How Markets Work: Disequilibrium, Entrepreneurship & Discovery (Hobart Papers) [Paperback]

Israel M. Kirzner (Author)

Book Description

ISBN-10: 0255364040 | ISBN-13: 978-0255364041 | Publication Date: October 1997

In the last hundred years or so, the neo-classical school has come to dominate microeconomic thinking. Economists concerned with competition have taken refuge in increasingly complex models which emphasize the end-state of competitive equilibrium. This paper presents, in non-technical terms, an 'Austrian' view of how a market economy works. The writer of this book follows in the Austrian tradition as he tries to crystallize the theory of entrepreneurial discovery and of its implications for economic understanding and policy.

Product Details

• Paperback: 80 pages
• Publisher: Coronet Books Inc (October 1997)
• Language: English
• ISBN-10: 0255364040
• ISBN-13: 978-0255364041
• Product Dimensions: 8.3 x 5.2 x 0.3 inches
• Shipping Weight: 1.6 ounces (View shipping rates and policies)
• Average Customer Review: 3.7 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #2,734,828 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

4 of 5 people found the following review helpful:

5.0 out of 5 stars You guys don't get it do you ?, June 9, 2005

By 

Alan Dale Partee "polkyman" (Tokyo, Japan) - See all my reviews
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This review is from: How Markets Work: Disequilibrium, Entrepreneurship & Discovery (Hobart Papers) (Paperback)

The main value of Kirzner's research along with all of the Austrian's is that Neo-classical Economists do not have any thorough treatment of entreprenuership or transition economies. In the last 15 years this has become of vital importance to transitioning countries and to people who study Game Theory. Kirzner NEVER tries to throw away Neoclassical Economics and he stresses this point many times. In his words he is just "filling in the GAPS" that are now wide open in the canon of of conventional economics. This is not so clear to people who have not done in depth research into developing countries where they utilize Austrian theory everyday in research and praxis. The new wave of Chinese Economics has utilized this research extensively. Try to read Professor Tony Fu-lai Yu from Hong Kong if possible. You cannot read kirzner with out having a little background in institutional economics.
Please enjoy, Professor Alan Partee PhD (business Econ.)

2 of 4 people found the following review helpful:

4.0 out of 5 stars A libertarian text on market forces, October 29, 2001

By 

M. Mcfarland - See all my reviews
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This review is from: How Markets Work: Disequilibrium, Entrepreneurship & Discovery (Hobart Papers) (Paperback)

The basic thrust of Kirzner's IEA pamphlet is to examine the differences between textbook perfect competition and the Austrian discovery process - and how this affects long-term growth in the economy. It's a micro text that's a little dry in places. But overall, Kirzner succeeds in keeping the reader on board.

Once the main differences are out in the open, the author then goes on to describe how the discovery process affects different markets and differing situations - advertising and insurance.

How Markets Work will be of value to financial economists and analysts working in the equity markets. It contains lots of examples of market processes that would be very useful in valuation analysis. What it isn't, though, is a generalist text. Three/Four stars.

4 of 18 people found the following review helpful:

2.0 out of 5 stars Will the Austrians ever get it?, May 4, 2002

By 

Michael Greinecker (Vienna, Austria) - See all my reviews
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This review is from: How Markets Work: Disequilibrium, Entrepreneurship & Discovery (Hobart Papers) (Paperback)

Kirzner tries to show that the Austrian school of economics (absent in Austria) gives us deeper insights into how the economy works than mainstream microeconomics. Sadly, he has no clue about mainstream theory. This book is full of mischarachterizations of neoclassical theory.

He confuses Stigler's model of information with the whole of information economics. He obviously never heard about assymetric information. This book was written in 1996!

He blames neoclassical economists for saying that marketing is only a form of manipulating consumers tastes. This is funny, since preferences are usually treated as exogenous. As an example of such a neoclassical economist he names John Kenneth Galbraight- a instituionalist in the tradition of Veblen.

The text has many flaws like that, but that's not all. The views he defends are flawed too. He argues for example that natural monopolies are no problem as long as the government doesn't prohibit entry. When the prices are too high, a entrepreneur can enter the market and drive the price down. But this doesn't work always. The monopolist has only to lower the price to drive the challenger out. But isn't that going to serve consumer interest after all? No. The ability to charge a lower price serves as a credible threat. Nobody would enter the market just to lose his fix costs. So our monopolist doesn't have to actually lower his price to keep the monopoly.

I could go on and on, but this book surely isn't worth the effort.

The only reason Austrian economics still exists is it's simplicity. You don't need more knowledge to read ,say , Mises than you need to read Ayn Rand. That makes them very popular among conservative non-economists.