Frank H. Knight on Uncertainty and Profit Manager versus Entrepreneur

Yasuhiro Sakai ()
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Yasuhiro Sakai: Faculty of Economics, Shiga University

No 32, Discussion Papers CRR Discussion Paper Series A: General from Shiga University, Faculty of Economics,Center for Risk Research

Abstract: This chapter aims to carefully discuss how Frank H. Knight, the "Grand Old Man" of Chicago, dealt with uncertainty and profit, with special reference to manager versus entrepreneur. Frankly speaking, Knight was a sort of man in paradox, having a dualistic view and adopting an eclectic approach. In order to shed a new light on his life and work, we first argue that there possibly exist some traces of the great Knight in the words and deeds of Martin Bronfenbrenner, once one of Knight's students at Chicago. Then we focus on the distinction between risk and uncertainty. According to Knight, non-measurable uncertainty must radically be different from measurable risk: only uncertainty, but not risk, enables the entrepreneur to acquire true profit as its reward. In contrast to the manager who are doing just routine jobs every day, the entrepreneur dares to engage in new venturous activities, thus playing the central figure of the capitalist system. We live in the new age of uncertainty. The second Knight is urgently needed.

Keywords: Frank H. Knight; Martin Bronfenbrenner; risk; uncertainty; manager; entrepreneur; profit; capitalist system (search for similar items in EconPapers)
Pages: 17pages
Date: 2018-10
New Economics Papers: this item is included in nep-ent, nep-his and nep-hpe
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Persistent link: https://EconPapers.repec.org/RePEc:shg:dpapea:32

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