Production: Entrepreneurship and Change

Entrepreneurs see the future better than others and go and make money off it. Profits are an index that maladjustments are being met and combatted by the profit-making entrepreneurs. Capital does not beget profits. Only wise entrepreneurial decisions do that.

The paradox of saving is that saving is the necessary and sufficient condition for increased production, and yet that such investment seems to contain within itself the seeds of financial disaster for the investors. The impact of net saving on the economy is to lengthen and narrow the structure of production. In an economy with increases in gross savings and investment, money wages and ground rents may well fall, but real wages and rents will rise. Technology, while important, must always work through an investment of capital.

Refusal to maintain the value of capital is known as consuming capital. Profit and loss are the results of entrepreneurial uncertainty.

An Alice J. Lillie Seminar. This lecture covers pp. 509-555 in the Scholar’s Edition of Rothbard’s Man, Economy, and State.