Reopening the Debate
Edited by Catherine Léger-Jarniou and Silke Tegtmeier
Chapter 3: Austrian market theory and the entrepreneurial function as opportunity recognition
Opportunity recognition has been largely absent from mainstream economics. More precisely, it has been absent from the theoretical corpus of the instrumental-causal tradition in economics, which upholds prices as parameters. But another strain of market theory, the genetic-causal view, sees the market as a dynamic, entrepreneurial system. Within this line of thinking, one can trace the evolution of entrepreneurial theory as the development of the “entrepreneurial function” from its inception in the work of Richard Cantillon to the development of modern Austrian market process theory. This chapter presents the evolution of that function and argues that opportunity recognition, while absent from mainstream economics, constitutes the core of Austrian market theory. Opportunity recognition is built on alertness, that is, the propensity to notice opportunities for profit.
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