Competition as a Discovery Procedure: A Rejoinder to Professor Kirzner on Coordination and Discovery

By Klein, Daniel B. | Journal of Private Enterprise, Fall 2011 | Go to article overview

Competition as a Discovery Procedure: A Rejoinder to Professor Kirzner on Coordination and Discovery


Klein, Daniel B., Journal of Private Enterprise


I. Introduction

What the market process does is to systematically translate unnoticed opportunities for mutually profitable exchange among individuals into forms that tend to excite the interest and alertness of those most likely to notice what can be spontaneously learned. In this way the opportunities for social improvement via mutually profitable exchanges tend to be most rapidly discovered and exploited.

- Israel Kirzner (1979, p. 150)

The Spring 2010 issue of The Journal of Private Enterprise featured a symposium organized around a critique that Jason Briggeman and I wrote of Professor Kirzner's work on coordination and discovery. Professor Kirzner provided a lengthy reply to the critique. The two papers were the object of commentary by Peter Boettke and Daniel D'Amico (2010), Steven Horwitz (2010), Gene Callahan (2010), and Martin Ricketts (2010). The present piece is written as a response to Professor Kirzner (the "Professor" will be omitted henceforth with no disrespect). I offer responses to the other commentators, in light of the main-body response to Kirzner, in an appendix to the online version of this paper. Briggeman and I are grateful to all of those who have engaged our work, and to The Journal of Private Enterprise for hosting the exchange.

II. Intense Criticism of Deep Formulations Should Not Give Offense

Klein and Briggeman (2010) - henceforth, K-B, treated as a singular noun - critically examines not just one or two features of Kirzner's ideas, but sets of features, and in a way that pulls back the lens and interprets the set in terms of decisions at deep levels of formulation spanning five of Kirzner's books (1973, 1979, 1985, 1992, 2000) as well as numerous additional writings. The K-B critique traces out many dimensions and manifestations, resulting in what Kirzner calls a "barrage of criticisms." Readers of Kirzner's reply will notice that he felt some affront. I hope that any hard feelings can be put aside.

Where Briggeman and I felt that Kirzner became abstruse, we used the word "abstruse." Where we felt that particular invocations of Hayek on coordination were spurious, we used "spurious." Where we felt that Kirzner shifted between meanings, or made inconsistent statements, we used "shifted" and "inconsistent."

A great, visionary thinker such as Kirzner, a maker of master formulations, will run into trade-offs and limitations. In surveying the terrains verged upon when working at a deep level, he must creatively formulate alternatives and assess those alternatives for their relative merits. All great thinkers run up against becoming abstruse and shifting about. For example, Adam Smith's moral theory, particularly the enshrouding of all moral judgment in sympathy, was extensively criticized by Scotsmen of his and the next generations as unduly abstruse (see the criticisms in Reeder, 1997). Smith's moral theory is abstruse, as is his price theory. On usury, Bentham (2008) and Dugald Stewart (1856, pp. 167-86) criticized Smith's inconsistencies. The criticisms alert us to problems and help us to assess them. Just as it is not bad manners to innovate in the market place (Schumpeter 1934, pp.86- 87), it is not bad manners to compete rivalrously over deep formulation.

Kirzner writes that "much of the K-B criticism turns out to be an exercise in semantics which does not affect the validity (in my opinion) of the conclusions reached" (p-70). It is as though Kirzner does not think it necessary to engage questions about the relative merits of two vying ways of discoursing (granting here the internal validity of each). Kirzner writes, "an expression of disagreement on semantics does not constitute a substantive criticism" (p. 76). He writes - also in the conclusion (p. 83) - as though semantic considerations are indifferent, even as though there is something untoward in raising objections about someone's semantic decisions.

Students of Adam Smith, Friedrich Hayek, Michael Polanyi, and Israel Kirzner understand that decisions emerge from higher, tacit dimensions of knowledge and motivation. …

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