 In the summer of 1988, I think it was July of 1988, I was about the age of many of you, and I attended my first Mises Institute Conference. At that time, it was called the Advanced Instructional Conference in Austrian Economics. It was quite a bit smaller than this, and it was out in California, Tom Woods mentioned last night that some of the summer conferences were out on the West Coast before they got moved here. And that was actually the second Mises Institute Summer Conference for students, the second edition of what eventually grew and became Mises University. So that was 30 years ago, this summer. And I think there were about maybe 40 or 50 students, and there were only four speakers. They were Roger Garrison, I don't know if Roger's still in here, David Gordon, Hanserman Hoppe, and there was a fourth guy, what was his name? Oh yeah, Rothbard was also one of the speakers. And that was really a transformative experience for me, as I know that coming to Mises U has been for many of you, and I hope will be this week a transformative experience also. So that was really my first exposure to all of these folks and to much of that literature. That was right before I was starting my graduate studies in economics. Now in subsequent years, as I mentioned, the conference expanded and they began bringing in kind of the second and third tier Austrians like Salerno, Block, De Lorenzo, Herbner, et cetera to give the lectures, and then eventually it became this fantastic, much larger event that we have now. But I have been at the summer conference, the Mises University Summer Conference, either as a student or as a speaker, every one of those years from 1988 until the present. So this is my 30th Mises U, can you believe it? No, thank you. After listening to all the lectures and doing all the reading and participating in all these discussions over those 30 years, I still don't think I'm quite ready to take the oral exams. Maybe this year I'll try the written part, but I don't know. What I want to speak to you about this afternoon as we close the first full day, at least the part before dinner, is entrepreneurship. Many of the previous speakers have referred to the role of the entrepreneur in this or that aspect of the market economy. Obviously, entrepreneurship is a central theme in the Austrian tradition, and as we'll see, the entrepreneur plays a critically important role in Mises' system and Rothbard's system and in that of most members of the Austrian school. Now, unlike some of the other topics that we have discussed today, like the division of labor, entrepreneurship is kind of a hot and sexy topic in the world at large, right? Everybody wants to talk about entrepreneurs and entrepreneurship, who's gonna be the next sort of famous breakthrough entrepreneur, that's Serena Williams. You all probably have watched Shark Tank. There are lots of reality shows of this nature, right? I mean, think about it, this is a TV show that lots of people enjoy, which is about business people pitching new products to sort of nasty and highly critical angel investors and venture capitalists. Lots of schools have Shark Tank kind of competitions. In fact, entrepreneurship is one of the hottest subjects in universities, particularly in business schools and other universities as well. The Princeton Review now has an entrepreneurship category when it ranks its top universities. When I first saw the top 25 undergrad entrepreneurship programs, number one, I was pleased that my own university, Baylor University, is ranked in the top 10 of that listing and has been for several years, but mainly I was surprised that there were 25 entrepreneurship programs that they could even rank. But now there's many hundreds of them. Entrepreneurs are kind of celebrities in our culture. What do you wanna be when you grow up? Well, American kids used to say, I wanna be president, not so much anymore. I wanna be a real estate developer and then president is maybe what they say. People wanna be, everybody wants to be the next Steve Jobs. Now not all entrepreneurs are equally popular some shall we say a little bit more controversial. Elon did not have a good week last week whole thing with the submarine and there's a bunch more stuff going on anyway. Now, why am I telling you about entrepreneurship? Why do I think it's important for us from sort of the theoretical perspective and empirical perspective? Well, Mises was really into entrepreneurship too. Now they didn't have Shark Tank back in the early 20th century but if you look at the index for human action, notice how many entries entrepreneurs get in the book. Look how many pages and of course indexes are not perfect and there are many more references to sort of entrepreneurship concepts and ideas than just the listing of the word entrepreneurship. But I mean, you know, epistemological problems of economics, right? Mises is very interested in the philosophy of the social sciences. Epistemology is a critical issue for him but look how many pages epistemology gets. I mean, it's nothing. Equilibrium, of course, if we were looking at a mainstream economics textbook, equilibrium would have many hundreds of entries and entrepreneurs would probably have none whatsoever. But I mean, clearly this is a big deal to Mises. Now what is he talking about? Is he talking about technology startups? Is that what Mises thought was sort of central to economic progress? Is he talking about, you know, Mark Cuban's latest thing or, you know, I mean, certainly those, the sorts of popular notions of entrepreneurship that people are really interested in today, Mises would be interested in them as well. But that's not really what Mises was talking about when he gives the entrepreneur a central role in his analysis of the market economy. Here's a sort of one of Mises' well-known quotes, quote from Human Action. Mises says, it is impossible to eliminate the entrepreneur from the picture of a market economy. The various complementary factors of production cannot come together spontaneously. They need to be combined by the purpose of efforts of men aiming at certain ends and motivated by the urge to improve their state of satisfaction. Now doesn't that sound characteristically Misesian, right? Purposeful human actors aiming to improve their state of satisfaction. In eliminating the entrepreneur, Mises says, one eliminates the driving force of the whole market system. So the entrepreneur is the driving force of the whole market system. Roger Garrison was telling me an Israel Kersner funny story before the lecture. Kersner titled one of his, one of his more recent books is titled The Driving Force of the Market. It's a book about entrepreneurship. He gets that phrase from this line, this passage in Human Action. But what is the driving force of the market, according to Mises? It's the sort of human faculty that accomplishes what? Brings together the factors of production, right? And organizes them in such a way that they can be used to satisfy human wants. This bringing together of complementary factors of production, it doesn't happen automatically, right? It doesn't even happen spontaneously. It happens deliberately and in a calculative fashion through the efforts of particular individuals and actions in the market. That's what entrepreneurship is. So notice a couple of things about this quotation. Entrepreneurship is a very general feature of the market economy, right? It's central to anything that we're talking about in the context of economics. It's not just startup companies. It's not just, you know, high tech companies. It's not just what they call gazelles, right? High growth firms, right? So all kinds of productive human activity, all human action that involves the assembly and combination of complementary resources is within the domain of entrepreneurship studies or the analysis of entrepreneurship according to Mises. So no, that's very different from the sense you get from watching Shark Tank or reading Entrepreneur Magazine or looking at Elon Musk's Twitter feed, okay? So if we're, let's start by talking about factors of production, right? What is involved in the combination of factors of production to allow people to satisfy particular ends? Well, and this is a nice follow-up to Roger Garrison's talk on capital theory, right? So production, the analysis of production in Austrian economics, it really is ultimately about capital or it, central to it is the Austrian notion of capital, which as you know from Roger's talk is in many important ways different from the way capital is treated in mainstream economics and in Marxist economics and other traditions, right? So what is production? I mean, production is really about the transformation of some things into other things, right? You know, if you bake a cake, you have flour and eggs and sugar and water and butter and whatever and you don't wanna just stuff those things into your mouth, right? You wanna combine them into a delicious, you know, layer cake or whatever that you can eat. So production is about transformation of inputs into outputs. If you wanna think of this in causal realist terms, we're interested in the relationship between means and ends, right? You know, enjoying a delicious piece of cake, that's the end that I seek to obtain when I go into the kitchen, but there's not, you know, a cake isn't just right there in front of me and I can't just will it into existence by snapping my fingers or waving a magic wand, right? I've gotta take the other ingredients and somehow combine them with energy and heat and labor and so forth to make the thing that I want. So we need to distinguish among different types of resources or goods and services, right? They're what the Austrians refer to as original factors of production, which include human labor and sort of nature-given resources, land, minerals, sunlight, wind, right? Things that are themselves not produced but are given by nature and available for us to use. We also have intermediate goods, tools and machines and factories and so forth, vehicles that we produce ourselves but not to consume them directly but to use them to produce other stuff, right? You don't eat a hammer, but you use a hammer to build or you don't live in a hammer but you can use a hammer to build a house that you can live in, okay? Something like that. What's interesting about, you know, what makes this an important topic and in some ways a challenging topic in a modern economy is that, you know, there are lots and lots of different ways to produce things, right? There's lots of ways to bake a cake, right? Different ingredients, there's different types of flour and you can use different ratios of flour to eggs and sugar and so forth. You could make the cakes with, you know, by hand. That's what we typically do, right, in our kitchen but you could make them on a big assembly line using advanced robotics, right? Most of us when we, even if we bake a cake at home we use an electric oven and we might use an electric mixer and we have all kinds of tools. We don't just use our hands and, you know, a stick like some ancestor might have done to try to create bread or something. So there are lots of different ways we can do it. Which inputs do I use? Which ingredients? Which brand of ingredients do I buy at the store? What type of labor do I apply? What should be the ratio of capital to labor and so forth? Now, if you think about making computers or cars or jet engines or skyscrapers there's an almost limitless number of possible combinations of inputs that can be used to produce particular outputs that we desire ourselves or that we think other people would desire and be willing to pay us for. So we've got to think about, we've got to have some means of figuring out the most effective combinations and the most effective individuals to affect those combinations and bring them to the market, right? And so we know, you know, from Roger's talk, right? That Austrians have a unique appreciation of the complexity of production. Production takes time, right? You go from lower-valued combinations to higher-valued combinations and so forth. Did Roger show you the famous Hayekian Triangle? Yeah, so why is this important for production theory? Well, the fact that production takes time means that decision makers, entrepreneurs, have got to, you know, they've got to make some choices now that will affect the stuff that will be available, that will be potentially produced and available to the market later, right? You know, you can't go backwards and forwards in time. So I have to make some commitments now to use particular inputs or to combine them in a particular way without knowing for sure what kind of output I'm gonna get and whether that's the right kind of output. So how do entrepreneurs do this? Well, to be able to engage in a rational process of figuring out how to combine inputs into outputs, we need to use some kind of a system. We need some mode of analysis. And that's where the Austrian notion of imputation comes into the picture. So I'll talk about imputation in just a moment, including concepts like the marginal product of an input and the marginal revenue product of an input, right? So by marginal product, we mean, if I say, you know, what's the marginal product of flour in making cakes? Well, if I use a little bit more flour, another cup of flour, how much more cake do I get, right? The marginal revenue product of an input is the same thing but measured in monetary terms, right? So if giving, you know, adding another cup of flour produces another fourth of a cake and I sell my cakes for 20 bucks a piece, when I add that additional unit of flour, I get how much more revenue Matthew people? Five bucks, yeah, so we're doing, who says Austrians don't do math? So the marginal revenue product of that cup of flour would be five bucks, okay? Again, critical to this process, again, say I'm making these cakes not just to eat myself but to sell, I'm a professional baker, right? In deciding whether or not I wanna buy that extra cup of flour and use that extra cup of flour, I'm thinking, well, how much do I have to pay to get it? And how much more money do I expect it to yield to my enterprise, right? Well, it's gonna, I think it's gonna, I think I can sell these for 20 bucks a pop and I'll get five more bucks from that extra fourth of a cake when I add this cup. But remember, you know, how much it costs me to buy the cup today, that's certain. The cost of that extra flour is known to me now. The revenue I'll have in my pocket, the additional revenue from using that cup of flour, that I only get that tomorrow when I take the cakes to market and, you know, the market price of cake tomorrow is not a given thing to me today. So uncertainty is central to this process as well. So the way the Austrians do imputation, this goes back to, I mean, it's sort of implicit in Karl Manger in his principles in 1871, it really spelled out in more detail by Friedrich Wieser, right? One of Karl Manger's sort of students or disciples and also fleshed out in more detail by Rothbard in man economy and state and many other economists as well. Imputation makes the following claims, right? The discounted marginal revenue product of a unit of an input or a factor is the money revenue attributed or imputed to one service unit of that factor discounted by the social rate of time preference. So let's say it takes a year to bake cakes and bring them to market. These are really elaborate cakes, I guess, the ones you see on Cake Wars. You know, so let's say that when I purchased that, it cost me, sorry, when I purchased one additional unit of flour, say one cup of flour, I can use that to get $5 of additional revenues, but not until a year from now, right? So I've got to discount that by, you know, I've got positive time preference. So, you know, $5 a year from now might only be worth, say, $4.50 in terms of present goods, right? So the most I would be willing to pay for a cup of flour today is how much? $4.50, yeah, because it will generate, I expect it to generate $5 worth of revenue a year from now, okay? So the marginal revenue product of that cup of flour is five bucks, the discounted marginal revenue product is let's say $4.50 or $4.75, depends on what the interest rate or the discount rate is in this particular situation. So as I said, that establishes the entrepreneur's maximum willingness to pay for that unit. I wouldn't pay $6 for a cup of flour if I expect it will generate five bucks of additional revenue a year from now, because then I'm losing money, right? I'm paying more, the cost of that cup of flour is more than what I expect it to gain in revenue. Now, I'd like to get the cup of flour for a dollar or free, I'd like to get it for free, then I could pocket the entire $4.50 in present value terms, you know, but I'd be willing to pay $1, $2, $3, $4. I'd be willing to pay up to $4.50, but not more for the control and the ability to use that factor. So you can imagine that now there's a lot of bakers, right? So if there's competition among entrepreneurs and assume for the moment, everybody knows with certainty that you can sell a cake for 20 bucks and so the additional cake is worth five bucks. Let's say we all know that for sure if we assume away uncertainty, then we would imagine that the market price of that cup of flour is gonna end up being about 450, right? I mean, if cups of flour are being sold on the market for 350, we would imagine that lots of people will realize, oh, I can buy that at 350 and transform it into something that puts another five bucks into my pocket, even with discounting, that's a great arbitrage opportunity, right? So we would expect people to start buying up cups of flour and that will drive up the market price of cups of flour, but we wouldn't expect the market price to be higher than 450 because then the demand for those cups would fall and the price would tend to go down until it equalizes, equilibrates right at around 450. So in the absence of uncertainty and given competitive bidding by entrepreneurs, the price of a factor will tend to equal its discounted marginal revenue product. Now, there's some exceptions to that principle. If you have certain factors have to be combined in certain proportions with other factors or you're baking bread and you need yeast and without yeast, you can't get any bread at all. But in general, when there's some substitution available among factor that's possible between factors, this principle will hold that prices of factors are determined by discounted marginal revenue products. But wait, some of you are saying, he just said some weird equilibrium thing. I thought this was Mises University, this is not Krugman University or Samuelson University or whatever. So yeah, again, I'm saying imagine this sort of equilibrium world, right? You could use the construct in Mises and Rothbard of the evenly rotating economy. So think of a kind of a long run equilibrium state where all factors of production exactly equal their discounted marginal revenue products. What kinds of incomes will be available will exist in that world? Well, anybody who owns a factor, that factor could be flour, it could be land, it could be human labor, right? So any wage earner will get a payment equal to the discounted marginal revenue product of that factor service. People who sort of own and operate firms, they're gonna get some kind of return as well like an opportunity wage, right? Rothbard calls it an implicit wage because they have to have something left over in their pocket to prevent them from selling the firm and going to work for somebody else, selling their labor to someone else. People who own financial capital, right? And sort of make it available to people in the market will earn an interest return, but that's it, right? All of the incomes in that scenario are paid out either as returns to a factor based on DMRP or implicit earnings to owners of enterprise and interest returns to capitalists. Notice what's not, what doesn't exist in that world. No profits and losses. No entrepreneurial profits and losses. Why? Well, think about the following. Suppose we drop this assumption that we live in an evenly rotating economy where everybody knows exactly what's gonna happen tomorrow and all uncertainty is absent. Well, now what we have going on in that world, i.e. in the actual world, right? Is that entrepreneurs are, you know, they're making these bids for units of factors of production without knowing for sure what the future is gonna be like, but based on some kind of beliefs or expectations, right? So they have knowledge and beliefs about the present, right, which includes, you know, technology. I mean, how do you actually bake a cake? I need some kind of recipe, how does it work? What are the capabilities of different factors? Which resources are available to me? And their expectations or beliefs about the future. What will be the demand for cakes in the future? You know, will the government regulate the cake market? Will there be a lot of, you know, is Elon Musk gonna be making cakes and I have to compete against him and so forth? Okay, so based on those beliefs and expectations, they make their bids in the factor market. And guess what? Some of them are gonna get it wrong, right? Some of them will pay for units of factors amounts that we will later find out are more than what the DMRP was revealed to be, right? What will happen to those entrepreneurs? They'll earn losses, right? Entrepreneurs who are relatively good at this and who correctly anticipate future states of the world, right, will be able to acquire factors of production at prices below what the DMRPs will eventually be revealed to be. So in the real world, you get profit and loss. You get entrepreneurial profit and loss, right? And profit and loss comes from the differential abilities of entrepreneurs to anticipate future conditions. Okay, differences in knowledge, belief, expectations among entrepreneurs is what gives rise to entrepreneurial profit and loss. In fact, Mises puts it this way, right? The term entrepreneur as used by economic theory means acting man exclusively seen from the aspect of the uncertainty inherent in every action. So what is entrepreneurship in kind of the most broad or general sense bearing uncertainty, right? Acting in a world where we really don't know what tomorrow is gonna be like and, you know, taking responsibility for buying and selling resources and combining them and so forth without knowing for sure how things are gonna work out. And notice we're talking about genuine uncertainty. So this is not casino gambling. It's not probabilistic risk. It's you call it nighty and uncertainty or what Mises following his important contributions of his younger brother, Richard Von Mises called case probability as opposed to class probability. Now, you know, so in this sense, sort of all human action is kind of entrepreneurial because we don't know for sure if the returns are gonna be greater or less than what we had to, you know, the expenditures we had to make to get those returns. But, you know, it might be useful, I find it useful to think about entrepreneurship in kind of a narrower commercial sense, right? Which is the act of combining and recombining productive factors in pursuit of money profit. Yeah, I mean, you can say I tried to bake a cake at home and it didn't work out. You see some of you, see those Pinterest fails. You know, my cake was a disaster. Okay, I earned some of a psychological loss. But really we're more interested in the commercial baker, right, who ended up paying more for factors of production than what the baker earned in money revenues. That's the kind of loss we would be concerned about. There's a great quote from the Austrian economist Ludwig Lachmann in his book on capital theory. He says, we are living in a world of unexpected change, i.e. a world of uncertainty. Hence capital combinations or resource combinations will be ever changing, will be dissolved and reformed. In this activity we find the real function of the entrepreneur. So the real function of the entrepreneur is this continual combination and recombination of factors of production under conditions of uncertainty. Now, in order to do this, entrepreneurs need a world of money. They need a world of money prices. And they need, in order to get those, you need markets and private property. So Joseph Lerner will talk about that in his lecture tomorrow on calculation. There's another way you can sort of conceptualize this. I like to use the term judgment, which is a term that is used both by Mises and also by Frank Knight, as a way of understanding this notion of decision-making under conditions of uncertainty. Think of judgment this way. Judgment is decision-making under uncertainty in the absence of a formal model or a formal decision rule. So I don't have a probability distribution in that where I just calculate the expected value. Rather, I rely on what we might call intuition or gut feeling or the Germans have a great word for this, forstain, which is usually translated into English as understanding, but it's really a very, you know, kind of a deep sort of understanding. Let me quote from Mises. The real entrepreneur is a speculator, a man eager to utilize his opinion about the future structure of the market for business operations promising profits. This specific, anticipative understanding of the conditions of the uncertain future defies any rules and systematization. Okay, so there's no equation that the entrepreneur can use to tell them how to act in conditions of uncertainty. And this sense, this judgment, this specific, anticipative understanding can be neither taught nor learned, except in this lecture right now. He says, the entrepreneur sees the past and the present as other people do, but he judges the future in a different way, okay? So notice that, you know, in order to judge in this sense, it's not just sort of an intellectual exercise, right? It's the act of actually taking stuff and combining it into other stuff. And to take possession of this stuff, you have to own it, right? So there's a connection between judgment and ownership or what Mises referred to as the capitalist entrepreneur. And I've got a long discussion of this in a book that I co-published, co-authored in 2012 called Organizing Entrepreneurial Judgment, which has a lot more details about this. And I'll come back to the ownership point in just a moment. So what then do we mean by sort of the entrepreneurial market process? That's a term that you hear often in the Austrian literature. So people like to talk about, this is, we're about this, not equilibrium, but the market process, the market process, et cetera. What do we mean by the market process? In his short essay, Profit and Loss, which I highly recommend on the subject of entrepreneurship, Mises, he says the following, if entrepreneurs fail to produce in the cheapest and best possible way, those commodities which the consumers are asking for most urgently, they suffer losses, right? And are finally eliminated from their entrepreneurial position, other men who know better how to serve the consumers replace them, right? So what Mises has in mind by the market process, it's not some kind of convergence to equilibrium. It's the constant day-to-day competition among entrepreneurs for judging future market conditions, right? So notice that government agencies and nonprofits don't go away, government agencies don't go away when they fail to anticipate future market conditions and get replaced by those who are better able to do so. But also nonprofit firms have a hard time doing this because they don't sell their goods and services on the market. And notice that some economists or mainstream economists, political scientists will say something like, oh, you know what's great about the market is it's like democracy. One company succeeds and iPhones are very successful and flip phones are no longer available on the market very much, right? So it's like the consumers have voted that they like touchscreen, all touchscreen smart devices better than old flip phones that you could drop from 100 meters and they would still work when you pick them up, right? Isn't that great? It's like people are voting for what kind of products they want. Well, I mean, actually a better way, it would be more correct to say, voting in elections is almost as good as the market, right? Because markets are not winner take all. I mean, lots of different preferences can be satisfied on the market. It's not one person, one vote, which is even better, right? You participate in the market to the extent that you care and to the extent that you're willing to put resources on the line and so forth. I just recently noticed a passage in Rothbard's man economy in state that makes the same point about the market process. But I like the way Rothbard phrases it. He says, of course we should not be too hard on the bumbling loser. It's the entrepreneur who failed to anticipate future prices, right? He receives his penalty in the form of losses. These losses drive him from his poor role in production. If he is a consistent loser, wherever he enters the production process, he is driven out of the entrepreneurial role altogether. Anyway, so, characteristically, Rothbardian formulation. So notice a couple of things. There's nothing in Mises formulation as we've described it so far that refers specifically to things like the following. Charisma and creativity and leadership skill. So yeah, I mean, it's true that Steve Jobs had a lot of charisma. Apparently he was also a real jerk, a real blankety blank hole to many of the people around him. But yeah, I mean, lots of successful business people have these kinds of personal characteristics, but that's not part of the definition of being an entrepreneur in Mises sense. That's not necessary to the entrepreneurial role, right? Entrepreneurship in Mises sense is it's not small business management, right? Nor is it starting a new company per se. I mean, managing a small business, owning and operating a small business is entrepreneurial, but that's not the only thing that's entrepreneurial. All kinds of productive activities are entrepreneurial in the sense that we've described. Yes, starting a new company is an entrepreneurial act but operating an existing company is also an entrepreneurial act, shutting down a company is an entrepreneurial act, restructuring a company is an entrepreneurial act and so forth. I got into a little Twitter spat with, actually a good friend of mine, Aya Leipanen is a professor at Cornell. She's an innovation scholar and she was saying that, well, we don't need to be studying entrepreneurship because what we really care about is innovation. And so why do we care about startup companies? If they're innovative, great. If they're not innovative, who cares? So entrepreneurship should really be a subcategory of innovation. And of course, the problem is what she thinks, what she means by entrepreneurship is startups, right? And yeah, I mean, it's true that I would not devote all of my efforts and energies to studying startup. I mean, startups are great. Startups are very important, but entrepreneurship is not exclusively the study of startups. If it were, then I would agree that, yeah, maybe we care about startups only to the extent that they help us to, they perform other functions, right? But entrepreneurship is not, in Mee's sense, it's not the study of startups. It's the study of arranging productive factors under conditions of true uncertainty, okay? Which includes startups and lots and lots of other stuff. I even have a little section in my book, Organizing Entrepreneurial Judgment with Nikolai Foss about what we call the startup bias in the contemporary entrepreneurship literature. So you can look that up if you're interested. But I also wanna refer to some of the other classic scholarly contributions to the entrepreneurship field. In Mee's' understanding, as I interpret it, entrepreneurship, it's not exactly the same thing as innovation, the notion famously associated with Joseph Schumpeter, right? I mean, entrepreneurs do innovate, but even not innovating in the technical sense, continuing to produce old technology or whatever, is also entrepreneurial in the sense that it involves maintaining responsibility for productive assets that are used under conditions of uncertainty. And this notion that I've articulated is also distinct from the idea famously associated with Israel Kershner, that entrepreneurship is about, sort of the alertness to or the discovery of pre-existing profit opportunities, finding those $20 bills on the sidewalk. I understand Kershner doesn't mean this literally, he means it metaphorically, but I think that this formulation can be misleading because, again, it abstracts away from the notion of bearing uncertainty. It acts as if entrepreneurship is just sort of scanning the horizon and you have to be the first to notice something that other people didn't notice. But the point is entrepreneurial profits, they're not there to be noticed because they don't exist today. They only exist tomorrow and they might not even be there tomorrow, after you've taken some action. And finally, entrepreneurship is not really something you can learn in school, as Mises said. Now, that doesn't mean that there's no point in having entrepreneurship courses or entrepreneurship programs in schools, but you cannot teach what Mises calls the specific, anticipative understanding of the uncertain future. You can teach the history of entrepreneurship, you can teach entrepreneurship theory, that's what I'm doing right now. You can study techniques of small business management, you can learn about the venture capital process and so forth, but that's not teaching entrepreneurship per se, that's just sort of learning about entrepreneurship. And goes without saying that this is not something that government can produce or create or somehow stimulate with wise policy or whatever. Now, having said, having sort of, having distinguished between the sort of theoretical notion of entrepreneurship that you get in most of the Austrian tradition from kind of the popular notion, I should point out that Mises does discuss the kind of popular conception of the entrepreneur as well. But he talks in human action about a special category of entrepreneur, a special class of entrepreneur. He says the following, economics also calls entrepreneurs, those who are especially eager to profit from adjusting production to unexpected changes and conditions. Those who have more initiative, more venturesomeness and a quicker eye than the crowd, the pushing and promoting pioneers of economic improvement. So people like Bill Gates or Steve Jobs or pick your favorite, John D. Rockefeller or James Watt or whatever, pick your favorite inventor, entrepreneur industrialist of history. But Mises says, it's confusing to use the word entrepreneur for these people because this is a kind of historically contingent, like a Weberian ideal type, not a precise theoretical category. And Mises says, let's use a different word, let's use the word promoter to describe these people. So we sometimes talk in Austrian circles about promoters or entrepreneur promoters, but the term didn't really take off in the literature at large. So again, these are real world flesh and blood individuals who have these particular characteristics. They invest a lot, they're movers and shakers, they are good at recognizing potential ways to make money and they're very creative and so forth. But again, this is not a theoretical construct of this kind of loosely defined, historically contingent one. Let me conclude by talking about one final point about ownership, which is a point that I made before. In my understanding of what it means to act entrepreneurially within the Austrian, in an Austrian sense, one has to own stuff, right, to exercise judgment over the deployment of productive resources. The entrepreneur has to own, right? So we can sit around here, you can come to my office hours in the next session and we can sit around the table and discuss all kinds of cool business ideas or whatever, but then it's 5.15 and we go down to dinner. I would say no actual entrepreneurship took place. We just had a fun conversation or it was like a role playing thing or we played a game or whatever. Entrepreneurship doesn't actually begin until real productive resources are invested, are committed to particular lines of production and the Hayekian Triangle flares out. Okay, that's when entrepreneurship begins. The great line from Frank Knight's book, Risk, Uncertainty, and Profit. He says ownership under uncertainty means an exercise of ultimate responsibility, which in its nature can be neither insured nor capitalized nor salaried. Okay, so you can't insure yourself against entrepreneurial failure because to be an entrepreneur means to take this ultimate responsibility over the use of assets. Now does that mean that entrepreneurs are like, in everybody's face, doing everything, making all the decisions, bossing people around in a typical business firm? Well, of course not. Right, entrepreneurs typically delegate. They delegate a lot. Entrepreneur owners, they delegate lots of day to day decision authority to other people in the firm, employees, and so forth. But remember, they hold the ultimate, they possess the ultimate responsibility, meaning for example, they can hire and fire employees. They can delegate some decision authority, but take it back. They can write the rules of the game within which employees act and do certain things. Right, so the point is non-owner resource providers like workers, suppliers, lenders, and so forth, they're obviously critically important to the production process. You can't operate a large commercial bakery without employees and without people who supply the raw materials and so forth. But those input providers are not exercising judgment in Mises sense because they do not bear the ultimate responsibility for the deployment of productive factors under conditions of uncertainty. So I'm thinking about this because I wrote a paper that I think it hasn't come out yet. Nikolai Foss and I contributed a chapter to a book on stakeholder theory. Some of you have heard about stakeholder approaches which are very popular in business schools nowadays. This is the idea that well, firms should not be run exclusively in the interest of shareholders, but rather in the interest of a broader class of people who have a stake in the enterprise, which includes the employees and the suppliers and maybe people who live in the community and so forth. Maybe all of society are stakeholders in a sense and so firms should be run in the interest of these broader stakeholders. And what we argue in this chapter is that this sort of misunderstands what it means to own resources because the non-owner input providers do not bear this kind of ultimate responsibility. If things go haywire, if the venture goes south, they don't make the decision about how the resources of the firm will be used. A worker can always choose to withhold supplying his or her labor by quitting. A supplier can decide not to supply anymore, but that leaves the assets of the firm in place. The workers and the members of the community and so forth, they don't have control or responsibility for the resources that are possessed and owned by the entrepreneur. So, look, there's kind of think of sort of a market selection process like the one described by Mises and Rothbard, right? So one can choose to be an owner or a non-owner input provider. And given competition among entrepreneurs, competition among employees and input providers and so forth, we would expect a kind of sorting in the market where those who are particularly skilled at exercising the ownership function will end up being owners. And those who are skilled in providing other inputs to the firm will end up being workers and suppliers and so forth, okay? So just final point, which is probably obvious to most people here, attempts by government to sort of simulate entrepreneurship run into a lot of problems, okay? So lots of kinds of government intervention indeed are harmful to entrepreneurs. Business cycle or credit expansion and so forth makes it harder for entrepreneurs to perform economic calculation in figuring out what to do. Government policies that bail out failing firms and provide subsidies to other politically connected firms and so forth. Obviously hinder the market process of selection among entrepreneurs. Government funded training programs and incubators and accelerators and R&D subsidies and so forth. Really basically just like other kinds of government intervention in the market, they direct resources to the wrong places in the wrong directions, right? Rather than letting the market be responsible for resource allocation. So people, I get asked, sometimes a green talks about this kind of stuff. Well, what's the best government policy for entrepreneurs? What should government do to help entrepreneurs? Well, I mean, the answer is not mess it up, right? I mean, get out of the way and don't mess up what entrepreneurs are trying to do. So a society that has stable money and secure property rights and economic freedom, that's the environment within which entrepreneurship can flourish. Thanks very much. Thank you.