Heath Spong

Praxeology, entrepreneurship and the market process: A review of Kirzner's contribution

It is surely Israel M. Kirzner who has promoted the role of the entrepreneur more than any other author in the second half of the twentieth century. His description of the market process and entrepreneurship in his Competition and the Market Process (1973) represents a seminal contribution to Austrian thinking, although it has been slow to catch on in broader circles. As Humberto Barreto argues above, for example, an entrepreneurial role seems to have disappeared from mainstream economics as the theory of the firm progressed (1989, pp. 95–98). The standard core of microeconomics allows little room for entrepreneurial elements, particularly if the latter are defined in terms of uncertainty, intuition, ignorance, and disequilibrium. In light of this intellectual discord and given his recent retirement, it is timely to reconsider Kirzners unceasing efforts to resurrect the role of the entrepreneur, and especially his effort to reconcile this role with conventional neoclassical approaches.

Positive Externalities and R&D: Two Conflicting Traditions in Economic Theory

This paper explores the early discussion of external economies in the work of Alfred Marshall and Arthur Pigou. Marshall emphasized external economies as a positive aspect of the market process. Pigou’s interpretation of externalities has become the standard public finance argument on the existence of market failure, and provides the rationale for proposed policy solutions. An examination of the differences between the two perspectives is subsequently used as the base for a discussion of the modern analysis of research and development, and of the difficulties inherent in the standard Pigovian view. A final substantive section of the paper reconsiders the Marshallian perspective, identifying recent contributions to economic theory that have begun a return to Marshall’s original interpretation. The conclusion considers the significance of this Marshallian tradition for industrial policy.

The impact of housing assistance on the employment outcomes of labour market programme participants in Australia

This paper examines whether the employment outcomes of Australian labour market programme participants vary according to whether they receive housing assistance. This issue attracted attention when a series of US studies showed that clients of welfare-to-work programmes are more likely to achieve positive employment outcomes if housing assistance is also received. This paper tracks the employment outcomes of labour market programme participants utilising six waves of data from the Household Income and Labour Dynamics in Australia (HILDA) database. Findings from a random effects model suggest that housing assistance status has little impact (either negative or positive) on employment outcomes. Differences in the institutional arrangements governing access to housing assistance could be responsible for the absence of any effect in Australia.

Uncertainty, institutional structure and the entrepreneurial process

While there exist numerous theories of entrepreneurship, we aim to construct an account that is thoroughly process-oriented and is thus consistent with non-teleological evolutionary foundations. To accomplish this, we combine theories of structural uncertainty with recent work in the theory of social institutions. From such a perspective, creatively thinking and acting entrepreneurial individuals can account for endogenous social change through their effect on institutions. Our approach helps to clarify many of the inconsistencies that arise in the existing entrepreneurial literature and we are able to clarify issues of entrepreneurial failure, self-employment versus entrepreneurship, entrepreneurs versus managers, and incentive for entrepreneurs in formal versus informal institutional settings.

The Impact of the GFC on Sectoral Market Efficiency: Non‐Linear Testing for the Case of Australia

This paper investigates the efficiency of the Australian stock market during the period of volatility and disruption associated with the Global Financial Crises (GFC). Furthermore, the investigation seeks to observe any divergence in market efficiency between industry sectors that demonstrate differing economic performance across the period. Spanning a time period of 2000-2015, the data are split into three periods of distinct economic conditions: a pre-crisis period of relatively high growth, the GFC period of disruption and contraction, and a post- GFC period of relatively low growth. Five sector indices listed on the Australian Securities Exchange are analysed to search for evidence of market efficiency (Real Estate, Consumer Discretionary, Financials, Materials, and Metals and Mining). A range of non-linear tests are applied in order to systematically investigate the structure of the market in each sector. The results highlight the cointegrated nature of non-linearity across related sectors, and also demonstrate that different industries within the same economy can reveal highly diverse patterns of non-linearity and market efficiency in response to financial crisis. [ABSTRACT FROM AUTHOR]

When Self-Interest Trumps Prejudice: Adam Smith’s Market as a Moral Exemplar

Abstract Purpose This chapter makes a case for Adam Smith’s description of the market as a moral exemplar. More specifically, it argues that the behavior of the individual agents who inhabit Smith’s market is indeed morally exemplary. Methodology/approach The basis for this argument is that economic self-interest drives market participants to look beyond any inherent prejudice or tendency to discriminate on the basis of preconceived opinions or beliefs. Some historical context is provided that illustrates conservative opposition to this perspective from unlikely sources. A simple moral framework is created to provide one possible representation of Smith’s interpretation of the market. In this framework self-interest is characterized as a “trump” that overcomes potential prejudices. It is further argued that this framework can be considered a moral exemplar, and that it is also important in facilitating exchange between participants. Findings The central argument is tested when the self-interest criterion is exposed to competition from the alternative moral value of altruism. The moral framework presented, and the principle of economic self-interest in particular, is resilient against this moral challenge. Social implications The social implications of this argument relate directly to our normative understanding of how individuals should behave in a market context. The chapter establishes a link between this moral framework and the functioning of the market. Originality/value of paper The chapter is original in its attempt to defend the underlying morality of Smith’s market without recourse to his other works, such as the Theory of Moral Sentiments. It also links an understanding of market egalitarianism with a broader moral framework of market activity. Furthermore, it offers a clarification of why economic self-interest, and not altruism, is the appropriate motivation for market activity.