Entrepreneurial Action
(These are notes freely inspired by Israël Kirzner's intervention in Aix early this month, as well as by my recent Ayn Rand readings and my own pet concerns. The brain who originally formalized most of these ideas was probably von Mises's.)
An entrepreneur is a nose. In a world of uncertainty, he makes decisions, and assumes responsibility for his decisions. Where he sees opportunities that other people don't see or don't dare act upon, he commits his resources -- that begin with his own time --, and takes a risk.
The profit he reaps, or the loss he suffers, is the retroaction that sanctions his decision, and constitutes the accounting cost of his action. The information about the accounting outcome of the opportunity is only available ex post. Ex ante, there are only wild or educated guesses; from an informational point of view, the action creates ex nihilo the information about this outcome, including the subjective value that people give to things created and destroyed in the process of the action. Though it may be argued from an objectivist point of view that the information about the objective universe is revealed, from the subjectivist point of view of human values, whatever previously unexpected difference in subjective value is a creation or destruction by the action.
Now, what matters to the entrepreneur in taking a decision is its opportunity cost: what he would have gained by committing the same resources to another assignment. And the information about the opportunity cost of his choice is never available but through guesses, which better be educated than wild. Indeed, he can but speculate about unknown events and quantities so as to appraise this cost, and he will never know it for sure, because he will never actually explore the branches of the multiverse he rejects when making an actual choice.
Conceptual thinking, the integration of actual and potential facts into abstract concepts, is what distinguishes human entrepreneurship from mere animal reflexes. It is what allows debate about economic costs and rational decision-making rather than mere innately prebuilt action-reaction loops. Of course, the rational decision-making process may consist in building new action-reaction loops adapted to known circumstances that short-circuit redundant further slow and expensive reasoning (what in AI research, J Pitrat after JL Laurière calls being intelligently "meta-idiot").
Well, in Aix, I behaved as an entrepreneur. I chose to devote my time to this particular lovely girl, rather than any of the other lovely girls around this conference. I will never know what I lost with this choice. It took (too much) time, and thought and rhyme, but after a while, I dared hold her hand. She seemed quite consenting, and soon enough returned the kino, but at the same time she looked afraid of being seen this way, for some reason I didn't guess (but should have guessed, having recently heard of a similar affair). Thus, at the time to conclude, which I probably tried one night too late, she said No, and the reason was another boy way back home. I gave her all the gold of sweet talk and intimate connection, but while we connected all too well intellectually and got on well emotionally, there was a level below which I could not manage to reach. She was in control and her No meant No, though her robot could say Yes as it pleased. I was not experienced enough to devise a way round her defenses, and I suppose in a long term way she is but more attractive being a woman able to control of her desires. Thus, after a long while trying to excalate from kino to kissing, and realizing I was too tired and ignorant to imagine another approach to her heart, my final entrepreneurial decision was to call it quit. Eject. Or maybe not: if she's so attractive in a long term way, maybe she deserves long term plans, rather than just a (ex post) doomed short term endeavour.
This example is meant to illustrate entrepreneurship as a point of view on all of human life. Making decisions, applying the known methods you had to learn to dynamic situations you must appraise without ever having time and resources to fully investigate them, exercising one's free will and being responsible for one's actions, these are characteristic of any and all Human Action, as Mises dubbed it. Actually, entrepreneurship thus understood is exactly what defines man as a moral being. Which is why I found it weird that a philosopher like Douglas Rasmussen would defend the classical distinction between human action and economic action, without really being able to articulate a distinction, or to realize that the usual distinction is a pure product of the State's fiscal accounting of things it manages to tax.
I was also disappointed by Israël Kirzner being unable to discuss points of epistemology and metaphysics, and notably by his misunderstanding the difference of categories and the non-contradiction between the objectivism of Ayn Rand, which applies to the metaphysical nature of the world, and the subjectivism of the Austrian School, which applies to the value men ascribe to things. Surely it is a shame that Kirzner spent so much time becoming a rabbi and learning intricate details of judaical theology and no time at all exploring the philosophical foundations of his own science. This is why he had to limit his study of economic science to instrumental utility in terms of a axiomatically accepted goals, as opposed to teleological utility that examines goals themselves; he was thus unable to defend against illiberals who crook goals, and unable to understand that libertarianism is not an ideology among others, that though sympathetic to him, seemed to him as a matter of personal choice, but a science of natural law, as objective as any science, only in a field different from his own. (However, one good point about his being a rabbi is that on topics he knows, which include the topic of things he does or does not know, he is able to speak extremely slowly and articulately so as to reply to complex questions with answers so clear and simple that they become understandable by a layman; his improvised reply to a question by George Lane notably was impressive.)
Now, there are people who understand both philosophy and economics. People in the modern French School of Liberty, like George Lane, Bertrand Lemennicier, Pascal Salin (who were present), or Henri Lepage, François Guillaumat (who were absent), seem to me to have this deep double understanding. Rothbard or Hoppe are most definitely on the right track, despite their shortcomings (but ask not too much from geniuses who clear out new fields of knowledge). My own writings are but an attempt at bridging the gap and making things clear in the minds of young libertarians (starting with my own mind).