Synopses & Reviews
Produced throughout the first fifteen years of Hayekandrsquo;s career, the writings collected in Capital and Interest see Hayek elaborate upon and extend his landmark lectures that were published as Prices and Production and work toward the technically sophisticated line of thought seen in his later Pure Theory of Capital. Illuminating the development of Hayekandrsquo;s detailed contributions to capital and interest theory, the collection also sheds light on how Hayekandrsquo;s work related to other influential economists of the time. Highlights include the 1936 article andldquo;The Mythology of Capitalandrdquo;andmdash;presented here alongside Frank Knightandrsquo;s criticisms of the Austrian theory of capital that prompted itandmdash;and andldquo;The Maintenance of Capital,andrdquo; with subsequent comments by the English economist A. C. Pigou. These and other familiar works are accompanied by lesser-known articles and lectures, including a lecture on technological progress and excess capacity. An introduction by the bookandrsquo;s editor, leading Hayek scholar Lawrence H. White, places Hayekandrsquo;s contributions in careful historical context, with ample footnotes and citations for further reading, making this a touchstone addition to the University of Chicago Pressandrsquo;s Collected Works of F. A. Hayek series.
Review
andldquo;Capital and Interest is lucid, logically organized, and speaks clearly to the big issues behind each collection of articles. White has done an exemplary job, chronicling the development of Hayekandrsquo;s thought.andrdquo;
Review
andldquo;An excellent collection. White has expertly organized Hayekandrsquo;s articles on capital theory, supplementing these essays with an accessible introduction that provides a modern appreciation for both the depth of Hayekandrsquo;s thinking and the changes in his views over time.andrdquo;
Synopsis
Stressing verbal logic rather than mathematics, Israel M. Kirzner provides at once a thorough critique of contemporary price theory, an essay on the theory of entrepreneurship, and an essay on the theory of competition.
Competition and Entrepreneurship offers a new appraisal of quality competition, of selling effort, and of the fundamental weaknesses of contemporary welfare economics.
Kirzner's book establishes a theory of the market and the price system which differs from orthodox price theory. He sees orthodox price theory as explaining the configuration of prices and quantities that satisfied the conditions for equilibrium. Mr. Kirzner argues that "it is more useful to look to price theory to help understand how the decisions of individual participants in the market interact to generate the market forces which compel changes in prices, outputs, and methods of production and in the allocation of resources."
Although Competition and Entrepreneurship is primarily concerned with the operation of the market economy, Kirzner's insights can be applied to crucial aspects of centrally planned economic systems as well. In the analysis of these processes, Kirzner clearly shows that the rediscovery of the entrepreneur must emerge as a step of major importance.
About the Author
F. A. Hayek (1899andndash;1992), recipient of the Presidential Medal of Freedom in 1991 and co-winner of the Nobel Memorial Prize in Economics in 1974, was a pioneer in monetary theory and a leading proponent of classical liberalism in the twentieth century. He taught at the University of London, the University of Chicago, and the University of Freiburg.
Lawrence H. White is professor of economics at George Mason University.
Table of Contents
Preface
1. Market Process Versus Market Equilibrium
The Market System and the Theory of the Market
The Task of Price Theory
Two Views
Competition and Entrepreneurship
The Market Process
Competition in the Market Process
Entrepreneurship in the Market Process
The Producer and the Market Process
Monopoly and the Market Process
The Entrepreneur as Monopolist
The Producer and His Choice of Product
Equilibrium Economics, Entrepreneurship, and Competition
2. The Entrepreneur
The Nature of Entrepreneurship
Decision-making and Economizing
The Entrepreneur in the Market
The Producer as Entrepreneur
Entrepreneurial Profits
Entrepreneurship, Ownership, and the Firm
Ownership, Entrepreneurship, and the Corporate Firm
A Hypothetical Example
The Corporate Firm Once Again
Entrepreneurship and Knowledge
Entrepreneurship and the Equilibrating Process
Entrepreneurship in the Literature
Misesian Entrepreneurship
3. Competition and Monopoly
Competition: A Situation or a Process?
Entrepreneurship and Competition
The Meaning of Monopoly
The Two Notions of Monopoly Compared
The Theory of Monopolistic Competition
Some Remarks on the Notion of the Industry
Schumpeter, Creative Destruction of the Competitive Process
Entrepreneurship as a Route to a Monopoly Position
4. Selling Costs, Quality, and Competition
On the Product as an Economic Variable
Production Costs and Selling Costs
Selling Costs, Consumer Knowledge, and Entrepreneurial Alertness
Advertising, Consumer Knowledge, and the Economics of Information
Advertising, Information, and Persuasion
Advertising, Selling Effort, and Competition
Waste, Consumer Sovereignty, and Advertising
Buying Effort, Factor Quality, and Entrepreneurial Symmetry
5. The Long Run and the Short
The Long and the Short Run in the Literature
On Sunk Costs and the Short Run
Costs, Profits, and Decisions
Entrepreneurial Decisions, the Long Run and the Short
Some Additional Cases
Further Observations on Long-run Competition and Short-run Monopoly
6. Competition, Welfare, and Coordination
The Fundamental Flow in Welfare Economics
Knowledge, Coordination, and Entrepreneurship
The Coordinating Process
The Role of Profits
Resource Misallocation, Transaction Costs, and Entrepreneurship
Nirvana, Transaction Costs, and Coordination
The "Wastes" of Competition
Long-run and Short-run Evaluations
Index