ȃǿȇ Partʺʺ: Politics and Philosophy
grounds. (Ļis characterization of his views derives fromȀȈȈȁb, p.ȁǿȈ;
ȀȈȇȈ, pp.ȀȁȈ–ȀȂǿ; and, more broadly, from all his writings listed in the
references.)
Kirzner argues, as positive economic analysis, that capitalism works
otherwise than its critics and most of its defenders believe. He traces
the entrepreneur’s pure profit to generally unappreciated facts. Ļe entre-
preneurcreateswealth, practicallyex nihilo, by discovering and exploiting
opportunities. Kirzner sharply distinguishes these acts of discovery from
acts of deliberate production (ȀȈȇȈ, p.Ȁȅȅ). Instead of taking resources
away from anyone else, the entrepreneur creates what did not exist before,
benefiting other persons as well as himself. Ļe prior physical existence of
a diamond discovered on a remote mountain is irrelevant to the creative act
and the moral entitlement it engenders. Kirzner sees the discoverer/pro-
ducer as entitled to the product not because he transformed and combined
inputs over which he already held just title but because he genuinely orig-
inated it. No one has any right to deprive the creator of the enjoyment of
his creation (ȀȈȇȈ, pp.ȀȄǿ,ȀȄȂ).
Of course, an entrepreneur does not createex nihilotheentiremar-
ket value of the products of his discoveries. Typically, he combines his
creativeness with the services of already existing resources and factors of
production, paying their owners for them. Kirzner focuses on the net value
of results remaining to the entrepreneur beyond all necessary factor pay-
ments. Ļis pure profit deriving from the entrepreneur’s creation is the
subject of Kirzner’s distinctive theory.
Allegedly, as Kirzner notes, discoveries depend on good luck, which
seems a weak basis for capitalist property rights. But luck does not operate
alone; motivated alertness also enters into discovery (ȀȈȇȈ, pp.ȀȅȀ–Ȁȅȁ;
ȀȈȈȁb, pp.ȁȁȀff.; F.A. Hayek speaks somewhere ofFindigkeit).
Kirzner does not maintain that a factual account of discovery and cre-
ation by itself constitutes ajustificationof capitalism; he does not claim
to be dissolving the dichotomy between “is” and “ought.” He appeals not
only to economics but also, as he must, to moral intuitions (about which
I say more below).
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Kirzner finds the “entitlement” theories of John Locke, John Bates Clark,
and Robert Nozick not downright wrong but incomplete or inadequate.
Ļese theorists tacitly take the economic pie, or the resources used to