Becker, T. Knudsen and R. Swedberg, eds. Stanford: Stanford University Press. Pp. 261–285.

Schumpeter, J.A. [1911], 2011c. "The Theory of Economic Development (1911). The Fundamental Phenomenon of Economic Development". In The Entrepreneur. Classic Texts by Joseph Schumpeter. M.C. Becker, T. Knudsen and R. Swedberg, eds. Stanford: Stanford University Press. Pp. 79–154.

Shionoya, Y. 2005. The Soul of the German Historical School. Methodological Essays on Schmoller, Weber and Schumpeter. New York: Springer.

Sombart, W. 1929. "Economic Theory and Economic History". The Economic History Review 2 (1): 1–19.

Spiethoff, A. 1952. "The “Historical” Character of Economic Theories". The Journal of Economic History 12 (2): 131–139.

Spiethoff, A. 1953. "Pure Theory and Economic Gestal Theory; Ideal Types and Real Types". In Enterprise and Secular Change. Readings in Economic History. F.C. Lane and J.C. Riemersma, eds. London: Allen and Unwin. Pp. 444–463.

Spiethoff, A. 1970. "Spiethoff’s Text". In Arthur Spiethoff on Economic Styles. F. Redlich, ed. The Journal of Economic History 30 (3): 644–652.

Sylos Labini, P. [1956], 1962. Oligopoly and Technical Progress. Cambridge: Harvard University Press.

Sylos Labini, P. 1984. The Forces of Economic Growth and Decline. Cambridge and London: MIT Press.

Sylos Labini, P. 1993. Economic Growth and Business Cycles. Prices and the Process of Cyclical Development. Aldershot: Edward Elgar.