Advertisement

The ethics of pure entrepreneurship: An Austrian economics perspective

  • Israel M. Kirzner
Article
  • 159 Downloads

Abstract

This paper focuses on the justice of income distribution in a system of private property rights. Milton Friedman argued that the “ethical principle that would directly justify the distribution of income in a free society is ‘to each according to what he and the instruments he owns produces’” (1962: 161–2). In this paper we (a) show that the winning of pure entrepreneurial profit cannot be justified on the basis of Friedman’s ethical principle, and (b) argue that a fuller understanding of the meaning of “pure entrepreneurial profit” reveals that Friedman’s universal ethic is of little relevance to capitalism, properly understood as a free enterprise system. To pass ethical judgment on pure entrepreneurial profit, it is necessary to supplement Friedman’s ethical principle with additional ethical insights. This paper does not argue directly in favor of any one such possible additional insight; it will simply demonstrate how one such additional insight might, if it passes final ethical screening, serve as the ethical defense of pure capitalism, which, we argue, Friedman’s ethical principle is unable to do.

Keywords

Entrepreneurship Justice Milton Friedman Property rights Pure entrepreneurial profit 

JEL classification

B53 L26 

References

  1. Clark, J. B. (1899). The distribution of wealth. New York: Macmillan.Google Scholar
  2. Friedman, M. (1962). Capitalism and freedom. Chicago: University of Chicago Press.Google Scholar
  3. Kirzner, I. M. (1989). Discovery, capitalism and distributive justice. Maryland: Basil Blackwell.Google Scholar
  4. Knight, F. H. (1921). Risk, uncertainty and profit. New York: Houghton Mifflin Company.Google Scholar
  5. von Mises, L. (1952 [1974]). Planning for freedom and twelve other essays and addresses. Illinois: Libertarian Press.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of EconomicsNew York UniversityNew YorkUSA

Personalised recommendations