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Economics as a Coordination Problem: The Contributions of Friedrich A. Hayek; O'Driscoll, Gerald P., Jr.
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Chapter 5

No discussion of Hayek's treatment of expectations would be complete without consideration of the role of entrepreneurship in his theory. Hayek himself contributed little to the theory of entrepreneurship. This failure is surely partly due to short shrift generally given to the entrepreneurial function in economics. This lacuna is ironic, given the theoretical importance assigned to the undertaker as far back as Cantillon and J. B. Say. But in classical British political economy it was the capitalistic function that occupied center stage. Moreover, Walras introduced the notion of timeless equilibrium, which renders unintelligible both the entrepreneurial and capitalistic functions. The roughly simultaneous attack by J. B. Clark—an attack renewed by Frank Knight—on the concept of an investment period obscured the need for theories of the entrepreneurial and capitalistic roles.

Chapter 6

Whatever we now know of the many precursors of modern marginalist and subjectivist economics, of Bernoulli, Dupuit, Gossen, J. B. Say, and Senior; and, even earlier, of Lottini, Davanzati, Montanari, and Galiani, *10 British political economy at the eve of the Marginalist Revolution was Ricardian in approach. Be this because of Ricardo's continued intellectual dominance, or the recrudescence of Ricardian thinking effected by the appearance of J. S. Mill's Principles, British economics especially was largely ignorant of these earlier insights. Ricardian classical political economy was macroeconomics by and large. *11 What was lacking in Ricardian theory was precisely a theory of choice and demand, a non-materialist theory of costs, and a consistent marginalism and subjectivism in approach. In short, Ricardian microeconomics was a skeleton insofar as it existed. Suffice to say, Ricardian value theory was at the root of this.