1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar
Source link: http://archive.mises.org/4474/the-faith-of-entrepreneurs/

The Faith of Entrepreneurs

December 23, 2005 by

If we accept the interesting description of faith by St. Paul (“evidence of things unseen”) we can understand entrepreneurship and capitalist investment as acts of faith. Everyone who is in business understands this. It requires a thousand daily acts of seeing the unseen future to be in business. The reality of the marketplace is that the consuming public can shut you down tomorrow. All they need to do is to fail to show up and buy. FULL ARTICLE


Ned Vare December 23, 2005 at 10:32 am

Mr. Rockwell,

I would appreciate your help.

The State of CT has been sued (Nov 22) by the teachers’ union (and other groups) to increase public school spending by $2B in order to increase “student achievement” among “under- performing” districts with the idea of reducing the “learning gap” that exists between high and low income (minority) groups.

The group has the name,”CT Coalition for Justice in Education Funding”

As part of preliminary preparation for defending the lawsuit, I’ve been asked by Yankee Institute, a conservative think tank in CT, to write a report showing, if I can, that there is little, if any, connection between school spending and student achievement. I intend also to report that the schools themselves contribute to their own failure.

So far, I’ve been able to locate much evidence of that, but your article, “The Faith of Entrepreneurs,” seems to point to an important general truth about how government control precludes the (market) forces that might improve education and therefor is the reason for, not the solution to, public school failure.

In the article, you mention several areas in which market forces work. I believe you have put your finger on why government schooling does NOT work. Such as: property rights (those are denied by the school system’s power to tax private property); market prices (denied by monopoly control in education); the time structure of production (I admit I do not know what is meant here); division of labor (not truly in effect in public schools where inefficiency and bureaucracy rule); and the absense of choice by consumers.

I’m hoping you can me help by directing me to other articles you (or others) have written that show how it is those missing forces that prevent the schools from working, and that more money, alone, simply does not, and would not, improve the results from government schools. (it is my personal belief that no matter how much is spent on public schools, it would not improve them since they are not designed to educate in the first place)

Thank you for your consideration.

Ned Vare
(1998 LP candidate for Governor of CT, currently writing education columns for local newspaper)

Alvin Lowi December 23, 2005 at 11:07 am

Lew has hit a home run with this essay. His distinction between entrepreneurship (implementation of innovation) and administration of assets is essential for understanding human progress. He goes a long way toward overcoming the unfortunate confusion created by Adam Smith’s “invisible hand” metaphor, which equates the building of economic science and knowledge with taking of risks on a future state of affairs. Established economic knowledge is past. Yet it is prologue for economic venture without which there is no progress, economic or other.

N. Joseph Potts December 23, 2005 at 11:09 am

This article neglects to mention what, to my mind, has become the chief threat to entrepreneurism. That is government interference, both incidental (say, inflation) and targeted (say, an antitrust suit). In fact, it was THESE threats I thought of when I first apprehended the subject of the article.

In confining his appreciation to MARKET forces, Rockwell has produced a piece that is perhaps a bit quaint. His appreciation is utterly valid and relevant, and nothing in this paean is exagerrated, in my view. But ultimately, market success much somehow evade or appease Leviathan, and the accomplishment of this, I fear, is the greatest miracle of all.

The dirtiest, too.

iceberg December 23, 2005 at 12:16 pm

Back into the 1980s, for example, Coca Cola decided to change its formula and advertise it as New Coke. The result was a catastrophe as consumers fled, even though the taste tests said that people liked the new better than the old.

You neglected to tell the best part of that story!

From Snopes.com: An interesting little claim sprang up in the wake of the introduction of Classic Coke, one having to do with its sweetener. People swore they detected a change in the flavor between Classic Coke and the original. This gave rise to the rumor that the product had been reformulated, dropping cane sugar in favor of high fructose corn syrup. Depending upon whom you listened to, either the demand for the return of original Coca-Cola afforded the company the opportunity to switch from cane sugar to corn syrup or the whole fiasco of taking original Coca-Cola off the shelves and reintroducing it three months later as Classic Coke was all a brilliant scheme to mask the change in sweetener. According to whispered wisdom, the company had hoped to slip the modification past consumers by having it take place during the original beverage’s absence from the shelves. People would be so darned glad to have Classic Coke back that they wouldn’t notice it didn’t taste the same as original Coca-Cola.

Dain December 23, 2005 at 12:27 pm

Ned, you can check out educationext.org for some rich research.

Don Beezley December 23, 2005 at 3:57 pm

I’m probably more comfortable with terms like “confidence” than I am with ones like “faith,” but a very nice piece none-the-less, Lew, thank you, and this is a great line:

“we observe the science of human action making great things happen.”

There is very little that human beings aren’t capable of–if our arrogant overseers would just leave us alone.

David White December 23, 2005 at 5:23 pm

Ned Vare,

Don’t let the fact that this book is out of print fool you; it was just WAY ahead of its time:


Marco Saba December 25, 2005 at 9:49 am

In this kind of system, to be a successful entrepreneur is very easy: you just need to be a friend of the money counterfeiters: the fractional reserve wizards or the central banking masters. Any business then will be smooth and you can get crddit out of thin air.
Until the judges and the courts get wiser… See what’s happening in Italy!

tz December 26, 2005 at 10:03 am

NOTE: the blog is broken under Safari (for the Mac). The right side bar ends up on the left side blocking the text of the articles.

That said, The summary of the article seems to be that the market is not a miracle, it is a lottery. The wheel of fortune. Entrepenuers may be better at guessing, or they may simply be lucky or unlucky. Or pehraps psychic if you would believe in that, since consumer tastes tend to be unpredictable. Worse, government (I include currency fluctuations, the DXY from 80 to 120 to 80, in this) can and does grant what amount to monopolies, destroying competion or making it unsurvivable.

Worse, when government does interfere, it can drive healthy, prudent businesses into bankruptcy by making them try to compete with prodigal competitors – consider the S&Ls of the ’80s where the fiscal zombie – those the FSLIC couldn’t close but were deep in the hole – could still give out 13% interest on savings accounts, but the prudent ones were stuck with the low single-digits.

A local store can’t tap into the mass chinese cheap credit creation like WalMart can.

So not only is it a roulette wheel, but it is rigged, and apparently the miracles are merely those who can determine the rigging better than the others. The connecticut Yankee who could calculate eclipses seemed like a wizard to King Arthur’s court.

So is it magic in the sense of something wonderous, or magic in the sense of illusion, misdirection, or ledgerdemain (punned misspelling intended – consider financial engineering or accounting tricks)?

The same leap of faith is taken by every farmer each spring – uncertainties include weather, pests, and even if things are too good, the market will be glutted and prices won’t be enough to compensate for his effort.Yet planting a seed and having it grow is a “miracle”, or at least was considered so.

You mention this leap of faith but you fail to mention the many, many, bodies lying dead at the bottom of the cliff because they didn’t make it across.

That too is not a miracle, it is a pagan god that demands blood sacrifices and shows no pattern in how it dispenses its favors. Or worse, it often dispenses favors to those who do the wrong things, but succeed anyway, and the problem with this is it argues for statism since the market isn’t playing by the rules it advertises. (I wouldn’t argue for state control, but when entrepenuers themselves realize they are more lucky than clever, and that their employees and customers are the beneficiaries of luck rather than planning, they argue against leaving things alone).

The market is more like fire – something powerful but amoral. Perhaps even primal. But not a miracle.

jeffrey December 26, 2005 at 12:28 pm

Thanks for the heads up on safari display. I think it is fixed now (a mystery fix that works but I don’t know why).

Larry Ruane December 26, 2005 at 9:23 pm

Great article, Lew. One of my earliest memories is of shopping with my Mom for clothes for herself, and she picked a blouse off the rack and said, “That’s ugly,” and quickly put it back.

I felt so sorry for the company that went to all the trouble to make that blouse, only to have my Mom say it was ugly! Of course, I didn’t realize then that what my Mom thought was ugly, many other people may have thought was beautiful; I thought everyone thinks like my Mom. I thought that item would never sell.

But I’m proud to say that this little episode shows that even at 6 years old (or whatever I was), I was already thinking like Lew Rockwell!

Comments on this entry are closed.

Previous post:

Next post: