No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Nine: P31W: Enter the Entrepreneur! 218 to step out in faith, knowing that a sovereign God will fully support them (Proverbs 16:3) if we are acting according to His will (either in killing giants or making business decisions). Of course this confidence should not be that God is going to necessarily bless our decision exactly the way we hope; rather, we can be confident that if we are acting according to His will, He can use our actions for our benefit and His glory. The P31W could “smile at the future,” because she feared the Lord. A certain amount of prescience is also required for entrepreneurship; the entrepreneur must be able to “see” the future market demand for his or her product or technique and see how others’ plans fit in with his or her own. Entrepreneurs may not have divine revelation like Joseph, but they must be better able than other competitors to imagine a future and ultimately shape that future. Absent divine revelation, human action is necessarily speculative because of the uncertainty of the future. We have a certain confidence in a means/ends framework where if we use a means (hammer and nail) to achieve a given end (secure two boards together), we will have an appropriate result. But if we expect that someone will want to purchase our carpentry creation, there is more uncertainty. If we want to expand our production for potential future increased demand, our uncertainty increases all the more. Our uncertainty increases because more individual plans have to “dovetail” with our own; the more plans that have to be consistent with one another, the more opportunity for our plans to deviate from our expectations. Deviations are further made likely as time progresses, since the other plans that we need to dovetail into are also adapting to changes in the data. Our initial estimates of their expected actions are not relevant; we must also be able to anticipate their changing future actions (or be able to quickly pivot to take advantage of the changes that they make). So while all action is speculative, a prescient entrepreneur is better able to think through and anticipate how every pertinent individual plan will fit within her own actions. In our earlier dating game example, Liam may know that Matt is going away for the weekend. He therefore knows his opportunity to go on a date with Amelia is better than another weekend, and his “prescience” of her choices convinces him to ask her out this weekend. And she said… 2 The P31W was able to anticipate the needs of commercial traders in her textile business; her prescience was rewarded with profit that was “good.” THE ENTREPRENEUR IN CLASSICAL ECONOMICS The French economist J.B. Say was the first to highlight the importance of the entrepreneur in his book A Treatise on Political Economy. His description is as follows: “…this kind of labour requires a combination of moral qualities, that are not often found together. Judgment, perseverance, and a knowledge of the world, as well as of business. He is called upon to estimate, with tolerable accuracy, the importance of the specific product, the probable amount of the demand, and the means of its production: at one time he must employ a great of number of hands; at another, buy or order the raw material, collect labourers, find consumers, and give at all times a rigid attention to order and economy; in a word, he must possess the art of superintendence and administration. He must have a ready knack of calculation, to compare the charges of production with the probable value of the product when completed and brought to market. In the course of such complex operations, there are abundance of obstacles to be surmounted, of anxieties to be repressed, of misfortunes to be repaired, and of expedients to be devised. Those who are not possessed of a combination of these necessary qualities are unsuccessful in their undertakings; their concerns soon fall to the ground, and their labour is quickly withdrawn from the stock in circulation; leaving such only, as is successfully, that is to say, skilfully directed” (p. 177).