Entrepreneureal Discovery Essay

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Journal Review: Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach Israel M. Kirzner Journal of Economic Literature, Volume 35, Issue 1 (Mar., 1997), 60-85. Effendy Juraimin California State University, Hayward “I think there is a world market for maybe five computers.” - Thomas Watson, Chairman of IBM, 1943 I. Introduction The earlier entrepreneurial error of Thomas Watson and IBM in 1943 creates profit opportunities for other alert entrepreneurs to discover in a free competitive market, thus pushing the market in the equilibrative1 direction. This is the essence of the Kirzner’s market process approach which is part of the modern Austrian economics. In the first half of the review, we summarize his article by overviewing the history of the approach, its contrast with the neoclassical, the development of the approach, its policy implications, its criticism, and some misunderstanding of the approach. In the second half, we show that nothing is original from the Kirzner’s approach, in comparison with that of the neoclassical, with the exception of its sheer ignorance and surprise characters. These distinctive features give scope for imaginative and creative 1 The market is systematically tending toward equilibrium, but guarantee no rapid (or slow) convergence 1 entrepreneurs to discover technological, sociological, and developmental disequilibrium by destroying old practices and creating new practices in the free competitive market process. II. Overview of Entrepreneurial Discovery and Competitive Market Process II.A. Modern Austrian Approach The paper2 discusses an approach within modern Austrian economics that emphasizes on microeconomics, but is different from that of (mainstream) neoclassical economics. This approach is not a widely accepted Austrian position, but key to revive contemporary interest

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