Thursday, October 4, 2018

Why Israel Kirzner Should Be Awarded the Nobel Prize in Economics

Israel Kirzner
By Robert Wenzel

On Monday, the Royal Swedish Academy of Sciences, Stockholm, Sweden, will announce the choice (if any) by the Prize Committee members for the 2018 Prize in Economic Sciences.

I have been on record since at least 2008, calling for  Israel Kirzner, professor emeritus at New York University, to be awarded the Nobel Prize. 

Kirzner studied under the great Austrian economist Ludwig von Mises and I believe his work on entrepreneurship is pathbreaking and has significant policy implications.   

Kirzner's important insight is in drawing out the essence of what entrepreneurship is. He argues that entrepreneurship is the ability to recognize a potential opportunity and act on it. Notably, and this is where, in particular, many other Austrian economists differ with him, he does not see the risking of capital as a characteristic specifically tied to the entrepreneur.

He sees the awareness of where capital can be found to be part of what an entrepreneur must be aware of to successfully complete an entrepreneurial project, rather than that the entrepreneur himself must have capital at risk.

Thus, the role of the entrepreneur and that of the person who risks capital are two separate functions.

If Kirzner is correct about this, and I believe he is, then it has profound policy implications, since those who argue that a person in poverty does not get an even break, are set back significantly by Kirzner's observation. Since if personal capital that is owned by the entrepreneur is not necessary to launch an entrepreneurial project, then the poor person is not at a disadvantage in pursuing entrepreneurial opportunities, simply because he is poor, Thus the poor do not need a special break. The poor who spot entrepreneurial opportunities, including where to find willing capital investors, can do so without the advantage of their own capital, and thus they can lift themselves from poverty just by keen entrepreneurial awareness.

Also see: Some Serious Confusion About Kirznerian Entrepreneurship

Robert Wenzel is Editor & Publisher of


  1. I agree with Kirzner and I agree with your conclusion that the poor can lift themselves from poverty by keen entrepreneurial awareness.

    But doesn't the highly regulated economy tend to put the entrepreneur with no capital of his own at a disadvantage to one who does have capital to navigate this morass? The Institute for Justice does pro bono work for some entrepreneurs in removing the regulatory shackles. How many more are stymied?

  2. Robert, I've never understood your point on the practical need to resolve the competing theories on entrepreneurship. It seems to be a highly academic argument with no practical implications. A poor entrepreneur could lift himself out of poverty regardless of which theory of entrepreneurs is correct.

    1. I disagree that is purely academic. If it frames someone's mindset in a new way or helps to rethink the legal structure, then the distinction moves beyond "academic". Love the phrase, where is the capital vs who has the capital. Opportunity vs status quo.

    2. My point is, which poor entrepreneurs and/or financial backers are reading Austrian economics debates about the definition of an "entrepreneur," and changing their actions based on the various arguments? If they have an idea, they will pursue it, regardless of whether Kirzner or his critics are right.

    3. The role of the entrepreneur isn't so important for entrepreneurship per se as it is for others (academics, politicians) to understand the role of the entrepreneur. Kobe Bryant doesn't care so much about the physics of rubber flying through the air, but insofar as others try to legislate the basketball flight, it would be good that they know what is and is not true about it. This is why it *does matter that we realize the Kirzner alertness view of entrepreneurship is *wrong and the Klein judgement view is *correct.

  3. As Peter Klein, Joe Salerno, and Walter Block have noted, there is no such thing as an entrepreneur who isn't a capitalist nor a capitalist who isn't an entrepreneur. Klein, who zooms in on the Austrian conception of entrepreneurship, has shown that entrepreneurship is a matter of judgement regarding the use of scarce resources with respect to what Salerno calls future-oriented appraisal of consumer demand. Kirzner's notion of entrepreneurship as alertness misses these crucial elements. Very little (to none) of Kirzner's theory has to with the Misesian understanding of future-oriented action. His winning the Nobel, rather than e.g. Rothbard, would be something like Hayek winning in '74, rather than e.g. Mises.