The Review of Austrian Economics, 15:1, 75–90, 2002.
2002 Kluwer Academic Publishers. Manufactured in The Netherlands.
A Critique of Kirzner’s Finders-Keepers
Defense of Proﬁt
Economics Department, Denison University, Granville, OH 43023, USA
Abstract. This paper criticizes Kirzner’s use of the ﬁnders-keepers ethic to justify entrepreneurial proﬁt. It does
so by pursuing two lines of argumentation. First, Kirzner’s defense of the justice of entrepreneurial proﬁt is based
upon treating the wage-for-labor-time exchange as legitimate. There are good reasons for doubting the justice of
the wage-labor exchange. The paper argues that the proﬁts earned by a capitalist ﬁrm employing wage-labor can
not be considered to be just if we accept the juridical principle of imputation. The juridical principle of imputation
asserts that people should be held legally responsible for the actions and results of the actions for which they
are factually responsible. If we consider hired human beings always to be responsible agents, as is true in David
Ellerman’s (1992) rendition of the labor theory of property, Kirzner’s defense of entrepreneurial proﬁt generated
in a capitalist enterprise is weakened. Second, the paper criticizes Kirzner’s thesis that in a market economy
everyone has, in principle, an equal opportunity to be an entrepreneur directing a productive enterprise or to be an
entrepreneur engaging in speculation. Kirzner reaches this conclusion because he believes that credit markets in a
free economy do not systematically discriminate amongst types of borrowers. This conclusion has been called into
question by credit rationing models demonstrating that asset-poor individuals can be systematically denied access
to loans. The credit rationing literature erodes the underpinnings of Kirzner’s application of the ﬁnders-keepers
ethic to the evaluation of entrepreneurial proﬁt earned through speculation or productive creativity because it
implies that all individuals do not in principle have an equal opportunity to be an entrepreneur.
JEL classiﬁcation: D63.
Israel Kirzner has for many years developed and championed a theory of the market as
a discovery process. He argues that an understanding of the market process derived from
the work of Hayek and Mises offers a more realistic and descriptive portrayal of a capi-
talist market economy than does the theory dominating mainstream economics depicting
the market economy as a perfectly competitive, general equilibrium system. Kirzner also
insists that if the Austrian theory were more widely accepted, the popular idea that it is
possible and desirable to challenge the justice of the outcomes of a market process guided
by the rule of law would be discredited. As he puts it, understanding the market as a discov-
ery process makes end-state notions of distributive justice “highly problematic” (Kirzner
1995:46). In a similar vein, Hayek (1976) maintains that in a market economy, conceptions
of social justice are a “mirage.” For Kirzner, a proper conception of the functioning of the
market process, combined with the widely held acceptance of a ﬁnders-keepers ethic, should
also produce an acceptance of the justice of free market outcomes, especially entrepreneurial
David Prychitko and an anonymous referee provided very helpful comments on an earlier version of this paper.
Support for this research was provided by the Bartlett Junior Leave Program at Denison University.