Handbook on Contemporary Austrian Economics

98 <strong>Handbook</strong> on contemporary Austrian economics
whether a potential pure profit exists). Entrepreneurial activity in the
market is thus dependent on monetary calculation in order to (1) discover
what resources need to be reallocated and (2) once the reallocation is done,
whether it was desirable from a societal perspective.
It follows that monetary calculation goes hand in hand with discovery:
they are two sides of the same coin. Rothbard and Salerno are right
to insist on the calculation aspect emphasized by Mises. However, by
introducing the concept of alertness, Kirzner has brought to bear the
importance of discovery in the monetary calculation that entrepreneurs
may engage in. Monetary calculation without discovery is not enough to
describe entrepreneurship per se (it may simply be a case of "Robbins ian
maximizing" as Kirzner would put it 23 ): entrepreneurship primarily
consists of discovery.
Another issue that has been discussed among Austrian economists in
the last two decades has to do with whether one can conceive of a "propertyless"
entrepreneur. 24 In his work, Kirzner isolates the entrepreneurial
function: the entrepreneur is pure and propertyless (something that other
economists such as John Bates Clark and Mises have done before him).
Isolating the entrepreneurial function not only has the merit of clarifying
the imputation of the different factor incomes (as Clark showed), but it
also enables economists to establish the very nature of that function. The
entrepreneurial function is about introducing novelty into the economic
system. This is what the discovery of new means and ends is all about. This
role is unthinkable in the closed universe of neoclassical equilibrium. For
this reason, all factors (capitalist, laborer, and land-owner) are present in
the neoclassical world except the entrepreneurial function. Similarly, all
the neoclassical factors are linked to ownership (of capital goods, labor
and land) except the entrepreneurial function.
It has been argued that the notion of entrepreneurial losses shows that
propertyless entrepreneurs cannot exist in the real world. 25 Surely entrepreneuriallosses
fall on a resource owner (exercising his capitalist function),
but he may not be the one who made the initial discovery. The capitalist
function may consist in taking (already recognized) risks while lending
resources, which is analytically separated from the entrepreneurial function
(i.e., discovering new opportunities). Indeed, one can imagine a case
where the entrepreneur presents the already-recognized (risky) opportunity
to the capitalist. In such a case, the capitalist will Cl:ct as a "Robbinsian
maximizer" in choosing whether to pursue it. Losses reflect the uncertainty
of the future, not the impossibility of isolating the entrepreneurial function.
It is true that in reality the individual exercising his entrepreneurial
function always possesses at least one factor: his own labor. But the fact
that the entrepreneurial and capitalist functions are, in reality, often found