Understanding Pure Kirznerian Dealmaking

The development by Israel Kirzner of the understanding of the entrepreneur is truly Nobel Prize worthy.

A key point in Kirzner's theory of the entrepreneur is that the entrepreneur recognizes opportunities and that the entrepreneur does not have to be a manager, land owner or capitalist, i.e. "funder" of an opportunity. For some reason, academics have an extremely difficult time accepting that an entrepreneur can be just an entrepreneur and nothing else. Perhaps it is because the academic life is so sheltered from the profit and loss system that academics just can't see the many ways profits can be made.

Indeed, even a supporter of Kirzner, Peter Botteke writes in a recent post at his blog:

Some within the Austrian camp chide Israel Kirzner for distorting Mises on the economic theory meaning of the entrepreneur. They claim instead that the entrepreneur must be a resource owner --- a capitalist. But Kirzner insists on what he calls the Misesian notion of the entrepreneur within economic theory.

Nobody denies that in the real-world, entrepreneurs wear several hats --- owner, manager, etc. But that is different from strictly speaking the economic theory meaning of the entrepreneur which is what Kirzner is concerned about.

In his comments section, I replied to Botteke this way:

Peter,

You said:

"Nobody denies that in the real-world, entrepreneurs wear several hats --- owner, manager, etc. But that is different from strictly speaking the economic theory meaning of the entrepreneur which is what Kirzner is concerned about."

I would take this point one step further.

On at least two occasions, in Kirzenarian fashion, I used neither capital, served as owner or managed a situation, yet I have been able to still make substantial money by saying to one person little more than "you should talk to this person about this, I will arrange it and collect 10%."

I find it fascinating that academicians have so much problem with this point that Kirzner makes. In the real world pure Kirzenarian deals are going down every day.

The late William Simon, former Treasury Secretary and multi-millionaire, once remarked, when you could make a call from a payphone for 25 cents, that if he was flat broke, all he would need to make a million was a roll of quarters.

A friend of mine makes money by walking the streets of the Los Angeles garment district finding items that merchants want to get rid of, he then finds other merchants in the district that he sells the goods to. He never uses any of his own money and makes the difference.

He once sold a truck load of shoes that a merchant wanted to get rid of to the merchant in the next store, and pocketed $6,000 in the transaction.

Note to academicians: You should really try and get what Kirzner means here, it will make your life much more profitable for very little additional work.

It is a great tragedy of academia that no one gets Kirzner's insights clearly, if at all. If they did, and provided insights to students about the wonders of pure Kirzenerain entrepreneurship, the world would have a much higher standard of living, as there is little beside entrepreneurs that raise the standard of living of the world. Not only do Kirznerian entrepreneurs exist, we desperately need more of them.