Between Innovation And Waiting: Entrepreneurial Calculation And The Temporal Logic Of The "Austrian" Cycle

The Austrian Business Cycle Theory (ABCT) explains economic booms and busts as the result of distortions in the interest rate, which misalign the temporal structure of capital and guide entrepreneurial investment in directions that are ultimately unsustainable. Within this framework, monetary expansion and credit relaxation artificially reduce the market rate of interest, encouraging investment projects that appear profitable only under distorted price signals. At the same time, Austrian economists define the entrepreneur as an agent of judgment, alertness, and anticipatory action, whose decisions rely on interpreting price signals and forming expectations about uncertain future market conditions. A tension arises between these two ideas when monetary distortions are observable and potentially predictable: if entrepreneurs can anticipate the effects of credit expansion and artificially low interest rates, systematic entrepreneurial error becomes less certain and the explanatory force of ABCT requires reconsideration. This paper explores two complementary paths that may reconcile these perspectives. The first follows a Wicksellian line of reasoning, emphasizing cumulative deviations between the natural rate and the market rate of interest. The second draws on a Lachmannian perspective, highlighting heterogeneous expectations, innovation, and the role of entrepreneurial discovery in shaping investment decisions. The analysis suggests that recognizing the anticipatory capacity of entrepreneurs reshapes the interpretation of boom-bust dynamics and supports a more cautious approach to economic policy, grounded in "policy humility" regarding the limits of monetary intervention in complex market processes.