The Meaning of the Market Process

Israel Kirzner is the foremost proponent of the modern Austrian theory of the market process. Although this theory concurs with many of the major policy implications of neo-classical economics, it sharply diverges from much of the substance and methodology of neo-classicism. Austrian economists criticize the "tight equilibrium" approach of the mainstream and emphasize the crucial role of ignorance, uncertainty, and the passage of time. By introducing the role of the entrepreneur and of entrepreneurial discovery--an innovation in which Kirzner's earlier work has played a central role--modern Austrian economists believe that it is possible to steer a middle course between those who believe the world to be always in full coordination, and those who believe it has no important coordinating properties at all. "The Meaning of Market Process" offers new substantive insights in support of this Austrian position, and new historical interpretations of how the ideas of the modern Austrians have emerged. The essays focus particularly on the pioneering work of Carl Menger, the contributions of von Mises and Hayek, and the famous interwar socialist calculation debate--issues which are especially relevant at a time when the economic failures of socialism have become widely recognized.