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BÖHM-BAWERK’S APPROACH TO ENTREPRENEURSHIP

Published online by Cambridge University Press:  04 November 2014

Matthew McCaffrey  and
Joseph T. Salerno
Matthew McCaffrey
Affiliation:
Lecturer in Enterprise, Manchester Enterprise Centre, University of Manchester.
Joseph T. Salerno
Affiliation:
Professor of Economics, Pace University.
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Abstract

This paper explores the neglected theory of entrepreneurial profit proposed by Eugen von Böhm-Bawerk. Although historians of thought often dismiss Böhm-Bawerk’s writings on this topic, we argue that he did develop a coherent theory of entrepreneurial decision making and profit distinct from his theory of interest. We first discuss Böhm-Bawerk’s ideas about futurity, uncertainty, and expectations in his theory of goods, which help form the foundation of his theory of entrepreneurship. Further, we connect his notion of uncertainty with his thoughts on money. We then turn to several of Böhm-Bawerk’s ideas about entrepreneurial profit. Entrepreneurs purchase and allocate factors of production; these decisions are speculative because production takes time, and therefore entrepreneurs bear the uncertainty of the market. Their judgment thus yields profits or losses based upon the ability to anticipate the future state of consumer demand. Finally, we discuss the views of several of Böhm-Bawerk’s contemporaries, in order to place his theory in historical context.

Type
Articles
Information
Journal of the History of Economic Thought , Volume 36 , Issue 4 , December 2014 , pp. 435 - 454
Copyright
Copyright © The History of Economics Society 2014 

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