The Review of Austrian Economics, 16:1, 5–23, 2003.
2003 Kluwer Academic Publishers. Manufactured in The Netherlands.
Entrepreneurship, Austrian Economics, and the
Quarrel Between Philosophy and Poetry
TYLER COWEN firstname.lastname@example.org
Department of Economics, George Mason University, Fairfax, VA 22030, USA
Abstract. I consider whether entrepreneurship is a distinct category within economic theory. More generally, I
consider the links between discussions of entrepreneurship and philosophic debates over the nature of the aesthetic.
For instance, Kant’s attempt to elevate the category of the aesthetic has much in common with Kirzner’s attempt
to elevate the concept of the entrepreneur. Shackle’s theory of choice refers very directly to the notion of the
aesthetic. Theories of the aesthetic and theories of the entrepreneur have common strengths and weaknesses.
Key Words: economic method, entrepreneurship, aesthetics, philosophy and economics
JEL classiﬁcation: B0, B1, B2, B4.
Is the entrepreneur a special category within economic theory? Or is the entrepreneur simply
another example of the rational, maximizing individual, as exemplifed by search theory or
human capital models?
Entrepreneurship is a common concept within economics, but basic questions about the
nature of the entrepreneur have brought little consensus. The extent positions can be divided
into two broad camps. The ﬁrst group thinks that entrepreneurship is a useful historical
category but is analytically nothing special. Most neoclassical economists hold this view,
whether implicitly or explicitly.
The second position posits entrepreneurship as a general feature of human action, and dis-
tinct in principle from maximizing behavior. In particular many of the Austrian economists
have stressed the special nature of the entrepreneur. Israel Kirzner’s Competition and
Entrepreneurship, which outlined a systematic theory of entrepreneurship, is arguably the
most inﬂuential text in the last thirty years of the Austrian school. Whether they agree with
all the details of Kirzner’s theory, many other Austrians view the entrepreneurial construct
as an important feature neglected by neoclassical economics.
Economics, and Austrian economics in particular, faces the danger (promise?) of being
trapped in a “Walrasian box,” to use a phrase I once heard from Roger Garrison. The
Walrasian box refers to a theoretical construct where all forms of behavior, and all economic
outcomes, are explicable in terms of rational maximization and market equilibrium. Most
neoclassical economists, especially of the Chicago variety, welcome the Walrasian box. For
them, reducing economic phenomena to the Walrasian box is virtually synonymous with
scientiﬁc progress. Melvin Reder (1982), in his classic Journal of Economic Literature