Table of Contents

Economic Behavior, Economic Freedom, and Entrepreneurship

Economic Behavior, Economic Freedom, and Entrepreneurship

Edited by Richard J. Cebula, Joshua Hall, Franklin G. Mixon Jr and James E. Payne

Expert editors add to an important field of research, the economics of entrepreneurship, and explore how institutions influence entrepreneurial behavior. This book provides comprehensive and contemporary insights into the interaction between economic behavior of firms and households, economic freedom, and entrepreneurship, and how it generates an environment with greater opportunities for growth and development for individuals, households, and private-sector firms.

Chapter 1: Misperceptions about capitalism, government and inequality

Daniel L. Bennett and Richard J. Cebula

Subjects: economics and finance, austrian economics, economics of entrepreneurship, political economy

Abstract

This chapter examines distorted views of capitalism, challenging the popular view that capitalism is a villainous perpetuator and government a saintly corrector of cronyism and inequality. These misperceptions result not only in a distorted understanding of the institutional structure that underlies capitalism and the mechanisms in which income is distributed, but also lead to perilous reform prescriptions that undermine the ability of capitalism to improve individual and societal well-being. A theory is outlined that links an economy’s institutions to the type of capitalism, entrepreneurship, and inequality to emerge in society. Institutions that constrain the discretionary authority of government incentivize productive entrepreneurship and facilitate free market capitalism, giving rise to a market-determined income distribution and opportunity for economic mobility. An examination of available evidence suggests that countries whose institutions are more consistent with economic freedom exhibit less inequality than those in where government is more prominent.