Boehm-Bawerk's Approach to Entrepreneurship

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Abstract

This paper explores the neglected theory of entrepreneurial profit proposed by Eugen von Boehm-Bawerk. Although historians of thought often dismiss Boehm-Bawerk'€™s writings on this topic, we argue that he did develop a coherent theory of entrepreneurial decision making and profit distinct from his theory of interest. We first discuss Boehm-Bawerk'€™s ideas about futurity, uncertainty, and expectations in his theory of goods, which help form the foundation of his theory of entrepreneurship. Further, we connect his notion of uncertainty with his thoughts on money. We then turn to several of Boehm-Bawerk'€™s ideas about entrepreneurial profit. Entrepreneurs purchase and allocate factors of production; these decisions are speculative because production takes time, and therefore entrepreneurs bear the uncertainty of the market. Their judgment thus yields profits or losses based upon the ability to anticipate the future state of consumer demand. Finally, we discuss the views of several of Boehm-Bawerk'€™s contemporaries, in order to place his theory in historical context.

Bibliographical metadata

Original languageEnglish
Pages (from-to)435-454
Number of pages19
JournalJournal of the History of Economic Thought
Volume36
Issue number4
Publication statusPublished - 2014

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