How Mises Goes Beyond Knight — and Why It Matters: Entrepreneurship, Calculation, and the Republic of Entrepreneurs

Heng-Fu Zou ()

No 800, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: Frank H. Knight's Risk, Uncertainty and Profit(1921) gave economics the canonical distinction between risk and uncertainty and explained profit as the residual return to the bearer of genuine (non-probabilistic) uncertainty. Ludwig von Mises's Human Action (1949) subsumes Knight's insight within a far more comprehensive architecture. Mises embeds en trepreneurship in a praxeological theory of action; shows that monetary calculation and market prices are the preconditions for entrepreneurial judgment; analytically separates entrepreneurial profit from interest, wages, and monopoly gains; locates entrepreneurial roles throughout firms and markets (not only in owner-insurers); frames competition as a dynamic selection process guided by profit and loss; links monetary-financial regimes to systematic entrepreneurial error (business cycles); and derives the institutional constitution-private property, open entry, freedom of contract - of what we call a republic of entrepreneurs. This paper reconstructs Mises's entrepreneur in depth, contrasts it with Knight's narrower uncertainty- bearing vantage, and develops measurable implications for growth, policy, and political economy.

Pages: 37 pages
Date: 2025-10-31
New Economics Papers: this item is included in nep-ent, nep-hme, nep-hpe and nep-sbm
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