Israel Kirzner, Professor Emeritus at NYU, is among the foremost scholars in the continuing development of the Austrian school of economic theory. He has extended our understanding of the workings of a free society, illuminated the role of entrepreneurs in the process of economic discovery, and shed new light on the dynamics of market forces. In this interview, recorded in 2000, Kirzner explores these differences, as well as his experiences as student of Ludwig von Mises, his interaction with other Austrian greats such as Friedrich Hayek, and his career as a professor at New York University. He displays his keen understanding of the differences between the Austrian school and neo-classical economics, and how Austrian economics affords new and exciting avenues for future work.

“What competition really means is the freedom of any entrepreneur to enter.” ~Israel Kirzner, from the Introduction

 

Below are some discussion prompts and other materials related to this video:

 

3:45 The Central Tenets of Austrian Economics

1- Why does Kirzner insist that it is important to regard Austrian economics as a tradition?

2- Kirzner claims subjectivism as the most important insight of the Austrian school. What do Austrian economists mean by subjectivism, and how does this differ from the perspective of mainstream economics?

3- How does the tenet of purposefulness differentiate the way individual behavior is viewed from the paradigm of maximization?

4- What is the place of ignorance in Austrian economic theory?

5- How does the Austrian perspective on time differ from the mainstream?

 

13:13 On Competition and Entrepreneurship

6- Contrast the Robbinsian view of decision-making to the Misesian. What elements of Robbins’ decision-making framework maintain some importance in Mises’?

7- Why is it easier to make predictions utilizing a Robbinsian framework rather than an Austrian one? Which do you find to be a more realistic description of the decision-making process, and why?

 

20:38 The Relationship Between Competition and Entrepreneurship

8- What does Kirzner see as the greatest flaw of the model of perfect competition, and why is it so problematic?

9- What does Kirzner means when he says, “Human beings¬† notice that which it is to their benefit to notice?” How can this be reconciled with the tenet of ignorance?

 

30:15 The Socialist Calculation Debate

10- Kirzner says that Mises argued that economic calculation under socialism was impossible, not that socialism is impossible. How can this be true?

11- Kirzner references Lerner, suggesting that Marxism is the economics of capitalism and price theory is the economics of socialism. What does he mean by this, and to what extent do you agree?

 

36:05 Implications of Competition and Entrepreneurship for Public Policy

12- Kirzner points to anti-trust policy as an important area of application. He also says that no matter how well-meaning anti-trust policies are, they are based on a faulty understanding of the nature of competition. What is the nature of this misunderstanding?

13- Kirzner argues that J.A. Schumpeter can be considered part of the Austrian school, at least as far as his analysis of anti-trust policy is concerned. Do you agree that Schumpeter’s analysis, as described by Kirzner, can be considered Austrian?

 

49:00 Influential Modern-Day Austrian Economists

14- Which modern-day Austrians does Kirzner consider to be influential, and for what reasons?  Are there any you believe he left out?

15- How does Kirzner characterize the relationship between Austrian economics and mathematics? Is mathematics a help or hindrance to Austrian economic analysis?

57:35 Economists’ Tendency Toward Conservatism?

16- Kirzner and Machan reference a Stiglitz paper which suggests that most economists are of a conservative political bent. What does Kirzner think of this claim?

 

“The great debate in the history of economics has been between those who understand the nature of economic ‘law’ and the deniers of economic law.” ~Israel Kirzner

 

Related References:

Kirzner’s The Economic Point of View: An Essay in the History of Economic Thought

Edwin Dolan’s The Foundations of Modern Austrian Economics

Arnold Kling, What Makes Capitalism Tick?, a Liberty Classic on Kirzner’s Competition, Economic Planning, and the Knowledge Problem

 

 

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