Subjectivism, Uncertainty and Disequilibrium: What’S so Radical About the Radical Austrian Approach to Entrepreneurship?

Abstract:     
A number of recent articles have offered a new approach to entrepreneurship based on a the thoroughgoing subjectivism of Ludwig Lachmann. This approach (dubbed the Radical Austrian Approach – RAA) claims to profitably extend in some crucial respects the other well-known Austrian approaches of Schumpeter and Kirzner. We examine this claim by analyzing three core concepts of the new approach, namely, subjectivism, uncertainty and disequilibrium. We clarify what we take to be the implications of the new Radical Austrian Approach (RAA), and question some claims that are either incorrect or, at least, unclear. We come inevitably to a fundamental question that must be confronted, namely, how can action be both disequilibrating and orderly? We offer what we believe is an obvious, but hitherto insufficiently articulated, framework that puts the RAA on a solid theoretical and empirical footing. We note also a number of opportunities for future research that emerge out of this analysis.

Number of Pages in PDF File: 33

Keywords: subjectivism, disequilibrium, expectations, uncertainty, institutions, network-effects, entrepreneur.

working papers series