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A Respone to Peter Kleins Lecture on Entrepeneurship

A Respone to Peter Kleins Lecture on Entrepeneurship
by Alex Merced

This is a Response to Peter Kleins Lecture on Entrepeneurship

In this lecture Peter Klein does a great job discussing different aspects of defining the entrepeneur, so to sum up two of the main definitions discussed.

Mises - The Entrepeneur is those who employ certain means for uncertain rewards, and an Entrepeneur Promoter is someone who is eager to change the structure of production by employing those certain means, (something to this effect, listen to the lecture for a better explanation from Klein)

Schumpeter - The Entrepeneur is someone Who introduces something new to the economy and destroys the current equlibrium leading to a new one. (For example, If you introduce DVD's, the need to produce VHS's will change, so now the economy must adjust.)

Both Views on Entrepneurship get at the same point, that the entrepeneurs action will change the structure of  production, though mises view is more equilibrating (the entrepeneur is aiming to satisfy exisiting demands with good and services) while Schumpeter is disequilibrating (the entrepeneur destroys current demands and creates new one). Both are valid and seemingly accurate views depending on how you define many of the term associated, although understanding multiple frameworks sure helps to notice trends that may not be as visible in another framework.

I don't know where I originally got the definition that I've always used in my thought process and in my book, "Economics and Liberty: a Pocketguide for Beginners", but I'd like to spend sometime refining it and creating another framework that may be useful in assessing different situations.

Capital - The means of pruduction, a party can have title to the ownership, control, and liability of capital, and can give title of each to another party.

The Enterprise - An entity which has control and title to the liability over a pool of capital from entrepeneurs and investors.

Entrepeneur - The person who assumes the liability of the enterprise and makes decisions on how the capital is put to use for production. The Entrepeneur may give titles over their capital to the enterprise for which he assumes liability.

Investor - A Person who gives title to control and liability of their capital to an enterpise yet keeps title over ownership, giving them claim to interest/profit from that investment.

In this framework, what truly seperates the entrepeneur from an investor is liability and control for production decision. This framework  I like cause it treats liability as property like anything else, and like a car you must find somone else to take title to it. In this framework it's easy to see how a C Corporation is illegtimate since instead of transferring title of the liability, liability has non title owner but the legal structure of the C Corporation.

I still got to to refine a this all little bit more, but thoughts and critics are welcome.

Posted Aug 06 2010, 11:36 AM by Alex Merced