 This is Jeff Deist, and you're listening to the Human Action Podcast. Ladies and gentlemen, welcome back once again to another installment of the Human Action Podcast. It's a great weekend. We're so happy to have all of you with us. And if you've been following along, you know that we are working our way through Rothbard's great treatise man economy and state. And we are sort of going on a chapter by chapter basis. Some shows are more than one chapter. Some are just one, and we're working our way through this dense book and hopefully bringing it to light for you and making it interesting and making it so that a lot more of you will read it. And so I'm very pleased this weekend to be joined by my friend, Hunter Hastings, who also runs our Economics for Entrepreneurs platform here at the Mises Institute and conducts his own E4E Economics for Entrepreneurs podcast. So, Hunter, good morning. Good morning, Jeff. Thank you for bringing me to the Human Action Podcast. Yeah, well, I wanted to have you because we're covering chapter eight, which is all about entrepreneurship and change. And I think that's really right up your alley. It's something you've studied at length, something you've thought about at length, read quite a bit about. So for the audience who's listening, chapter seven and eight are a bit of a contrast. Chapter seven is all about factor pricing, and it assumes an evenly rotating economy. Now, that's a construct which Mises used and which Rothbard also uses throughout this book. If you're a little fuzzy on what that means, it basically means a construct whereby there's no profit and loss. There's a degree of certainty in the economy. And if you go back to chapter five on page 321, there's actually a nice little paragraph long exposition by Rothbard of what the ERE would mean. It would be, you know, the value scales and technology and the given resources all stay the same. So rates of production of each good remain constant. Prices remain constant. Total population remains constant, supply and demand, etc. So we use this construct to aid us in learning about the structure of production, which is what this entire section of the book, multiple chapters, is about. And so we derive a lot of things from the ERE. But then in chapter eight, we move into an area of uncertainty. And that's really where the entrepreneur comes in. And Hunter, what strikes me about this chapter, Rothbard doesn't come out and say it as such, but what strikes me about it is that, you know, we really have to draw a huge distinction between profit and loss and interest. They're two very different things. And the idea that capitalists somehow just make a rate of profit and that this is all easy for them is absolute bunk. Right. Rothbard points out that we have to think in terms of profit and loss, not just profit, and that the entrepreneur can make a profit. He points out that that's a profit above the opportunity cost of just parking your money somewhere and taking the going rate of interest. And the downside of that is entrepreneurial error gets you lost. And as we'll talk about as we get later into the chapter, there can be situations where there are aggregate losses in the economy for various reasons which we'll cover. So the entrepreneur is bearing this uncertainty and loss is a significant possible result as well as profit. And that's why the entrepreneur is so brave and so valuable. I'm sure our listeners will understand, of course, that there are such things as accounting profit, which is basically revenues over expenditures. But money profit, the kind of profit that Rothbard is talking about in this chapter, also sometimes you'll hear the term economic profit, is as you mentioned, this is a rate of return above the general interest rate they could have gotten by simply parking their money. And I don't know if you remember this, Hunter, but there is a period where people were going through Trump's past business dealings, his casinos in Atlantic City and such, and looking at the amount of money which had been bequeathed to him by his father and saying he'd actually be wealthier if he had just done nothing and been in an index fund or something this whole time. I don't know that that's true, but I think that's interesting. Do you remember hearing this? Well, I do, and I can also relate to it from the world of venture capital. When you put together 20 startup companies in a venture capital fund, you have a strong confidence that some of them will go bankrupt. You have a limited amount of confidence that some of them will be home runs and generate significant profits, and there'll be some in the middle. And you don't know at the outset what those are, and you hope that the profit from that portfolio of uncertainties will be greater than the going rate of interest, that you'll get superior returns. But you absolutely don't know it, and it's perfectly possible that you'll get an inferior rate of return. So I'm very familiar with that principle. Well, one thing I like to tease out of this chapter is there tends to be this socialist or Marxist critique of capitalism that these fat cats have lots of money in capital, and they just make money off of it. And so I would draw the reader's attention, Hunter, to this little aside on page 513, where Rothbard says, well, it's absurd to think that there's some sort of natural or automatic rate of profit. We don't have a rate of loss. Nobody would engage in an activity that had a set rate of loss. And I think the distinction between profits and interest, both in Marxist thought and also in Neoclassical or Smithian or Keynesian thought, that capital generates interest. And what we're talking about in this chapter is a very different kind of animal. Yes. And Rothbard talks about the entrepreneur being on the alert for discrepancies. And a discrepancy gives the entrepreneur the opportunity to earn more than the going rate of interest. So the profit will be greater than the going rate of interest. As you say, it's a different animal. It's money profit. And what that means is that the entrepreneur has the foresight to understand that the consumer, who is the ultimate determinant here, has a preference which is not currently priced into the market for the factors. And if the entrepreneur can buy those factors and convert them to sales of goods to the consumer, where the marginal value productivity of those factors is greater, the entrepreneur realizes that and makes a profit, but it means that others didn't. And so it's that adjustment of discrepancy, which is the special talent, but also the high risk activity of the entrepreneur. So you're right. It's not just, I thought of Thomas Piketty when reading that remark by Rothbard. And Piketty believes that the rich get richer just by inheriting their capital and taking the 5% on it. And the entrepreneurial role is entirely, entirely different. They're performing the social role of what Rothbard calls adjusting those discrepancies for the benefit of the consumer. It's the consumer who benefits in the end. Well, Mr. Piketty, Mr. Piketty, the difference between his book and Rothbard's book is that people have read Rothbard's book. I think a lot of people have Piketty's book on their shelf, but they haven't actually read it. But, you know, going back to chapter 7, what's interesting here is that time, as always in the structure of production, a vertical ladder, there's always a temporal element and Rothbard, this weaves its way through several of Rothbard's chapters. And so it's all about time. We have a discount against things for the future and we have a premium for in favor of things in the present. And so when we think of those two things, twin opposed forces, we come up with this concept of interest. And so when you speak about the risk that entrepreneurs take, one of those, of course, is that capital, which they have invested or saved or applied to a business venture, is the source of factor incomes all along the way in this ladder-like structure. And so the capitalist has accumulated a wages fund and very often, as you know from your own investing experience, the capitalist is going without an income while the worker is being paid along the way. So another sort of defense of capitalism against the exploitative thoughts of Marxist. Right. Rothbard is very careful to point out that the factors he's talking about are land, labor, and time. And there are returns to each of those and there's income for each of those. And interestingly, later on in the chapter, he talks about who benefits from the aggregate investment that the entrepreneur directs to the lengthened structure of production, as we'll talk about in a second. And he said real returns to labor, real income for labor increases, real returns for land increase. Yes, the entrepreneur gets some additional profit, but that is going to be arbitrage away very quickly as more and more entrepreneurs see what's happening and come into that same area of investment. So those returns are uncertain and they're going to decline. So actually, labor and land are the ones who benefit from the entrepreneur's direction of aggregate investment. And this idea of interest representing a meeting of time preferences between people who want to borrow money and people who want to save or invest money is so interesting because Rothbard has this phrase where he says the discount that we apply to some profit or income in the future is basically the rate of interest. And he says or, and I'm quoting him, the social rate of time preference. I thought that was an interesting turn of phrase because it brings to mind the term social cooperation, which is actually an alternative working title for Mises is human action. So there's actually an element of social cohesion in interest rates if we allow them to be arrived at in what Rothbard would call the pure rate of interest. Right. The production entrepreneurship and change that he uses to title this chapter, the ultimate source of change. And he repeats this over and over again is a change in time preference and especially a change in time preference at the consumer level. So if the consumer wants to consume more, i.e. their time preferences increased, that's going to affect aggregate investments, going to decrease it. If the consumer consumes less, so that time preferences is decreasing, then there's the release of more funds for investment and increase in capital. And then what Rothbard calls a progressing economy, one that has more capital and therefore profits and returns to labor and land are increasing. So time preference is always the first change. As you say, it's a social time preference. Ultimately, it's the consumer's time preference aggregated up to society. So time preference is always the engine. It's always the first change. It's the one that makes all the other changes occur, including entrepreneurial change. But it also debunks the notion of exploitation. If profit and interest both have social benefit, that's a blow against, I think, the beliefs of a lot of our friends on the left. Yeah, there's a super important paragraph in this chapter about profit as the social signal to the entrepreneur that they're rearranging the factors of production. They're making their investments in ways that the consumer and therefore society approves of. And he calls it an index, an index that the entrepreneur is making the right adjustments. And he takes that to the logical next step is that an entrepreneur who makes more profit is therefore being of greater and greater benefit to society. So we should be more congratulatory and more excited. So we should look at Jeff Bezos and say, gosh, isn't that terrific? He's made so much profit that that shows how much benefit he's brought to society. How much he's listened to consumers saying, I have a different preference and it's currently provided to me by the marketplace. Please change the structure of production. And Bezos does that and now he's the richest man on the planet. So we have to be celebratory of profit and the entrepreneurs who make profit because that's the signal that society's sending to say thank you to the entrepreneur. Well, Hunter, you know who else is rich is his ex-wife. I just read the other day, I think she's the second richest woman on the planet or something now with all the gains in Amazon stock. As an aside, I would say I'd like him a little more if he burned down the Washington Post, but it's his money. You know, it's interesting, you bring up this idea and Rothbard uses the terms progressing stationary and retro-aggressing economy. So, you know, a progressing economy has net aggregate profits. A retro-aggressing economy is one where losses exceed profits. So talk about this conceptually. Why should we be thinking about this in net terms if we're supposed to be focused on the individual entrepreneur? We're libertarians after all. Well, Rothbard is aggregating or grossing up the individual activities of entrepreneurs, but he looks at it from time to time as the economy. And the progressing economy is actually one where gross investment is increasing. So we're generating more capital goods. And those capital goods are bringing profits, especially to the entrepreneurs who are engaged in the highest stages of production. They're increasing the real incomes of labor and the real incomes of land at the aggregate level. Now, that's not necessarily true of everybody. So some entrepreneurs are going to take losses, but we need that to happen so we can figure out where the best places are to invest. If factors are what Rothbard calls highly specific, then they're not going to be able to change. If consumption is decreasing, labor that's involved in the stages of production very close to consumption may find that they're subject to decreased demand. If they're non-specific, they can go get new skills and go start working at the highest stages of production. If they don't do that, then they can suffer losses. The same with land. Land that's associated with the highest reaches of production is going to get increased returns. But if land is highly specific at the lower end of production, then it can get decreased returns. Think of the shopping malls that are currently empty because of the coronavirus restrictions. And some investors are thinking about repurposing those into some kind of housing, so they're trying to make the shopping malls less specific. But right now, they're suffering. So he's looking at the aggregate of the economy, but also telling us to recognize that in some specific individual instances, there can be loss, entrepreneurial loss or specific factor loss. So even in a rising economy, there can be losers and vice versa. Right. Rothbard has some wonderful language about that. He talks about the entrepreneurs who lose find to their sorrow that they invested in the wrong place. So he introduces a kind of emotional factor. He calls it psychic profit or psychic loss. So there's that. Some entrepreneurs can make error even in a rising economy. And as we just said, there are other places where specific factors can get lower returns. So the aggregate is to look at the total economy, but that doesn't say that there aren't what he also calls bumbling losers in some other parts of the economy. He recognizes at the individual level that there are both winners and losers. Now, of course, a lot of Austrians would say that in terms of aggregates, GDP is not a very good one or a very accurate one. But nonetheless, we got some GDP numbers for Q2 of the U.S. economy just a couple of days ago. And year over year relative to 2019, that the GDP number was down about 35%. So a little more than a third. So by definition, I mean, when we have a number that big, does that mean we're in a retroaggressing economy? Not necessarily. We probably are. What it means is that there's less consumption going on. And that's the biggest cause of reduced GDP. But also there's less production going on. The restaurants are closing and we talked about the shopping malls being closed down and so on like that. So we've got both. But interestingly, there's a lot more savings. And if that savings goes into investment and generates more capital, especially in the higher reaches of the production structure, then we can quickly convert a retroaggressing economy into a progressing economy. And we may already be there. There's a lot of money in private equity funds now. There's a lot of money waiting to be invested. Perhaps it's being invested right now in some new forms of higher structures of production. I underlined a phrase from the book where Rothbard conjures up this wonderful picture. He said, when there's less consumption, there's more savings. And those funds are ranging, ranging around the economy in search of higher returns. So you get this beautiful picture of these saved funds looking all over the economy, looking for the higher returns, thinking about the future, thinking where is the higher DMVP in the future. And so you get this feeling of the engine is worrying. And I think we're at that stage. There might be a little pause because of the government interventions at the moment. But those funds are ranging around the economy, looking for places to get higher returns. So that's an exciting prospect. Yes. And there's a sense that when government impedes things, capital works its way around in a happy way. Yeah. The entrepreneur is always smarter than the government. I remember talking to an investor from South Africa and asking him about all of the restrictions that were placed on his investment opportunity. And he said, we can always move faster than them. We're always smarter. Our imagination is better. It doesn't matter what they regulate or what they confiscate. We'll always do better than they do. Yeah. The entrepreneur is always going to be smarter than the regulator. Well, one thing that Rothbard points out here is about interest rates in a progressing versus a retrogressing economy. And of course, the Fed is something that we worry about a lot. A lot of people think Austrian's overstate the importance of the Fed. It doesn't really have that much impact on interest rates. I disagree with that view. But there are people out there like John Tammany who writes at Real Clear Markets who says, you know, the Fed isn't really as powerful as you. Fed obsessed Austrian's think. But so put that aside for a second, Hunter, just conceptually, when there's more profit investment savings in a progressing economy, we would expect interest rates to drop. More capital available, less demand. But when we're in a retrogressing economy would expect conversely interest rates to rise. So sometimes when the economy tanks, especially here in the United States and also in Europe, our central banks go into hyperdrive. They're trying to keep interest rates lower than they might otherwise be. So that seems to me a real problem for the economy and a tough one for entrepreneurs to get around. Yeah, Rothbard hasn't introduced banking or central banking or any of those constraints in yet in Chapter 8. So he talks about, as you say, as there's more aggregate investment, the interest rates are going to go down. And then he separates that from the loan market. And there he points out that there are tons of interest rates, lots and lots and lots of different interest rates in the loan market. Not just the percentage rate, but also the terms that you can get and the durations and that kind of thing. And those interest rates are related to the uncertainty of the entrepreneurial project. And so the loan market is smart enough to look at the uncertainty of the project and charge a higher market rate of investment for a more uncertain future and a lower rate of investment for something that they think is more certain. And that's what he calls entrepreneurial judgment and foresight. And so that's the rate of interest that is relevant to the entrepreneur. Can they get the funds that they need in order to invest in that future output that will give them the profit that they're seeking? So there's a difference between this aggregate and conceptual and theoretical rate of interest, which Rothbard explains to us very carefully, and the loan market, which is what the entrepreneur is actually dealing with on a day-to-day basis. And of course we can see that ever since 2008 when the Fed has struggled mightily to keep interest rates low, there are still places like those car lots you see dotted around that aren't a dealership that accept people with really bad credit and they charge a very high rate of interest, sometimes 20% on the auto loans that they underwrite themselves in many cases. Also rental centers, there are people of modest means who go into rental centers and actually rent computers and TVs and dining room furniture suites and that sort of thing, and oftentimes pay over 20% for that. So the market continues to be the market. Yes, and interestingly that's all related to high time preference and the returns in the time market. So you think of the payday loan business, which is another 25% or 30% or 35% annual rate kind of premium, but that's not the point. The point is that an individual has a high time preference for some money now and is willing to pay whatever the premium is to have that money now, same as your furniture rental example. So that's really about the consumer and their time preference and they'll figure out their own value structure for that time preference. Is that exploitation? If somebody goes into rent a center and I don't know, gets an Apple tablet that costs $800 and they end up spending twice that over time because of interest, I would say no. Yeah, Rothbard is really interesting on that because he talks about all of these internal changes in investment rates and savings rates, but ultimately points out the consumer decides. The consumer decides where investment is going to be made in the economy. Even if you're thinking about Apple deciding to switch to its own chip design instead of Intel's, the consumer is deciding that. The consumer is deciding what kind of preferences they want to apply when they're using their iPhone or their tablet or their MacBook Air. So it's the same thing with the rental market and the payday loan market. The consumer decides and the great error of the leftists and the Marxists is they refuse to give the consumer agency. They won't let them make their own decisions. They won't let them act in the way that they want to act and Rothbard points out it always comes down to the consumer. Everything in this whole changing economy he's talking about is determined by the consumer and the consumer is always changing their preferences. They're always looking for new opportunities. The consumer is the ultimate decider. Now you mentioned earlier it's not always so immediately apparent whether we're in a progressing or a retrogressing economy. For example, even though we're all very worried about the state of the U.S. economy right now, there is obviously a huge increase in savings going on just because people have uncertainty for the future. And I mentioned in a talk a couple of weeks ago in Birmingham, W.H. Hut wrote a famous academic paper called The Yield from Money Held and there's an article by Hoppe which goes a little bit further into this. It says, hey, you know, it's completely natural when things are uncertain for people to hold larger cash balances. And in effect, it's not that they're not consuming. It's that they choose to have the psychic comfort, I guess, of more money in the bank and put the potential for more future consumption over some sort of current consumption. So they prefer the dollars in their bank account to that shiny new Ford F-150 that they might actually want, but they don't want it more than they want the money. So this idea that plays into something Rothbard addresses, the paradox of savings. A lot of our listeners may have heard of the paradox of thrift, so let's talk about this. There's the idea that, well, when people are saving to accumulate capital, they have to forego some consumption. But when we have less present consumption, this lowers demand and that signals less investment in production. So over time, we need an economy based on consumption and consumption is the driver of the economy. And that's basically an underlying principle of what we might call Keynesianism broadly. And it is completely at odds with what a lot of our listeners know from Say's law. So let's get into this. Let's talk about this because Rothbard takes pains to disabuse us of this paradox of thrift. Yeah, it's a wonderful passage actually because he's quite playful in the way that he spells it out. So he paints this picture where there's less consumption and therefore more savings. And he says, isn't that a disaster? You've got less consumption. And so those factors that are involved in production close to consumption are finding that demand is decreased and they're getting lower returns and lower wages and so on like that. Isn't that a disaster? Well, no, because at the same time, that saving, that decrease in consumption is releasing these funds to go, as he says to repeat what he said, go ranging around the economy to find higher returns to their investment. And so they find it in the higher reaches of the economy. We start producing with greater productivity. We start increasing wages to people who work in those higher returns. And so when he quotes the paradox of savings, he quotes Hayek actually where he says that the phrase originated. And so the paradox is focusing on one thing, the lower consumption and the lower production close to consumption and forgetting or ignoring what's going on in the rest of the economy, which is very positive growth, the higher aggregate investment going into these more efficient, more productive investments, which is going to generate more consumer goods and more consumption down the road. So that's a time factor. It's involved with time preference and time as a factor. And paradox of savings is actually a failure to see the big picture of what's going on in the economy as opposed to one element. It's very like Henry Aslet. You've got to think beyond the first implication and get to the second and the third and the fourth and the fifth, and those are positive. So Rothbard points out Bomberwerk who had already explained to us that spending less on present consumption so you can spend more on future consumption is still spending. It's just a temporal matter. And then Rothbard gets into this very naughty discussion about the length of the production processes. So this new investment is always extending the length of the production process. And so he talks about Bomberwerk's roundaboutness. That's 18th or 19th century language, which is a little bit difficult for us today. I remember Bomberwerk's example of you've got a house by the river to get water into your house. You take a bowl and you dip it in the river and you carry it to the house. Then one day you discover you can lay a pipe and take it straight to your faucet. That's more roundabout, but as Rothbard points out, it's more productive and it's also a more direct way of getting flowing water constantly coming through your faucets into your house. And so this complex idea of lengthening the structure of production, in theory that sounds like a bad thing. But in practice it's a great thing because you're increasing productivity more consumer goods over time and therefore a progressing economy. Hunter, you know what came to mind when I was reading this about present consumption versus future? Folks on the left like to say, well, these rich capitalists accumulate all this capital and sure they invest it, but they never really spend it which would stimulate the economy and then they die. And they die with all this money and they leave it to their kids. And then their kids just grow an even bigger pie and that this continues on. And actually I think it was Forbes magazine has done some really interesting work that in a more dynamic economy, I would consider generally in the 20th and now 21st century, the U.S. versus older European economies, family fortunes tend to not last beyond about three generations. In other words, at some point you have some kids or grandkids or great-grandkids who just go out and buy Ferraris and are profligate and they're spending and are jet-setting playboys or something like that and they blow it because they don't have the work ethic because they didn't need it because they were born into a wealthy family. And Forbes sees this as a huge problem that we're going to get these accumulations of capital and certain families or something like that and it really isn't the case empirically. Right and Rothbard is also really interesting on that because he points out that an entrepreneur with great foresight and great judgment will make a high return, will get a great income and some entrepreneurs do it repeatedly because they have that facility, they have that capability but there's no guarantee that they will and he says that the market is no respecter of your history just because you did it before doesn't mean you'll be able to do it again and eventually that entrepreneur is liable to make a mistake and he will be hit with a blow just as hard as the first entrepreneur making a mistake. In fact, he may be hit with a harder blow because in Rothbardian terms he's now got a thousand ounces to risk and he loses them whereas a starting entrepreneur with 50 ounces to risk may get a higher return. So there's no guarantee that history, so in this case that you're citing inheritance will give you a return in the future. Every investment is uncertain and history has nothing to do with that. I'm not sure Americans really understand how we don't have any trepidation about Nouveau-Riche here. We don't even have a concept for it. If you come from nothing and you make the money, you can move on into Beverly Hills or the Hamptons and everyone just congratulates you and you're there. I mean, you grew up in England, there's a little bit of a difference even today. Yeah, there was definitely a class society and the Marxist class analysis actually applied in the UK when I was growing up. There was an aristocracy, historically the landowners and the people in the part of the country where I came from, the coal mines and those kinds of things and if you came from the working class, you were definitely a working class and that's where you stayed. Maybe you could go to college if you were the next generation and maybe get to the middle class, but it was definitely a class society that definitely does not apply in the US. We love entrepreneurs, everybody can be an entrepreneur and the market is making it more and more possible for entrepreneurs to get the capital, whatever their own personal situation. So on the e4e podcast a few weeks ago, Dusty Wunderlich who's a fintech as they call it today, expert is pointing out that there are tons of fintech apps which are now rounding up funds to lend to entrepreneurs at what he would say is close to the original rate of interest because there are so many of them and so much competition that access to that capital is universal. Anybody can get it and anybody can be an entrepreneur and we hope they'll all become rich. So yeah, America is still the place where anybody can be an entrepreneur, we hope that everybody will become an entrepreneur, they can get those high rates of return and you're right, the nouveau reaches a French expression which won't cross the Atlantic. And just imagine the truly democratizing force of where venture capital and micro lending and that sort of thing are headed, that's democracy. Right exactly and that's what we on the economic side as opposed to the political side of looking at this are excited about that democratization of entrepreneurship, let everybody be an entrepreneur, let them have access to capital, let them take on these uncertain projects, let's hope they all win, elevate the progressive economy as Rothbard calls it or progressing economy and that will be the future and we can stop arguing about politics and how you shift resources from one favored group to an unfavorable group and let everybody be an entrepreneur and that will be truly a democratized market, a universally distributed entrepreneurial capitalism. Now in the work of people like Peter Klein and Pair Bieland, one of the big Austrian critiques of other schools of thought is that economics generally, not only does it lack a theory to explain entrepreneurs and entrepreneurial action and the individual risk taker in the economy but it also seems to lack a coherent theory of the firm when entrepreneurs get together under some sort of business entity umbrella. So talk a little bit more about this because I know it's something you've looked at. Yes, so to your first point, there isn't a role for entrepreneurship in classical economics they just have a blob of capital and they figure it's homogeneous because that's the only way they can run their equations because they've mathematicized economics. So Austrians don't do that and they recognize from Menge's time really that entrepreneurs are the drivers of change and growth as we're explaining in this chapter of Rothbard and so how do entrepreneurs actually implement that process of assembling resources in order to invest and create a production process that will produce a future good and the way that we do that now is a firm. So it's a very evolving set of thinking about the firm right now. So you have the Cosian way of thinking about the firm which is your transaction costs are cheaper inside than going out in the marketplace and so that's why you have a firm. You gather people together so that they can work together and build their internal processes so you can get the external production onto the market. There are legal reasons in most countries to create a firm for limited liability but actually now we're finding and this is a superb expression of Austrian capital theory and it's talked about in this chapter in Rothbard that you want your capital to be super flexible because the consumer is always changing. The value of your capital which reflects the consumer preferences is always changing. You don't want to be saddled with old capital that you can't change and Rothbard has a long section about that and so you want your capital to be really really flexible and with the advent of the internet and the ability to access global supply chains and to access labor and specialties and download your code from GitHub and so on you need less and less inside the firm and in fact the idea of the firm may disappear. We have an upcoming episode of E4E which talks about an ecosystem based strategy as opposed to a firm based strategy which is how as an entrepreneur do I best fit into the ecosystem that the consumer is constructing to get their benefits and I may not need to form a firm. I may just need to form a network to gather all of those resources together to bring the consumer what the consumer wants and fit into her or his system. So the idea of the firm in economics is a really dynamic one and I think Rothbard hit on that in this chapter because he talks about the problem of being a firm with existing capital that you can't switch out quickly to the new capital and the new technology and so what Austrians are doing with Austrian capital theory is saying well let's keep looking at that. How flexible can a firm be to the point where hey maybe in the future we don't need a firm. We haven't got there yet but the structure of organization and the capital structure of firms is changing rapidly and Austrian capital theory has a lot to do with that and it originates from Mises and Rothbard. Well it's interesting to hear you describe this dynamism because I know you've spent a lot of your career in private equity and looking at companies and looking at investments so when you see this, when you see the firm sort of falling away to a more networked or spider webbed version of sole proprietors or gig economy or whatever it might be, I'm struck by that because I think our friends on the left view things very differently. They seem to think that the whole world is consolidating into Walmarts and Googles and Amazons and that we're going to be dominated by these giant companies and now with the coronavirus shutdowns the mom and pops are not going to survive and that's going to make it even worse. Right, one of the beauties of Austrian economics is it's about dynamism and it's about complex systems. One of the aspects of complex systems is you can't model them you can't predict them and that's why Rothbard called this chapter production entrepreneurship and change and you mentioned Forbes before so they have an interesting article about look at the Fortune 500 look at it 50 years ago, 75 years ago, 25 years ago, 20 years ago and count the number of firms that were in the Fortune 500 during all of those periods. It's very very few. I don't have the numbers up the top of my head but it's in the teens I think and certainly we can look at Amazon and we can look at Google and look at Facebook and know that they weren't in the Fortune 530 years ago and so change and dynamism is what's going on in the economy and Austrian economics understands that and all of these anti-capitalist commentators can't get that into their heads for some reason and they don't understand why and empirically we know that change is everywhere but they look just at the current moment and they look at the distribution of power or revenue or income or profit or whatever they think it is and they say this is the present situation and we don't like it but they have no concept of dynamism. I'm at a loss as to why that is. Well we're about ready to wrap up this conversation but Hunter I want to mention I really like what you brought up just briefly a few minutes ago which is that we're focusing more and more on economics versus politics and the idea that we need some sort of ideological shift in this country versus we need actual economics and ownership and entrepreneurship and capital to make changes. I really believe that that's the future I think that that's an important part of the Mises Institute and our mission is to teach people economics and try to build a society that doesn't surround itself doesn't revolve itself as much around Washington DC or wherever your capital happens to be. So talk about how people can find you and how they can find the eFREE podcast because everybody listening to this is an entrepreneur with respect to maybe their own household budget with respect to their own career, their job prospects maybe you're thinking about starting a side business maybe you're thinking about starting a main business maybe you're just thinking about having a website or a blog and in every sense I think we are not going to have the job security that our grandfathers may have enjoyed at a particular firm or company we're going to have to have a lot if nothing else a lot of different employers W2 employers throughout our careers and so we all need to be a little bit more nimble we need to be thinking about this and I think the work you're doing on the eFREE platform is going to help people so talk about it. Adam Smith wrote a book called The Wealth of Nations and in 2020 I'd like to shift that focus to for everybody the wealth of you the wealth of you as an individual think about wealth as a a longitudinal concept the rest of your life and how are you going to build up that wealth not just in terms of of income but knowledge and education and foresight and capability think about the wealth of you and that's a lot of what Austrian economics can do with its methodological individualism and its concepts of entrepreneurship so that's the long term goal we're trying to help people in an entrepreneurial sense and the economics for entrepreneurs podcast is a start we're trying to combine the inputs of our Austrian economics professors some of which you've mentioned like Dr. Klein Dr. Bieland and then every other week a practitioner who says here's how I put this into practice in real life so that's our bridge from Austrian theory to applied theory which is what entrepreneurship in real life is so you can find that on Mises.org slash E4E pod the letter E the number 4 the letter E POD you can also find it on my own website hunterhastings.com and pull down the podcast tab they're all there every week we not only have the recorded conversation but we have a thousand word summary of what the key takeaways that people should have that's free and we try to create an Austrian style visual graphic model of what was communicated that day we're building up a accumulation of those and as you know Jeff we're building a broader platform called economics for business E4B which will provide much greater resources for entrepreneurs uncertainty is a knowledge absence so we'll try and provide knowledge which could be courses it could be papers it could be articles it could be tools could be lots of things we'll try to provide mentorship and we'll try to provide a community of entrepreneurs who can ask each other the questions and share experience so I've come across this problem as anybody else come across it can you help me so the community will be there too and so that's all pure economics applied and like you I'm trying to envisage a world where there's no politics we're not arguing over how the pie is divided it's all economics how can I get into a progressing economy and how can I do that as an individual making entrepreneurial profits because I exercise foresight and I bear the uncertainty and I realize it's nothing is guaranteed but I'm building the wealth of me as I add to experience we Dr. Bylon points out that entrepreneurs who keep succeeding tend to become more Austrian they strip away all of the the knowledge that's no use to them and they focus on what works and what doesn't what that is is understanding consumer preferences and rearranging factors to to meet those preferences so that's the world that we're trying to build you're trying to build you're leading us thank you very much and we'll be making a lot of progress there's a lot of growth investment and capital that we're building and hopefully we'll be able to distribute that to all entrepreneurs through the economics for business platform well ladies and gentlemen you know one thing you can do to make yourself more successful to differentiate yourself right here and right now is to read serious books because much of the population is unwilling to do this if you recall Warren Buffet has said that he reads 500 pages a day company reports all kinds of things that's basically what he does all day so that he can make the best decision he can with respect to his investments with and reduce uncertainty to the extent he can so that's what the human action podcast is all about if you've been listening along we're going to finish up on the production portion of this book next week you can go to mises.org type in man economy in state and pull up a beautiful html version of this book which you can search and go through chapter by chapter absolutely no cost there's also a downloadable pdf and version for your e-pop or your kindle or that sort of thing and of course you can go to our bookstore and purchase the book either in a beautiful hardcover for I think only $20 with the code HAPOD for human action podcast I think only $5 or $10 in paperback using the same code so it's a kind of book that you might consider owning and keeping on your shelves because it really is one of the depending on who you want to talk to four or five really seminal books in the Austrian program so all that said Hunter Hastings I want to thank you so much for your time today and ladies and gentlemen have a great weekend thank you Jeff the human action podcast is available on iTunes SoundCloud, Stitcher, Spotify Google Play and on Mises.org subscribe to get new episodes every week and find more content like this on Mises.org