Eric M. Jackson, The PayPal Wars
World Ahead Publishing, Los Angeles, CA, 2006, 270 pp.,
includes index, Price $15.95.
Edward P. Stringham
Published online: 5 January 2008
Springer Science + Business Media, LLC 2007
Economists such as Friedrich Hayek, Israel Kirzner, Ludwig von Mises, Murray Rothbard,
and Joseph Schumpeter have made important contributions to economists' theoretical
understanding of entrepreneurship. They have discussed how entrepreneurs create new
opportunities, invest resources, and are the driving force of economic progress (Boettke and
Coyne 2003). To these economists, trying to model these entrepreneurs using mathematical
equations misses much of what entrepreneurs do (Rothbard 1985, p. 286). Similarly,
statistical studies cannot come close to fully illustrating the unique contributions of
Given that most entrepreneurship is distinctive and specific to time and place, would it
be possible to illustrate the theories about it using real world phenomena? Although not an
academic book, The PayPal Wars provides a clear example of economic theories in
practice. The book starts with a discussion of Joseph Schumpeter's (1942) concept of
creative destruction, and the next 270 pages go on to describe how it worked in the history
of online payments firm PayPal.com. The book is written from the perspective of Eric M.
Jackson who worked at the Silicon Valley startup from when it had 2,413 customers in
1999 to after it had more than 40,000,000 customers in 2002.
Much of the book involves personal stories, but The PayPal Wars also illustrates the
process and benefits of entrepreneurship in many ways. PayPal's founding entrepreneur was
Peter Thiel, the Silicon Valley businessman who founded the company in December 1998
and took it through its initial public offering and October 2002 sale to eBay for $1.5 billion.
Perhaps not coincidentally, Peter Thiel is a libertarian who knows about most, if not all, of
the Austrian economists listed above. In fact, one of the original goals of the company was
to “give citizens worldwide more direct control over their currencies than they ever had
before. It will be nearly impossible for corrupt governments to steal wealth from people
through their old means” (p. 19). PayPal was actually attempting to put into practice a
Rev Austrian Econ (2008) 21:99–101
E. P. Stringham (*)
San Jose State University, San Jose, CA 95192, USA