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Alertness, local knowledge, and Johnny Appleseed

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Anderson and Hill argue that property rights entrepreneurs, driven by non-replicable Kirznerian alertness, identify unowned and unpriced attributes of a resource and capture rents to those resources by limiting access to them. I argue that alertness is non-replicable, but it is also not random. Kirzner’s analytical framework emphasizes an individual’s local knowledge and subjective interpretative schema. Incorporating these concepts and emphasizing two types of local knowledge, about social and commercial conditions, explains why some people are alert to profit opportunities and others are not. This implies that economic restrictions are more detrimental to entrepreneurship than previously understood. I provide evidence by examining Johnny Appleseed’s successful nursery business.

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  1. Despite volumes of folk stories, there is remarkable little scholarly research on the life of John Chapman. This paper draws primarily from the historical investigation by Robert Price (1967), which carefully distinguishes between documented fact and fiction.

  2. Anderson and Hill discuss two types of contracting. Specific contracting describes voluntary coalitions of individuals who limit access to a commons among well-identified participants. General contracting applies to “all comers, including those not party to a specific contract…[and] take[s] the form of collective rules that recognize and legitimize claims on assets by some individuals and exclude others from those claims” (2002, pp. 495–496).

  3. Property rights economists have written little on land expansion east of the Mississippi River in the early 1800’s. One potential reason given by Anderson and Hill is that in “the East, climate and topography were similar enough to England that it was possible to adapt English institutions.” (2002, p. 498). The Western frontier, on the other hand, required innovations in land institutions such as range rights and cattle associations to adapt to the different resource endowments [See Anderson and Hill (2004)]. Despite the similarity of the Eastern United States to English climate and topography, there were still many uncertainties about land acquisition. Social norms and agent types, for example, were very different on the United States frontier compared with England.

  4. Leeson et al. (2006) make a related argument about the heterogeneity of entrepreneurs. They argue that errors of overpessimism lead to slower market correction than errors of overoptimism, but because people differ in their overpessimism for particular opportunities, market correction still occurs.

  5. Beaulier and Prychitko (2006) discuss the tension amongst evolutionary and teleological theories of the emergence of property rights by Austrian economists. Anderson and Hill’s theory of property rights entrepreneurship is an evolutionary account because although the individuals are acting purposefully, there is no system level planner or hierarchy of ends; entrepreneurs engaged with varied and competing individual ends leads to the creation of property rights.

  6. As Pollan notes, “Just about the only reason to plant an orchard of the sort of seedling apples John Chapman had for sale would have been its intoxicating harvest of drink, available to anyone with a press and a barrel” (Pollan 2001, pp. 21–22)

  7. Rent dissipation, a problem associated with some land laws, was limited to the extent that Chapman was especially capable of engaging in such business endeavors. See Anderson and Hill (1983, 1990) for discussions of the affect of formal rules on the potential for waste in land acquisition.


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The author thanks an anonymous referee, Peter Boettke, Stewart Dompe, Josh Hill, Emily Schaeffer, Richard Wagner, Larry H. White, and especially Peter Leeson for helpful comments. All remaining errors are, of course, the author’s own. He gratefully acknowledges generous research support from the Earhart Foundation and the Mercatus Center.

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Correspondence to David Skarbek.

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Skarbek, D. Alertness, local knowledge, and Johnny Appleseed. Rev Austrian Econ 22, 415–424 (2009).

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