Economist Israel Kirzner lectured to about 100 Hillsdale College students yesterday on the history of Austrian economics and how it relates to the theory of market process.
Kirzner, a former student of Ludwig von Mises, focused on the deepening of the Austrian school’s understanding of subjectivism, especially between 1937 and 1948.
“In that decade, Hayes and Mises were considered to be defeated,” Kirzner said. “It was said that Austrian economics had a distinct history, but no future. It was precisely in that decade, when Austrian economics was being read its last rites, that Mises and Hayek were deepening their understanding of subjectivism and redirecting Austrian economics.”
Kirzner described how Hayek’s focus on the role of knowledge and knowledge discovery and Mises’ focus on human action and entrepreneurial discovery helped inform the theory that the market is a process, not an equilibrium.
He also discussed profit, entrepreneurship, and freedom of entry.
“An entrepreneur is someone who has to make a decision in the teeth of an uncertain future,” Kirzner said. “He has to guess. True human decision making is entrepreneurial. The market is subject to the will of the consumer. It’s only the freedom to make mistakes that can stimulate the discovery procedure that leads to the correction of mistakes made. When an entrepreneur makes a pure profit, he has made a discovery.”
Kirzner supervised the economics dissertation of Hillsdale College Associate Professor of Economics Charles Steele at New York University.
“Many of us believe that of the scholars who studied under Ludwig von Mises, Dr. Kirzner is the most important,” Steele said. “The most important single event in my development as an economist was the opportunity to study under Dr. Kirzner.”
PRAXIS hosted the hourlong event, which included a Q&A session and an afterglow chat with Kirzner.
“I could have listened to him all day,” junior Emily Albert, an economics major, said. “He’s very knowledgeable. He covered a very broad topic succinctly. I loved how he presented the idea of perfect knowledge and equilibrium compared to the market process. As an economics major, listening to him really inspires me.”
