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75

A NoteoN RothbARdiAN decisioN-

MAkiNg ReNts

Mihai VladiMir Topan

ABSTRACT: In hisMan, Economy, and State, Murray Rthbard intrducesthe catallactic functin f decisin-makin wner, and the crresndentincme f decisin-makin ability rent. These are sused t exist bthin ERE (they are, therefre, distinct frm the caitalist functin and hisincme, frm labr and waes, r land and the crresndin rent) andin the real world permeated by uncertainty (they must also be dierentfrom the entrepreneurial function and prot and loss). Even though thesecncets seem t suest an imrtant breakthruh int the thery fthe rm, we argue that they are problematic. They must dissolve into (atbest, be elabratins f) either the standard ecnmic functins resentin the ERE (such as labr, fr instance), r the entrereneurial functin.

KEYWORDS: decision-making ability, decision-making rents,ownership function, entrepreneurship, firm

JEL CLASSIFICATION: D20, D21, L20, L21, L26

Mihai Vladimir Topan ([email protected]) is President of the Ludwig vonMises InstituteRmania. He is als assistant rfessr at the Deartment f Inter-natinal Business and Ecnmics, Academy f Ecnmic StudiesBucharest. Theresent aer is surted by the research rject CNCSIS TE nr. 38/03.08.2010.

The author would like to thank Marius Spiridon, Dan Cristian Comnescu, RaduMuetescu and Matthew McCarey for valuable comments and suggestions. Theremainin errrs are, f curse, my wn.

VoL. 15 | No. 1 | 7588

SpRINg 2012

The

QuarTerly

Journalf

ausTrian

econoMics

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76 The Quarterly Jurnal f Austrian Ecnmics 15, N. 1 (2012)

IntroductIon

one elegant way of solving the problems posed by the theoryof the rm would be to discover, within the framework ofthe classical thery f distributin, an ecnmic (r catallactic,in Misesian terminly) functin resnsible fr the creatin1of rms. By positively identifying and describing this function,by negatively dierentiating it from all other functions and byconnecting it to a specic form or share of income, a satisfactory

theory of the rm could be provided. Rothbard (2009 [1977],pp. 601603) comes very close to such an objective2 thruh hisdecisin-makin wner functin and decisin-makin ability rent.After a very brief restatement of the Misesian-Rothbardian theoryf entrereneurshi, we will resent these cncets as Rthbardintroduced them. Then we will discuss briey some other instancesin which he makes use f them, as well as the surce f insiratinthe authr himself mentined. After an analytical/thereticalcritique f the mentined cncets, we cnclude.

tHE MISES-rotHBArd VIEW oF EntrEPrEnEurSHIP

There is no doubt thatat least from a theoretical point of viewtheclosest disciple of Ludwig von Mises was Murray N. Rothbard. Thiscan als be seen, amn the many tics these tw iants tackled,in their thery f the entrereneur. The rle r ecnmic functin fthe latter they bth see as uncertainty bearin:

The term entrereneur as used by catallactic thery means: actin manexclusively seen from the aspect of the uncertainty inherent in everyaction. (Mises, 1998 [1949], p. 254)

Like every acting man, the entrepreneur is always a speculator. He dealswith the uncertain cnditins f the future. His success r failure deendson the correctness of his anticipation of uncertain events. If he fails in his

1 Mre recisely, fr the creatin and structurin, exansin, rerientatin/restruc-

turing, reduction or dismantling of rms.2 This was inted ut by Jseh T. Salern, bth in the intrductin t Rthbard

(2009 [1977], p. xliv) and in Salerno (2008, p. 206). In the study guide to Rothbard(2009 [1977]), Robert Murphy also designates this Rothbardian contribution asfairly unique (Murhy, 2006, . 115).

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77Mihai Vladimir Topan: A Note on Rothbardian Decision-Making Rents

understandin f thins t cme, he is dmed. The nly surce frmwhich an entrepreneurs prots stem is his ability to anticipate betterthan other people the future demand of the consumers. (Mises, 1998[1949], p. 288)

If all ele were t anticiate crrectly the future state f the market, theentrepreneurs would neither earn any prots nor suer any losses [].What makes prot emerge is the fact that the entrepreneur who judgesthe future rices f the rducts mre crrectly than ther ele dbuys sme r all f the factrs f rductin at rices which, seen frmthe point of view of the future state of the market, are too low []. On

the ther hand, the entrereneur wh misjudes the future rices f therducts allws fr the factrs f rductin rices which, seen frm thepoint of view of the future state of the market, are too high. His total costf rductin exceeds the rices at which he can sell the rduct. Thisdierence is entrepreneurial loss. (Mises, 2008 [1951], pp. 78)

We shall deal further with the nature of prot and loss, but suce it tosay here that the active entrepreneurial element in the real world is dueto the presence of uncertainty. (Rothbard, 2009 [1977], p. 434)

They [the capitalist-entrepreneurs] must advance present money in aseculatin un the unknwn future in the exectatin that the futureproduct will be sold at a remunerative price. In the real world, then,quality f judment and accuracy f frecast lay an enrmus rle inthe incomes acquired by capitalists. (Rothbard, 2009 [1977], p. 510)

Entrepreneurship deals with the inevitable uncertainty of the future.(Rothbard, 2009 [1977], p. 552)

A distinuishin mark f the Rthbardian analysis f entrere-neurshi is the utmst care nt t fall int the Kirznerian (prop-ertyless) interretatin f the Misesian entrereneur.3 He alwaysinsists, therefre, n the entrereneur as wner f rerty.In addition, as one of the quotes above also shows, he alwaysseaks abut the capitalist-entrepreneur, recisely s as nt tdeprive of any element the person who copes with uncertainty inthe real wrld. Fr Rthbard he is mst certainly an wner (if nt,what is he risking?); he is also a capitalist (advances property/

3 A much-debated tic in the Austrian ecnmics literature. one f the main intsof contention is the view laid out in ch. 2 (The Entrepreneur) of Kirzner (1973).For outstanding analyses of this matter (and much more) see Salerno (1993) andHlsmann (1997). For Rothbards views see Rothbard (1997 [1957], ch. 14, ProfessorKirzner on Entrepreneurship), fr examle.

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resurces within a temral hrizn imlyin waitin/time); heis an entrepreneur because the future he has in view is uncertain,and the resources advanced in production can be lost. The grossincme, therefre, f a real wrld entrereneur will be cmsedof several elements: a wage component (if he also provides labor,such as management); an interest component; and a (pure) protand lss cmnent.4

tHE rotHBArdIAn concEPt oF dEcISIon-

MAKInG rEntS

It is here that Rthbard intrduces a sulementary elementwhich we think is problematic. Namely, he identies the ownershipfunction as suciently delineated conceptually by the idea ofdecision-making, sme srt f ultimate assumin f the resurceallcatin resnsibility/burden. The wner must decide the all-catin f his rerty/resurces. And fr this decisin, Rthbardrewards him with a secial frm f incme: the decision-makingrent (r the decisin-makin ability rent):

But is there a functin which wnin businessmen erfrm, and wuldstill perform in the ERE, beyond the advancing of capital or possiblemanaerial wrk? The answer is that they d execute anther functinfr which they cannt hire ther factrs. It es beynd the simlecapital-advancing function, and it still continues in the ERE. For wantf a better term, it may be called the decisin-makin functin, r thewnershi functin. Hired manaers may successfully direct rductinr chse rductin rcesses. But the ultimate resnsibility andcontrol of production rests inevitably with the owner, with the busi-nessman whse rerty the rduct is until it is sld. It is the wnerswho make the decision concerning how much capital to invest and inwhat articular rcesses. And articularly, it is the wners wh mustchse the manaers. The ultimate decisins cncernin the use ftheir rerty and the chice f the men t manae it must therefrebe made by the wners and by n ne else. It is a functin necessary tproduction, and one that continues in the ERE, since even in the EREthere are skills needed to hire proper managers and invest in the mostecient processes; and even though these skills remain constant, the

4 An (self) insurance premium could also be included; or various other rents, suchas for self-provided location, for instance. We ignore these further, as they do notchane the substance f ur arument.

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eciency with which they are performed will dier from one rm toanother, and diering returns will be received accordingly.

The decision-making factor is necessarily specic to each rm. Wecannot call what it earns a wage because it can never be hired, and thusit des nt earn an imlicit wae. We may therefre call the incme fthis factor, the rent of decision-making ability. (Rothbard, 2009 [1977],. 601603)

The ttal rss earnins f an entrereneur cnsist then f u t

fur ssible elements: interest, wae, decisin makin rent andpure prot/loss. At this point, Rothbard comes dangerously close tothe conclusions of the very author he strived so hard to dierentiatefrom: Israel Kirzner. Specically, by introducing this additionaldistinct functin f wnershi and its subsequent (sulementary)frm f remuneratin/incme, he ends u searatinsmethincnsidered as a shrtcmin in Kirznerwnershi frm entrere-neurshi. If this is nt s, and if it is still the wnershi functinthat also receives the prot/loss residuum, then we have a function

with two incomes, a situation which violates the one functionne incme rincile imlied in the thery f distributin.5 Nt tmentin the emtyin f the catallactic functin f the entrereneur,that wuld remain withut an incme share.

5 See Hawley (1907, p. 112). Frederick B. Hawley has a very interesting treatmentof enterprise and entrepreneurship, very much like that of Mises. Without theshisticated tls f the latter (such as ecnmic calculatin, case rbability,specic understanding etc.) he manages to de-homogenize the role of the entre-preneur (or, as he calls him, enterpriser) from various other contributions tothe nal product: laborer (including manager), capitalist, and insurer. Apart from

his thery f entrereneurshi, he is interestin fr his methdly (staunchdefender of deductive method). Nevertheless, in his macro analysis, he is ratherre-Keynesian, cnsiderin the business cycle t be a nrmal ccurrence in marketeconomies due to (natural) disproportions between available savings and possibleinvestment channels. See Topan (2009).

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otHEr PLAcES In WHIcH rotHBArd EMPLoYStHE concEPt

While Rothbard does not make extensive use of the decision-makin ability and decisin-makin rents,6 he des mentin (atleast one of) them several times inMan, Economy, and State. First,there is this place (we quote extensively to better clarify the context;the cncets aear in the secnd ararah):

Labor is usually treated as a perfectly divisible factor, as one that variesdirectly with the size of the output. But this is not true. As we have seen,the truck driver is not divisible into fractions. Further, management tendsto be an indivisible production factor. So also salesmen, advertising, costof borrowing, research expenditures, and even insurance for actuarialrisk. There are certain basic csts in brrwin which simly arise frminvestigating, paperwork, etc. These will tend to be proportionatelysmaller the larger the sizeanother indivisibility, with returns increasingover a certain area. Also, the broader the coverage, the lower insuranceremiums will be.

Then there are the well-known gains from the increase in the division oflabor with larger outputs. The benets from the division of labor maybe considered indivisible. They arise from the specialized machines thatmust rst be used with a larger product, and similarly from the increasedlabor skills of specialists. Here too, however, there is a point beyondwhich n further secializatin is ssible r where secializatin issubject t increasin csts. Manaement has usually been stressed asparticularly subject to overutilization. Even more important is the factorf ultimate-decisin-makin ability, which cannt be enlared t theextent that manaement can.

What any given rms size and output will be is therefore subject to ahost of conicting determinants, some impelling a limitation, some anexpansion, of size. At what point any rm will settle depends on thecncrete data f the actual case and cannt be decided by ecnmicanalysis. Only the actual entrepreneur, through the give and take ofthe market, can decide where the maximum-prot size is and can setthe rm at that point. This is the task of the businessman and not of theeconomist. (Rothbard, 2009 [1977], pp. 597598)

Then, after the standard quote provided above, Rothbard

mentions the decision-making rents again in chapter ten, when

6 The same can be said abut ther cncets tuched un in Rthbards wrks,such as quasi-money (Rothbard, 2009 [1977], pp. 826827).

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discussing monopoly prots versus monopoly gains to factorsof production:

The mnly ains must, then, be imuted t either labr r landfactrs. In the case f a brand name, fr examle, a certain kind f labrfactor is being monopolized. A name, as we have seen, is a unique iden-tifying label for a person (or a group of persons acting co-operatively),and is therefre an attribute f the person and his enery. Cnsideredgenerally, labor is the term designating the productive eorts of personalenergy, whatever its concrete content. A brand name, therefore, is an

attribute of a labor factor, specically the owner or owners of the rm. Or,cnsidered catallactically, the brand name reresents the decision-makingrent accruing to the owner and his name. (Rothbard, 2009 [1977], p. 679;his emhases)

And fteen pages later, in the same chapter and a similar context:

Yet many monopolized [] factors are labor factorssuch as brandnames, unique services, decision-making ability in business, etc.(Rothbard, 2009 [1977], p. 694)

In all these instances, Rthbard seems t assimilate, mre rless, the income of decision-making to a type of wage, and to viewthe decisin-makin ability as sme srt f labr. This can als befund in ther wrks f the reat Austrian master. Fr instancesmewhere else, he says:

The fact remains that just as the cstumer earns interest lus manaerialwages plus prot, so will a landowner earn interest plus managerialwages plus prot (and wages can include wages of decision-making).The prot goes to better forecasters, and poorer ones will suer losses.7

Fr nw let us just ntice the tensin in Rthbards usae fthe cncet. on the ne hand decisin-makin is nt labr, as itis smethin lically antecedent t it. Smene has t decide thehirin f labrers (and, resumably, actually hire them, manaersincluded). On the other, it is labor, even if a special type of labor

7 Rothbard (1997 [1957], p. 308). It is rather peculiar that Rothbard includes, on theprevious page, entrepreneurship in the labor category: Over the whole economy,then, the prices of capital goods are imputed back to land and labor, until nally,the net incmes are earned by: land, time, labr (includin entrereneurshi).

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(some unique ability or talent, possibly even associated with abrand name).

rotHBArdS SourcE oF InSPIrAtIon

In a ftnte,8 Rthbard indicates as his surce f insiratin afertile, but neglected hint of Eugen von Bhm-Bawerk, who inthe intrductin t his Capital and Interest wrte the fllwin:

But even where he [the undertaker (BB)/the businessman (MR)] doesnt ersnally take art in the carryin ut f the rductin, he yetcntributes a certain amunt f ersnal truble in the shae f intel-lectual suerintendence say, in lannin the business, r, at the least, inthe act of will by which he devotes his means of production to a deniteundertaking. (Bhm-Bawerk, 1890, p. 8)

S far, it seems that a decisin-makin functin is suested. ButBhm-Bawerk goes on like this (again, we quote extensively so as

nt t miss the cntext):

The question now is whether, in view of this, we should not distinguishtwo quotas in the total sum of prot realized by the undertaking; onequta t be cnsidered as result f the caital cntributed a secnd qutat be cnsidered as a result f the undertakers exertin.

On this point opinions are divided. Most economists draw some suchdistinction. From the total prot obtained by the productive under-taking they regard one part as prot of capital, another as undertakers

prot. Of course it cannot be determined with mathematical exactitude,in each individual case, how much has been contributed to the makingof the total prot by the objective factor, the capital, and how much bythe personal factor, the undertakers activity. Nevertheless, we borrowa scale from outside, and divide o the two shares arithmetically. Wend what in other circumstances a capital of denite amount generallyyields. That is shwn mst simly by the usual rate f interestobtainable for a perfectly safe loan of capital. Then, of the total protfrm the undertakin, that amunt which wuld be enuh t ay theusual rate of interest on the capital invested in it, is put down to capital,

while the remainder is put to the account of the undertakers activity asthe prot of undertaking. []

8 Footnote 50, p. 602 of Rothbard (2009 [1977]).

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on the ther hand, there are many, esecially amn the yunereconomists, who hold that such a division is inadmissible, and that theso-called undertakers prot is homogeneous with the prot on capital.

This discussin frms the subject f an indeendent rblem f nlittle dicultythe problem of the Undertakers Prot. The diculties,however, which surround our special subject, the problem of interest,are s cnsiderable that I d nt feel it my duty t add t them by takinup another. I purposely refrain then from entering on any investigation,or giving any decision as to the problem of undertakers prot. (Bhm-Bawerk, 1890, pp. 89)

Bhm-Bawerk, by deliberately trying to restrict his inquiries tothe phenomenon of interest, avoids altogether the thorny questionof prot and of the specic economic function thereby remu-nerated. While he indeed suests a decisin-makin functin, hedes nt seak (r suest, I think) a decisin-makin rent. Andwhen cnsiderin the crresndin incme share f the saidfunction, he speaks about prot. Two possible roads open up atthis point: (1) either Bhm-Bawerk would have elaborated on theundertakers cntributin aart frm labr as the entrereneurialfunction, remunerated with prot; and, as he abstracted from/assumed away uncertainty in his cncet f the erfectly safelan in rder t mre recisely delimit the rle f caital andthe fundamental surce f interest, this entrereneurial functinwould have most probably incorporated uncertainty. (2) Or, hewould have discussed this act of will type of undertakerscntributin in the cntext f certainty (r in ERE, as Rthbardhas ut it); but, then aain, what remains f the idea f entrere-neurshi as uncertainty bearin?

Whatever Bhm-Bawerk might have thought on these mattersis, in a sense, irrelevant. It is not uncommon for later authors torescue insights from previous ones, and to use them in ways thatwould have totally surprised the latter. Rothbards insight, then,must be juded n its wn merit. T this we nw turn.

An AnALYtIcAL crItIQuE oF tHE concEPt

Let us take a clser lk at the decisin functin and thedecisin-makin rents t see if they hld water. A fundamentalquestin t be answered immediately wuld be: can these rents

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be negative? Rothbards answer is no (Rothbard, 2009 [1977], pp.603604), and is based on his standard analysis of rent (whichmust always be positiveno matter how small, but positiveinrder t induce the factr wner t artake in the rductinprocess). But what is rewarded through these (positive) rentswhen there are lsses and in his caacity as entrereneur theowner has failed to correctly forecast the relevant market data?(He made a wrn judment; can we in sme sense emhasizenly the fact that he made a decision nevertheless?) We would

be in the straneif nt utriht cntradictrysituatin frewarding the individual (as owner) for the mere fact that he tooka decisin, nly t cncmitantly enalize him (as entrereneur)fr his uninsired decisin. Des nt, ne wnders, the idea fdecisin-makin imly the desideratum f successful decisin-makin?9 And, if s, des nt successful decisin-makin refer tuncertainty bearing and overcoming?

We have stumbled here upon a thorny question: up to whatpoint, and for what purposes is ERE as such useful? Specically,what remains f decisin-makin in ERE? Rthbard himself seemst suest in anther lace that the answer miht be nthin:

In the ERE, where all techniques, market demands and sulies, etc., frthe future are known, the investment function becomes purely passiveand waiting. There might be a supervisory or managerial labor function,but this can be analyzed under prices of labor factors. (Rothbard, 2009[1977], p. 434)

9 Even if it might look like we are torturing a bit the texts to nd arguments on ourside, there are instances in which Rthbard suests decisin-makin cmes withsuccess/failure, and cannt be meaninfully searated frm uncertainty (and,therefore, conned to, and isolated in ERE). Thus, in Ethics of Liberty, he says atsme int that: If Cruse had eaten the mushrms withut learnin f theirpoisonous eects, then his decision would have been incorrecta ssibly traicerrr based n the fact that man is scarcely autmatically determined t makecorrect decisions at all times. (Rothbard, 1998 [1982], p. 32) And again: The lessfarsighted entrepreneurs suer losses for poor handling of decisions under uncer-tainty. (Rothbard, 1998 [1982], p. 39, n. 3) Passages of this sort can also be foundin Man, Economy, and State: In additin t the caital-sulyin functin, the

crrate caitalists als assume the entrepreneurial functin: the crucial directinelement in uidin the rcesses f rductin tward meetin the desires f thecnsumers. In the real wrld f uncertainty, it takes sund judment t decidehow the market is operating, so that present investment will lead to future prots,and not future losses. (Rothbard, 2009 [1977], p. 434)

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on the ther hand, if we were t suse that decisin-makinrents can be negative, it becomes very dicult to understand whatthe dierence would be between them and prots/losses. Theyboth vary; they can both be positive or negative. Moreover, theymust bth ertain t wnershi, as therwise the questin arises: ifdecisin-makin ertains t wnershi, t what des uncertaintybearin ertain? (If the answer were aain entrereneurshi,what wuld this cncet still mean?)

One route has been left in suspension above, when we discussedRthbards inclusin f the decisin-makin functin under labrfactrs (and f the decisin-makin rents under waes). That is,the imlied suestin that it miht be fruitful t searate withinthe brader catery f labr, a secial subcatery, secial enuhso that it deserves a separate and dedicated catallactic function,tether with a frm f incme. While nt withut merits, this ideafalls under heavy re by Rothbard himself elsewhere:

Catallactically, labr is hired by entrereneur-caitalists. It is rsslyunscientic to separate laborers into arbitrary categories and to referto one group as labor and workers, while the other group receivesvarious other names. To give them other names implies a dierence inkind between their cntributin and the cntributin f thers, but thisdierence does not exist. (Rothbard, 2009 [1977], p. 565)

WHAtS At StAKE?

Succinctly ut, the rblem is the fllwin: will the Austriantheory of the rm be an entrepreneurial theory of the rm, r a decision-making ability theory of the rm? Which ne is the fundamental/essential aspect, and provides for the nature f the ecnmicphenomenon of the rm?

An element of appeal in this perspective (the one acceptingthe decisin-makin rents cncet) culd be the idea fspecicityinduced into the activity of the businessmen. Some anities with

the resource-based theories of the rm are immediate10

(eventhough the Rothbardian theoretical edice in its entirety permits

10 See, e.g., Nelson (1991).

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a quite thruh criticism f such theries). prfessr JsehSalern, fr instance, builds u the cncet f the real/interalentrereneur by means f the interatin f the wnershi, cai-talist and entrereneurial functins:

An imrtant sideliht f this interatin f the wnershi functin withthe capitalist and uncertainty-bearing functions is a new perspective onthe nature and organization of the rm. The rm appears now as theprojection of the owners personality, with all its cognitive and tempera-mental idiosyncrasies, into objective reality. Each rms organization is

shaed t accmmdate the unique decisin-makin ability f the wnerand it is eretually transfrmed in a dynamic wrld by his decisins.The rms organization is, furthermore, the immediate source of theinteral entrereneurs decisin rents. (Salern, 2008, . 206)

Nevertheless, in my opinion, the specicity element does not byitself justify the introduction of the above-discussed new element(decisin-makin rents). Seein human actin under uncertaintyexactly fr what it isreal wrld human actinat nce imlies

that entrereneurial judments must be as specic as ssible.11

Moreover, prot and loss can account for the correctness of specic(idiosyncratic, even) entrepreneurial judgments or decisions:

Mst uncertainties are uninsurable because they are unique, sinle cases,and not members of a class. They are unique cases facing each individualr business; they may bear resemblances t ther cases, but are nt hm-geneous with them []. Estimates of future costs, demands, etc., on theart f entrereneurs are all unique cases f uncertainty, where methdsof specic understanding and individual judgment of the situation must

apply, rather than objectively measurable or insurable risk. (Rothbard,2009 [1977], pp. 554555)

The entrereneur, in makin his decisins, is n the cntrary cnfrntedwith unique cases about which he has some knowledge and which haveonly limited parallelism to other cases. (Rothbard, 1956, p. 19)

As for the high versus low cost rms in any line of business,they can be exlained at least in tw ways, withut the need frthe secial (ERE) decisin-makin ability. on the ne hand, the

11 One could dene entrepreneurial judgments, along Misesian lines, as referringtparticular circumstances f time, lace and ersns frm the future. See Tan(2005), fr instance.

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possibility of error implies the possibility of being way o target,or just a bit o the mark. This would suce to explain dierencesin prot, although it is true that these would have to be of a ratherephemeral nature. As for the more lasting dierences, the idea ofnon-monetary income (or even direct consumption) could explainthe constantly low prots (high costs) of skillful entrepreneurswh (fr instance) t fr r cmmercial lcatins because theyare clser t their hme.

concLuSIon

It is our conviction, therefore, that the separation of the ownershipand entrepreneurship functions even at the theoretical level (thereforeas catallactic functins, as sed t real ersns) remains rb-lematic. The residual functins f rerty/wnershiislatedby the eliminatin f labr and waitin elements12imly at ncebth uncertainty bearin and decisin-makin.

rEFErEncES

Bhm-Bawerk, Eugen von. 1890. Capital and Interest. A Critical History ofEconomical Theory, Macmillan and C., Lndn and New Yrk.

Hawley, Frederick Barnard. 1907. Enterprise and the Productive Process: ATheory of Economic Productivity Presented from the Point of View of the

Entrepreneur and Based upon Denitions, Secured through Deduction (and

Presumably, Therefore, Precise and Final) of the Scope and FundamentalTerms of the Science of Economics. New Yrk and Lndn: g. p. putnamsSns, The Knickerbcker press.

Hlsmann, Jrg Guido. 1997. Knowledge, Judgment, and the Use ofprerty. Review of Austrian Economics 10, no. 1: 2348.

Mises, Ludwig von. 1949. Human Action: A Treatise on Economics. SchlarsEdition. Auburn, Ala.: Ludwig von Mises Institute, 1998.

. 1951. Prot and Loss. In Planning for Freedom. Auburn, Ala.: Ludwivon Mises Institute, 2008.

12 As well as implicit insurance premiums or various land rents, if such is the case.

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Murhy, Rbert p. 2006. Study Guide to Man, Economy, and State. A Treatise onEconomic Principles with Power and Market: Government and the Economy,Auburn, Ala.: Ludwig von Mises Institute.

Nelson, Richard. 1991. Why Do Firms Dier and How Does It Matter?Strategic Management Journal 12: 6174.

Rothbard, Murray N. 1956. Toward a Reconstruction of Utility and WelfareEcnmics, In May Sennhlz, ed., On Freedom and Free Enterprise: TheEconomics of Free Enterprise. princetn, N.J.: D. Van Nstrand.

. 1957. A Reply to Georgist Criticisms. In The Logic of Action II: Appli-cations and Criticism from the Austrian School. Cheltenham, U.K. andLyme, N.H.: Edward Elgar, 1997.

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