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… is from page 73 of Israel Kirzner’s March 1992 South African Journal of Economics paper, “Subjectivism, Freedom and Economic Law [2]” as this lecture is reprinted in Austrian Subjectivism and the Emergence of Entrepreneurship Theory [3], (Peter J. Boettke and Frédéric Sautet, eds., 2015), which is a volume in The Collected Works of Israel M. Kirzner [4]:
The tendency of market outcomes to reflect, at least to some extent, the realities which surround the society of men, derives from the propensity of men shrewdly to size up these uncertainties and to act purposefully to discover and overcome error.
DBx: Entrepreneurship in the market is nothing but the discovery of error and imperfections, or of situations that entrepreneurial discovery reveals to be the results of error or imperfections. To argue – as many economists do – that government intervention is necessary to ‘correct’ market imperfections and to protect people from error (either of their own or others’ making) is to utterly miss a key feature of the market process – namely, entrepreneurship.
Productive discussion and research can and should compare entrepreneurial discovery to government intervention. Under what conditions is entrepreneurial discovery likely to outperform government intervention, and under what conditions is it wiser to rely on government intervention? Questions such as this one are serious and scholarly. What is not serious or scholarly is to point to some existing problem in real-world markets and then leap to the conclusion that the best ‘solution’ for this problem is government intervention. (What’s even less serious and scholarly is to label all that you dislike about markets as market ‘failures’ that must be ‘corrected’ by government intervention. The results of even the most wisely made trade-offs are never what we’d have to suffer were we denizens of paradise. But we are not denizens of paradise.)