Ḥeleḳ rishon. Maʼamre musar, daʻat ṿe-yirʼat H. lefi seder parashiyot ha-Torah -- ḥeleḳ sheni. ʻIyunim be-musar ṿe-yirʼat H., pirḳe maḥshavot, maʼamre musar, maʻarakhot ha-teshuvah, shevive or.

Markets can be said to overcome ignorance in two senses. First, in an imaginary world of economic equilibrium, market prices can signal to consumers how they may alter their behavior so as to conform to supply and demand conditions of which they are ignorant. This is a point that was underscored by F.A. Hayek and, now, by Jeffrey Friedman. But the more important manner in which markets overcome ignorance was identified by Hayek's mentor, Ludwig von Mises, and is not mentioned (...) by Friedman: when market prices are not perfectly aligned to supply and demand conditions (and they never are), they present profit opportunities to entrepreneurs who are alert to make such discoveries. Their profit‐motivated actions then reallocate resources in a pattern more efficiently reflecting the true supply and demand conditions. It is this way of overcoming ignorance that most clearly separates the market arena from the political arena, because no corresponding corrective discovery process exists in politics. (shrink)

A spate of recent attacks on the rationality assumption in economic theory is noticed. Some of these attacks are fresh and, in many ways, original, but the central ideas underlying them are not new. They appear to have been provoked by the direction in which much of mainstream economics has been moving in recent years. On the other hand, it is suggested here, certain developments in contemporary economics, associated particularly with the revival of interest in the Austrian paradigm, offer afresh (...) understanding of the way in which the rationality assumption, its role in economics properly understood, is able to meet these old?new attacks. (shrink)

A spate of recent attacks on the rationality assumption in economic theory is noticed. Some of these attacks are fresh and, in many ways, original, but the central ideas underlying them are not new. They appear to have been provoked by the direction in which much of mainstream economics has been moving in recent years. On the other hand, it is suggested here, certain developments in contemporary economics, associated primarily with the revival of interest in the Austrian paradigm, offer a (...) fresh understanding of the way in which the rationality assumption, its role in economics properly understood, is able to meet these old-new attacks.On assiste depuis quelques années à une recrudescence des critiques à l'égard de l'hypothèse de rationalité employée en théorie économique. Certaines de ces critiques sont nouvelles, et originales à bien des égards, mais les idées essentielles qui les sous-tendent sont anciennes. Ces critiques semblent avoir été provoquées par la direction vers laquelle une grande partie du courant dominant en économie a évolué durant ces dernières années. D'un autre côté cependant, certains développements au sein de l'économie contemporaine - des développements essentiellement dus à la renaissance du paradigme autrichien - offrent une compréhension nouvelle de la manière dont l'hypothèse de rationalité est capable de résister à ces critiques anciennes/nouvelles - si on comprend correctement le rôle joué par cette hypothèse en théorie économique. (shrink)

This paper examines Kirzner's contribution to the study of the equilibrating tendency in economics. By analyzing his interpretation of Jevons’ law of indifference, we participate in the debate on Kirzner association with neoclassicals when discussing the equilibrating tendency. A reconstruction of Kirzner’s use of Jevons’ law is conducted, considering his argumentative strategy when presenting the Austrian economics ideas to other professionals in the field. We conclude that Kirzner drew close to neoclassical economics to emphasize the relevance and uniqueness of Austrian (...) economics. By doing so, we highlight the main differences between the two currents of economic thought. (shrink)

This paper analyzes the presence of Israel Kirzner in the History of Economic Thought and focusing on his professional engagement with other economists. His academic trajectory is contextualized on three milestones of the recent history of the Austrian School. The first one is the ending of the socialist economic calculation debate, when the Austrian was considered unconvincing due to the economics’ shift to a general equilibrium model of the economy; in the aftermath of the debate, Kirzner entered at the New (...) York University’s PhD program and was mentored by Ludwig von Mises. At this point, Kirzner started to develop his ideas on entrepreneurship and to aim an audience wider than his Austrian peers. The second is the Austrian Revival in the 1970s, in which the prestigious recovery stage of the Austrian School, thanks to Kirzner assuming a leadership role in the process. The third is in the 1980s, when a more consolidated Austrian School attempts to define itself, as Kirzner retains an Austrian vision founded on the synthesis between Mises and Hayek. It is concluded that Kirzner’s professional engagement was fundamental in the recovery of Austrian theory. He communicated Austrian ideas to a wider audience and synthetized Misesian and Hayekian proposals on the market process. These efforts allow us to recognize a Kirznerian view of the Austrian School, established with the traditional microeconomic theory, but including greater subjectivity on the interpretation of economic phenomena, becoming a more general, more realistic theory. (shrink)

In an oft-quoted paper entitled “To What Extent Was the Austrian School Marginalist?”, Streissler challenged earlier interpretations of Menger’s work that had accorded equal billing to Menger alongside Jevons and Walras as co-discoverer of the marginalist principle. In Streissler’s words, Menger was exceptionally great because he created marginalism at the same time that he surpassed it: the essence of Menger’s contribution to economic science was to be located in his subjectivist vision of the economy rather than in marginalism per se. (...) Streissler’s interpretation presaged Professor Kirzner’s subsequent rendering of Menger’s work, namely, that Menger’s subjectivist vision of the system as whole forms the very core of his contribution. This paper argues that, while these modern subjectivist reinterpretations are more faithful to Menger’s work than the earlier restrictive marginalist interpretations, they have nonetheless failed to identify Menger’s ‘vision.’ It is submitted here that this vision is to be located in Menger’s intention of constructing a theory of complex economic phenomena. Building upon Alfred Whitehead’s “process philosophy”, this paper provides a philosophically realist reconstruction of Menger’s theory of complex phenomena before investigating its pervasiveness and significance in the economic sphere.Dans un article célèbre intitulé “To What Extent Was the Austrian School Marginalist?”, Streissler remit en cause les interprétations antérieures de l’oeuvre de Menger qui faisaient de ce dernier un des co-inventeurs du principe marginaliste au même titre que Jevons et Walras. Pour Streissler, Menger était exceptionnellement grand parce qu’il créa le marginalisme en même temps qu’il le surpassa : l’essence de la contribution de Menger à la science économique se trouvait dans sa vision subjectiviste de l’économie plus que dans le marginalisme en soi. L’article de Streissler annonçait l’interprétation que devait donner le Professeur Kirzner de la contribution de Menger, à savoir que sa vision subjectiviste du système dans son ensemble constituait le coeur même de sa contribution. Ces réinterprétations subjectivistes modernes de l’oeuvre de Menger sont certes plus fidèles à celle-ci que les interprétations étroites antérieures données sous l’angle marginaliste. Ces réinterprétations modernes n’ont pas pour autant identifié la vision qu’avait Menger de la sphère économique. L’article suggère que cette vision se situe dans la théorie des phénomènes complexes de l’économie que Menger se propose d’élaborer. En se fondant sur “ la pensée du procès ” d’Alfred Whitehead, l’article propose une reconstruction philosophico-réaliste de la théorie des phénomènes complexes de Menger avant d’illustrer sa pertinence et son importance dans la sphère économique. (shrink)

Israel Kirzner is to be credited for clarifying and developing the theory of capital and interest set out by Ludwig von Mises and for articulating and defending the pure time preference theory of interest. A revisiting of Mises and his critics suggests that the pure time preference theory is best formulated in terms of economic actions and then applied to the anticipated consequences of those actions. Differences between the Misesian and Knightian reckonings of time preference are to be understood in (...) terms of the contrasting conceptions of a zero time preference. Parallels between the time preference theory of interest and a leisure preference theory of wages are explored. Austrian economics is deemed healthy despite lingering puzzles about its theories of interest and wages.On doit au Professeur Kirzner la clarification et le développement de la théorie du capital et de l’intérêt dans la lignée de Ludwig von Mises et l’articulation et la défense de la théorie de l’intérêt comme étant la préférence pure pour le temps. Une relecture des travaux de Mises et de ses critiques suggère qu la théorie de la préférence pure pour le temps est mieux formulée en termes d’actions économiques et ensuite appliquée aux conséquences anticipées de ces mêmes actions. Les différences entre les acceptions Misessiennes et Knigtienne de la préférence pour le temps doivent être comprises en termes de conceptions différentes d’une préférence nulle pour le temps. Les rapprochements entre la théorie de l’intérêt comme préférence pour le temps et la théorie des salaires comme préférence pour les loisirs sont explorés. L’économie autrichienne est jugée saine en dépit des énigmes persistantes qui entourent ses théories de l’intérêt et des salaires. (shrink)

This paper contends that the identification of a pro-competitive agenda in the process of regulatory reform undertaken in many developing countries ultimately rests on the vision held by the authority about the sources of market failures. Conventional IO theory rests on the assumption that the exercise of market power by incumbent firms limits the access of potential competitive entrants, and therefore, regulation should curb such power. However, the existence of market power is an inference from conventional thinking on markets and (...) competition. Professor Kirzner overturned this thinking, by introducing a realistic process perspective of markets, instead of the traditional structural view. Beyond the philosophical question of “realism,” the market process view sustains practical policy making advantages, mostly due to the lack of knowledge requirements placed upon the regulatory agencies to allocate resources more efficiently. The process view suggests the need of creating a proper institutional setting for firms to freely interact, rather than on impinging in the allocation of resources itself according to unreliable contrived views of market efficiency. Based on Kirzner´s process view, this paper outlines an alternative network competition perspective, focused on the integration of complementary capabilities, as a regulatory yardstick. This view balances the rights of incumbent firms to exploit their rights, and the possibilities of third parties to integrate into the network concerned on a non-discriminatory basis, thereby preserving the investments of incumbents on a more equitable basis.Cet article affirme que l’agenda proconcurrentiel de réforme réglementaire entrepris dans plusieurs pays en développement repose en fin de compte sur la vision qu’a l’autorité concernant les échecs de marché. La théorie conventionnelle d’organisation industrielle suppose que l’exercice du pouvoir marchand par les firmes existantes limite l’accès de concurrents potentiels et, qu’en conséque- nce, la réglementation devrait brider ces pouvoirs. Cependant, l’idée qu’il existe un pouvoir marchand est une émanation de la pensée conventionnelle à propos des marchés et de la concurrence. En opposant une vision réaliste du processus marchand à la vision structurelle traditionnelle, le Professeur Kirzner a réduit à néant ce mode de pensée conventionnelle. Audelà de la question philosophique du “réalisme”, la vision procédurale de marché affirme que la politique de réglementation est un échec car les agences de réglementation ne disposent pas des connaissances nécessaires requises pour affecter les ressources de manière efficace. La vision procédurale suggère le besoin de créer un environnement institutionnel dans lequel les entreprises peuvent interagir entre elles plutôt que d’empiéter sur l’affectation des ressources en ellemême comme le suggère la perspective artificielle et peu fiable de l’efficacité marchande. Se fondant en cela sur la vision procédurale de Kirzner, cet article ébauche une perspective différente du réseau concurrentiel dont l’étalon est l’intégration des capacités complémentaires. Dans cette vision, les droits des firmes existantes à exploiter leurs droits ont comme contrepoids les possibilités de tierces parties à s’intégrer dans le réseau concerné sur une base nondiscriminatoire, préservant ainsi les investissements des entreprises existantes suivant une base plus équitable. (shrink)

In this article we consider the theories of utility developed by Rothbard and Kirzner in their respective treatises on economic theory . We argue that while both authors were strongly influenced by Mises’ ordinalist conception of utility and in fact both authors affirm this conception in their initial expositions of utility theory, their subsequent developments diverge quite sharply. In particular, Kirzner adopts an approach that is neoclassicist in its essentials, and we discuss how this approach conflicts with the approach developed (...) by Mises . We thus give further support to Salerno’s contention that there exists a tension within Austrian price theory today, falling between two camps: Rothbard’s furtherance of the Mengerian “causal-realist” tradition, and Kirzner’s “dynamic” version of the standard Hicksian indifference-based framework. (shrink)

Israel Kirzner has spent a career in articulating and refining concept of entrepreneurship; His work is indispensable for anyone seeking an understanding of the role of the entrepreneur in the economy. This paper provides a critical appreciation of this work, and considers how Kirzner’s insights might feature in a defense of Capitalism in the post- Socialist world.Israel Kirzner a consacré sa carrière à articuler et affiner le concept d’esprit d’entreprise. Ses travaux sont indispensables pour quiconque cherche à comprendre le rôle (...) de l’entrepreneur dans l’économie. Cet article propose une évaluation critique de ces travaux, et examine dans quelle mesure la perspective kirznerienne peut représenter une défense du capitalisme dans le monde postsocialiste. (shrink)

The root of any system of economic theory is the theory of price. But while modern Austrian economists have put a great deal of effort and ingenuity into building up the superstructure of their discipline since the mid-1970s, they have paid scant attention to ensuring that the price theory supporting the edifice is a sound and settled doctrine. The result is that, for many current Austrians, price theory is a “dynamic” version of neoclassical price theory. More precisely, it is Chicago (...) price theory with a theory of entrepreneurship and of competition as a rivalrous process grafted onto it. This ad hoc approach to Austrian price theory thus relies heavily on the analytical tools and techniques developed by Alfred Marshall, Frank Knight, and Jacob Viner. George Stigler later elaborated these individual contributions into a systematic price theory.The prevailing approach almost completely ignores the fact that there exists an alternative “causal-realist” tradition of price theory that was founded by Carl Menger and developed by his followers both in Austria and abroad. These include especially Böhm-Bawerk, J.B. Clark, Frank Fetter, Herbert Davenport, Philip Wicksteed, and Ludwig von Mises. The causal-realist tradition, which is explicitly anti-Marshallian and anti-Stiglerian, maintained a shadowy presence in Austrian economics for most of the postwar period. It is only in recent years that some Austrian economists, seeking a sound price theory to sure up the foundations of their discipline, have explicitly recognized and embraced it.Israel M. Kirzner’s neglected book, Market Theory and the Price System, which was first published in 1963 and reprinted in a new edition this year, was the first and only systematic attempt to marry Stiglerian price theory with elements of the causal-realist tradition. Murray N. Rothbard, who had already reformulated and significantly advanced the causal-realist tradition in his own treatise Man, Economy, and State, wrote a comprehensive and quite critical referee report on Kirzner’s book manuscript for the publisher in 1961. His comments have never been published before.This article contains two parts. The first part is a response to certain claims and omissions made by Peter J. Boettke and Frédéric Sautet, the editors of the new edition of Kirzner’s book. The second part contains Rothbard’s report on the book as a supporting document for the arguments of the first part. By proceeding in this way the goal is to clarify the important issues at stake for Austrian price theory. (shrink)

To improve on the argument presented by classical economists, many authors have tried to rely as much as possible on a value-free approach. In this paper, reasons to reject the propositions made by neoclassical economists are briefly recalled. We then turn toward Kirzner’s proposition which is to evaluate a policy, or a rule, according to the extent to which it promotes coordination. This proposition, however, must also be rejected because, if it introduces some dynamics in the picture, it is a (...) dynamics towards equilibrium, while real life, entrepreneurial dynamics can either be towards coordination or discoordination. Coordination is not monotonously linked to progress. It therefore appears preferable to rely on Hayek’s notion of order; a notion specifically designed to allow progress to take place, while maintaining a ‘satisfactory’ level of coordination. For such an order to prevail, any rule or policy deliberately introduced must be compatible with the existing order, that is, it must protect legitimate expectations. Following a reflection on the definition of ‘legitimacy’ we then reach the conclusion that the quest for a value-free welfare economics is lost, and that even the quest for a value-free economics will have, in a certain sense, to be left, or at least reconsidered.Afin d’améliorer l’argument présenté par les économistes classiques, beaucoup d’auteurs ont essayé de se reposer autant que possible sur une approche sans jugements de valeur. Dans cet article, nous rappelons brièvement les raisons de rejeter les propositions faites par les économistes néoclassiques. Nous nous tournons donc vers la proposition de Kirzner qui est d’évaluer une politique, ou une règle, par rapport à la manière dont elle promeut la coordination. Cependant, cette proposition doit aussi être rejetée car si elle introduit une dynamique dans l’analyse, c’est une dynamique du côté de l’équilibre, alors que dans la vie réelle, la dynamique entrepreneuriale peut initier plus de coordination ou plus de discoordination. La coordination n’est pas liée de manière monotone au progrès. Il apparaît aussi préférable de se rattacher à la notion d’ordre de Hayek, notion construite précisément pour permettre au progrès d’avoir lieu, tout en maintenant un niveau “satisfaisant” de coordination. Pour qu’un tel ordre existe, toute règle ou politique délibérément introduite doit être compatible avec l’ordre existant, c’està- dire, qu’elle doit protéger les anticipations légitimes. Après une réflexion sur la définition de “légitimité”, nous arrivons à la conclusion que la quête d’une science économique du bien-être sans jugement de valeur est un échec, et que la quête d’une science économique sans jugement de valeur doit être, dans un certain sens, abandonnée ou au mieux reconsidérée. (shrink)