Most helpful positive review
12 of 14 people found the following review helpful
right ideas at the wrong time
on August 11, 2007
Competition and Entrepreneurship is a book with many interesting insights. Kirzner attacks the use of equilibrium models in mainstream economics, and rightly so. Mainstream economists places great emphasis on equilibrium, but have little to say about how equilibrium is attained. Undergraduates are told a simple story about excess supply and excess demand. The story at the graduate level and in professional journals is even worse. At this level, economists often ignore the issue of equilibration altogether.
Kirzner challenged the conventional view by focusing on the process by which entrepreneurs move market prices towards equilibrium. "The market process is set into motion by the ignorance of the market participants". "Gradually, competition between the entrepreneurs as buyers, and again as sellers, will succeed in communicating to market participants correct estimates of other market participants' eagerness to buy and sell". Of course, Kirzner is building upon the work of Mises and Hayek, whereby competing market participants learn to adjust their plans mutually as prices change. But Kirzner does add greater detail about the specifics of entrepreneurship.
Unfortunately, this book was published at a time when the economics profession was unwilling to listen to such arguments. In 1973 professional thought was so clouded by ideology that there was really no chance for Kirzner to gain the recognition he deserved. The mindset of the profession is less ideological now, but the professions obsession with math has reached new heights. Very few graduate students learn this sort of economics these days.
On the bright side, economists have moved in Kirzner's direction by taking greater interest in informational and coordination issues. Most of this is done with game-theoretic models, rather than with the verbal logic that Kirzner uses. For anyone interested in learning Austrian economics, Competition and Entrepreneurship is a good place to start. It is a relatively easy read, both clear and concise, and it reveals much about the workings of markets.