Corridors, Coordination, and the Entrepreneurial Theory of the Market Process

Abstract

Daniel Klein (Klein 1997, Klein and Orsborn 2009 and Klein and Briggeman forthcoming) and Israel Kirzner (forthcoming) have been engaged in a debate concerning how economists should understand and use the terms “coordination” and “economic goodness”. Klein and Briggeman (forthcoming) contend that Kirzner suffers from excessive ambition scientifically. The authors claim Kirzner’s reliance and identification with “the Misesian image of science” threatens to discredit his more sensible contributions (e.g., market processes are driven towards progress by competitive entrepreneurial discovery). We offer a response to Klein and Briggeman’s claim that loose, vague and indeterminate forms of economic reasoning make for a more robust political economy. In doing so, we also explain the theoretical context surrounding Kirzner’s theory of the entrepreneurial market process. While we agree with Klein and Briggeman’s critique of scientism and formalism, we emphasize the nature of the debates over market theory and the price system that Kirzner was engaging in order to understand the reasons behind his methods and the theoretical insights they provide. Rather than the source of his failure, we view Kirzner’s “excessive ambitions” to provide a scientific foundation of the market process as the source of his great success as an economic theorist.

Keywords: Austrian Economics, Disequilibrium Dynamics, Entrepreneurship, Kirzner, Market Process

JEL Classification: B31, B53