The Concise Guide To Economics

by Jim Cox
 

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Introduction

Basics and Applications

  1. Overview of the Schools of Economic Thought
  2. Entrepreneurship
  3. Profit/Loss System
  4. The Capitalist Function
  5. The Minimum Wage
  6. Price Gouging
  7. Price Controls
  8. Regulation
  9. Licensing
  10. Monopoly
  11. Anti-Trust
  12. Unions
  13. Advertising
  14. Speculators
  15. Heroic Insider Trading
  16. Owners vs. Managers
  17. Market vs. Government Provision of Goods
  18. Market vs. Command Economy
  19. Free Trade vs. Protectionism

Money and Banking

  1. Money
  2. Inflation
  3. The Gold Standard
  4. The Federal Reserve System
  5. The Business Cycle
  6. Black Tuesday
  7. The Great Depression

Technicals

  1. Methodology
  2. Labor Theory of Value
  3. The Trade Deficit
  4. Economic Class Analysis
  5. Justice, Property Rights and Inheritance
  6. Cost Push
  7. The Phillips Curve
  8. Perfect Competition
  9. The Multiplier
  10. The Calculation Debate
  11. The History of Economic Thought

A Chronology

About the Author

Praise for the Book

2. Entrepreneurship

Entrepreneurship can be defined as acting on perceived opportunities in the market in an attempt to gain profits.  This acting involves being alert to profit possibilities, arranging financing, managing resources and seeing a project through to completion.  Entrepreneurs can be regarded as heroic characters in the economy as they bear the risk from bringing new goods and services to the consumer.  To quote from Ludwig von Mises in Human Action: 

They are the leaders on the way to material progress.  They are the first to understand that there is a discrepancy between what is done and what could be done.  They guess what the consumers would like to have and are intent on providing them with these things. p. 336  

Entrepreneurship is an art, every bit as much as creating a painting or sculpture.  In each case--running a business and producing a work of art--the same elements abound:  Conceiving the undertaking, taking resources and combining them into something new and different, risking those valuable resources in producing something which may ultimately prove to be of less value. 

It is very common in economics textbooks to ignore the entrepreneur when the texts discuss markets and competition.  Their treatment implies that this alertness to profit possibilities, arrangement of financing, management of resources and seeing a project through to completion are all automatic within the market economy.  They are not.  Real flesh and blood people must act (and not once, but continuously), and be motivated to take these risks in order for commerce to proceed. 

The theory of perfect competition entirely eliminates any role for such a person.  One of the reasons the role of entrepreneurs has been deemphasized is the methodology of positivism.  This approach reduces economic phenomena to mathematics and graphs.  Since the traits of alertness, energy, and enthusiasm so necessary for entrepreneurship do not lend themselves readily to mathematics and graphing they are neglected by many economists.  Here we have a method displacing real-world events.  Which is it we should do?:  Throw out parts of reality (such as the above named traits) which do not fit with a method, or find a method that acknowledges and deals with such significant parts of reality?



 

The Concise Guide To Economics © 1995, 1997 Jim Cox