I often get e-mails from publicists asking if I’d like to receive free copies of books. (I take them up on their offers only when I believe the chances are above 50 percent that, after reading the book, I’ll mention it in some substantive ways at Cafe Hayek or in some other of my writings.)
Yesterday brought such an e-mail. One of the books offered is Amar Bhidé’s Uncertainty and Enterprise: Venturing Beyond the Known, forthcoming in December 2024 from Oxford University Press. Here’s the publicist’s pitch:
The author of A Call for Judgment and The Venturesome Economy, is back with a new framework for entrepreneurial individuals and businesses on how to overcome doubts and disagreements during periods of uncertainty or on the absence of objective data. Even now – thinking about business strategy and planning for post-election in the United States feels impossible, yet businesses have to keep moving forward in spite of the unknowns. Bhidé’s framework shows leaders how to navigate challenges and build consensus around decisions where there is no clear path or evidence to lean on.
Another of the offered books – this one forthcoming in December 2024 from Cambridge University Press – is Marc Fasteau’s and Ian Fletcher’s Industrial Policy for the United States. And here’s the pitch for this book:
Already being hailed as a foundational work on industrial policy and with praise from left and right of the aisle, this book argues that America needs a three-pronged strategy that includes tariffs/trade; innovation/manufacturing support; and a strategy to balance the overvalued dollar. Features case studies organized by country, industry, and time period, and hundreds of concrete and practical recommendations.
What strikes me about the e-mail that I received from the publicist is the contrast between these two books.
I’ve not yet read either volume, but the one that I’m certain is the better of the two is the book by Bhidé. Bhidé is a creative, careful, and wise economist. Ian Fletcher, in contrast – judging by the many things of his that I’ve read over the years – knows no economics. His many briefs about international trade are run-of-the-mill apologies for protectionism. It’s therefore unlikely that his new book will present a compelling case for protective tariffs, subsidies, and other government interventions.
Indeed, the book by Bhidé – who understands and appreciates entrepreneurship – likely supplies arguments that devastate the case for industrial policy. An understanding of entrepreneurship, combined with an understanding that economic growth requires entrepreneurship, is sufficient to understand the folly of industrial policy – at least of industrial policy aimed at enhancing the economy’s overall performance rather than aimed at artificially buoying one or two industries regardless of the cost.
Entrepreneurs innovate, and innovation is creative. Industrial policy is a preconceived plan about how resources will be allocated. Because innovation, being creative, cannot be known or planned for in advance, industrial policy must squelch innovation and, hence, squelch entrepreneurship insofar as entrepreneurship and innovation might create economic opportunities that are inconsistent with the industrial-policyists’ plan. The greater the portion of the economy covered by industrial policy, the smaller is the scope for entrepreneurship and innovation. Growing economies of course require plans, but the plans are made decentrally, by entrepreneurs and businesses competing with each other with their own resources for the patronage of buyers who spend their own money. Government planning overrides these decentralized, competitive plans – and crushes the creativity that is always part of these plans.
It’s a safe bet that Bhidé’s book makes clear the innovative nature and role of entrepreneurship. Also a safe bet is that Fasteau’s and Fletcher’s book evinces no understanding of, or appreciation for, the role of entrepreneurship. Bhidé understands that economies grow decentrally, from the bottom-up, though a ceaseless process of experimentation, trial, and error in which individuals spending and investing their own money – and guided by market-set prices and other market signals – are sharply incited to discover economic opportunities and to cut their losses on those many occasions when they err. Any case for industrial policy necessarily rejects this understanding.
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Here, by the way, is the description at Amazon of Bhidé’s book:
Uncertainty–doubt about what is or could be–fuels our ambitions and fears. Tantalizing possibilities spur us to innovate and explore. Yet, we also strive to reduce uncertainty. Mountain climbers and deep-sea divers plan carefully. Rules, routines, and research in business, the law, and medicine are designed to increase predictability and forestall unpleasant surprises.
Mainstream economics, however, hides from uncertainty, banishing it to the mystical world of unknown unknowns or reducing it to mechanistic calculation. Its textbooks ignore everyday problems that lack demonstrably correct solutions. But resolute responses to such problems require confidence. Where does confidence come from, especially when we go beyond the known? How do we justify our fallible judgments to ourselves and others?
Drawing on more than thirty years of teaching and research, Amar Bhidé offers compelling answers. Inspired by–while modernizing–the forgotten ideas of the economist Frank Knight and other great twentieth-century thinkers, Bhidé challenges both hyper-rational economic orthodoxy and claims of pervasive behavioral biases. He shows that while big bets require more justification, the facts alone don’t persuade skeptics. Instead, narratives that combine reason, contextual evidence, and creative interpretations align our imaginations.
Bhidé’s framework and rich examples explain neglected and surprising features of entrepreneurship. He shows how startups and giant corporations coexist; how seemingly bureaucratic procedures encourage the giants to undertake complex high-stakes initiatives; and, how vividly described possibilities help make the imagined real. Cutting through esoteric theories–but avoiding glib prescriptions–Uncertainty and Enterprise examines the foundations of bold yet reasonable action.
