[Originally appeared as “Professor Hébert on Entrepreneurship” in the Journal of Libertarian Studies 7, no. 2 (Fall, 1985): 281–86.]
Since I admittedly know more about Austrian economic theory than about Richard Cantillon, I would like to focus my comments on the Austrian aspects of Professor Hébert’s paper, in particular his discussion of entrepreneurship. Hébert is correct in his discussion of the differences between Mises’s and Kirzner’s concept of the entrepreneur and in his critique of the Kirzner approach.
Mises conceives of the entrepreneur as the uncertainty-bearer, who receives profits to the degree that he can successfully forecast the future, and suffers losses to the extent that his forecasting goes awry. One evident case of rewards in proportion to the success of forecasting is the stock or commodity market. The stock or commodity speculator, furthermore, clearly suffers losses to the extent that his forecasting is significantly less accurate than that of his fellow speculators. But Mises points out that the market as a whole is in the same situation as the stock or commodity market. The entrepreneur who buys raw material and hires labor, and who thereby incurs costs in order to produce a future product, is expecting that he will be able to sell the product to customers for a revenue greater than the costs. Just as the stock speculator purchases stock in the hope and the expectation that it will rise in price, so the employer incurs costs in the expectation that he will be able to sell the product at a greater price.