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How Mises Goes Beyond Knight — and Why It Matters: Entrepreneurship, Calculation, and the Republic of Entrepreneurs

Author

Listed:
  • Heng-fu Zou

    (Institute for Advanced Study, Wuhan University
    World Bank)

Abstract

Frank H. Knight's Risk, Uncertainty and Profit(1921) gave economics the canonical distinction between risk and uncertainty and explained profit as the residual return to the bearer of genuine (non-probabilistic) uncertainty. Ludwig von Mises's Human Action (1949) subsumes Knight's insight within a far more comprehensive architecture. Mises embeds en trepreneurship in a praxeological theory of action; shows that monetary calculation and market prices are the preconditions for entrepreneurial judgment; analytically separates entrepreneurial profit from interest, wages, and monopoly gains; locates entrepreneurial roles throughout firms and markets (not only in owner-insurers); frames competition as a dynamic selection process guided by profit and loss; links monetary-financial regimes to systematic entrepreneurial error (business cycles); and derives the institutional constitution-private property, open entry, freedom of contract - of what we call a republic of entrepreneurs. This paper reconstructs Mises's entrepreneur in depth, contrasts it with Knight's narrower uncertainty- bearing vantage, and develops measurable implications for growth, policy, and political economy.

Suggested Citation

  • Heng-fu Zou, 2025. "How Mises Goes Beyond Knight — and Why It Matters: Entrepreneurship, Calculation, and the Republic of Entrepreneurs," CEMA Working Papers 800, China Economics and Management Academy, Central University of Finance and Economics.
    • Handle: RePEc:cuf:wpaper:800
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    References listed on IDEAS

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