Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach

Abstract

Modern Austrian Economics, building on earlier work of Mises and Hayek, explains the determination of market prices in terms of entrepreneurial discovery processes. Dissatisfied with mainstream equilibrium models, Austrians see market equilibrating tendencies as series of competitive discoveries increasing mutual awareness among market participants. (Unlike deliberate search, discovery consists in alert entrepreneurs noticing profit opportunities, generated by earlier errors, which had been entirely unsuspected.) This approach entails unconventional implications for such issues as: antitrust policy, economic justice under capitalism, the meaning of economic welfare, and the possibility of rational planning under socialism.