Dated July 15, 2012, There is a new article on the blog by Peter Klein entitled "Austrian Economics and Management Studies", about "the growing interest in Austrian economics within management studies".
Here's one of them, emphasis mine:
ENT: Political Ties, Institutional Environment and Opportunity Recognition in a Transition Economy Author: Xinglu Zhao; Sun Yat-sen U.; Author: Jianqi Zhang; Sun Yat-sen U.; Author: Jun Wu; Sun Yat-sen U.; Author: Xi Li; Sun Yat-sen U.; From the perspective of Austrian school of entrepreneurship and institutional theory, we suggest that building and utilizing political ties facilitates entrepreneurial opportunity recognition through acquiring timely institution-related information and government officials’ experiential advices in transition economies. A survey of 301 corporate executives in Pearl River Delta district in China supported our viewpoint. In addition, due to the potential substitutive effects between informal guanxi and formal institution environment, we further found political ties’ positive association with opportunity recognition is stronger under high level of regulative volatility, but is, unexpectedly, irrelevant with legal enforceability. In conclusion, this article not only highlights the crucial role of institutional theory perspective on social networks and opportunity recognition, but also provides new empirical evidence for understanding opportunity-based entrepreneurship in a transition economy.
Yes, that's what Austrian economics is all about. Getting political ties. That's what Austrians mean when they talk about opportunity based entrepreneurship.
OK, I get that the Chinese are new to this. They still haven't mastered Engrish, for that matter. But I would hope Peter Klein has a better grasp of Austrian Economics than evidenced by that little paragraph.
Hey, it's no big deal, really. A morning smile is a valuable thing, and Peter Klein has providied us with one.
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
Gee, I had no idea "interest in" and "mastery of" were synonyms. Thanks so much!
BTW, opportunity-based political entrepreneurship has been discussed quite a bit in the Austrian literature, e.g.:
http://www.gmu.edu/depts/rae/archives/VOL15_2-3_2002/holcombe.pdf
Of course there are many problems with this approach, some treated by Mises in Bureaucracy (1944).
Thank you for your reassuring reply that we can expect more of the same from you.
BTW, inflation of the money supply has been discussed quite a bit in the Austrian literature, e.g.:
[insert link here]
Of course there are many problems with this approach, some treated by Mises in [insert book here].
@Peter Klein
I don't mean to jump on the bash Peter Klein wagon, but I highly suggest not using so many Latin/French based English words and sticking with the German based English words. Maybe those words were just typical jargon in your field, but damn, reading the quote Smiling Dave posted made my head hurt.
Maybe I'm missing the boat too, but what's the problem here? I don't think Austrian Economics is not all about obtaining political ties, any more than it is. AE is value free (I chant this over my copy of HA, but I digress). We can all agree that the existence of political ties is a shame, and that if we all agreed not to use them that we would all be better off. But, like the tragedy of the commons, we know that others will use this means of obtaining wealth (often to our detriment) even if we "take the high road." Some may still insist on avoiding political ties, and kudos to them I suppose, but that doesn't change the fact that political ties, shamefully if you want, do indeed represent entrepreneurial opportunity (the opportunity for individuals to successfully forecast future consumer demands given future market conditions, earning a profit that their competitors do not earn).
I wholeheartedly agree that the people of China would be better off if the place were not a fascist corporatist communist mess, that politics introduces much chaos into the market. But for an entrepreneur, the question at hand is, is there an opportunity to take advantage of the inevitable misallocations of resources that will result from government intervention into the market? Can the insights afforded by Austrian Economics guide us into recognizing early entrepreneurial opportunity that has been engendered by the rotten smelly government?
Again, I could be wrong, but this doesn't seem like a deviation from AE any more than getting a drivers license does.
In conclusion, this article not only highlights the crucial role of institutional theory perspective on social networks and opportunity recognition, but also provides new empirical evidence for understanding opportunity-based entrepreneurship in a transition economy.
Stephen,
Is it only Austrians who get driver's licenses? Or do people get them without thinking at all about AE?
Think about it. That article is saying that from an Austrian perspective it is good for business to bribe officials and that way get an advantage. True or false, ethical or unethical or who cares about the ethics, what is Austrian about it? What insight from AE is required or was used to reach that conclusion?
Imagine if a serious website devoted to quantum mechanics posted some Chinese paper saying they used insights from quantum mechanics to figure out how to pull up their pants. [Note: no knowledge of quantum mechanics is used in pulling up ones pants. Just to make sure we are on the same page here]. Then the guy who posted that would defend himself by saying "Well, I never said they actually understood quantum mechanics, only that they are interested in it. You must be really dumb not to make that distinction."
Like I say, it's great comedy.
I give you Malachi, the Don Rickles of this forum.
Dave,
I enjoyed your analogy. I laughed loudly, one could say.
However, I don't think it applies to this situation, since I would argue that a) Klein was not talking about bribery (nothing specifically Austrian about bribery, very true, very true), and b) what Klein was talking about, utilizing political channels in non-illegal ways that are open to everybody, and coupling the information with Austrian insights can be an effective entrepreneurial tool.
Like peanuts and legumes, all bribery may indeed be considered the utilization of political ties, but the utilization of political ties need not be bribery.
I'm impressed that Dave knows what the article is saying without having read it. Because the article isn't posted online, those of us lacking extrasensory powers can only read the abstract, which states simply that Chinese firms led by entrepreneurs with strong political ties (presumably to top Party officials) make more money from recognizing profitable opportunities than entrepreneurs lacking such ties. Shockingly, the benefits of political ties are higher when there is a lot of regulatory uncertainty. Wow, who do these authors think they are, making such preposterous claims?
Of course the authors, unlike Dave, appear to make no normative judgments in their analysis. But Dave's logic has convinced me to withdraw the offending blog post. Mainstream management scholars, presenting at their major professional meeting, are reading Austrian economists and trying to incorporate Austrian insights into their work, which clearly shows that Austrian economics is not influential in management research.
Round 2 goes to Peter Klein.
Could someone please explain to me why this is so controversial? I'm not being sarcastic; I really don't know what the fuss is about.
Peter, my good man. You admitted they are using quantum mechanics to pull up their pants in your very first post here, when you explained to me that they haven't exactly mastered AE, but are just interested in it.
Are you now saying something different? That these respected Chinese scholars actually did use some kind of Austrian insight when they decided bribes are cool? That it was me who missed the boat, because in the article itself there are gems of Austrian Economics that use deep praxeology to conclude bribes to politicians make money for the bribers?
Dave's logic has convinced me to withdraw the offending blog post
You decide, Pete. If I'm wrong, leave that blog post up there, loud and proud. If I'm right, then by leaving it intact you are setting yourself up for ridicule from your peers, so you would be wise to remove it.
Bottom line, Pete, man up. There is nothing wrong with saying "I goofed. I cut and pasted from a google search about AE and management without actually checking the results. My bad." It will earn you some respect from me and possibly other people.
Fighting with an amateur like me [and being made a fool of] will not look good on your resume. Employers check these things.
'Tis but wounded pride, Rcder, expressing itself.
Wow, who knew that 'interacting' with government officials could be a source of 'opportunity-based entrepeneurship'!
Austrian economics doesn't prescribe anything, and it doesn't appear from the abstract that the paper does either, but opportunity-based entrepeneurship has nothing to do with Austrian economics. Don't know why Dave's gettin the hammer.
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
Rcder: Could someone please explain to me why this is so controversial? I'm not being sarcastic; I really don't know what the fuss is about.
Smiling Dave, you are way out of bounds. Please learn some manners in the next month.
This thread... I haven't seem good mild antagonisms and jabs at other posters around here since Lao Tzu and Student stopped posting... This is good.
@Daniel Sanchez
And I fear the fun might be over :(
... Also, Dave's wrong on this one.