Lecture 2 Entrepreneurship in Business

8/10/2019 Lecture 2 Entrepreneurship in Business

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ENTREPRENEURSHIP IN BUSINESS

By Assistant Professor OctavianDragomir Jora, Ph.D.

The Bucharest University of Economic Studies The Faculty of International Business and Economics The Applied Modern Languages Program 2013 2014

On method in economic science. Praxeology and two questions:

how much economics the entrepreneur needs to be w re of

and

how much economics do we need to be w re of the entrepreneur

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LECTURES (I)

1) Introducing and organizing the course. (The enterprise of deliveringlectures about entrepreneurs)2) On method in economic science. Praxeology and two questions: howmuch economics the entrepreneur needs to be aware of? and how mucheconomics do we need to be aware of the entrepreneur?3) The economic problem and the institution of private property rights.

Indices and indexes revealing the economic freedom of the world4) Spiritual values and entrepreneurial spirit. Projection of adocumentary movie and debate upon it: The Call of the Entrepreneur(2007)5) Economic functions: the capitalist-entrepreneur, the administrator-manager, the operative-technician, the public servant-bureaucrat. Divisionof labour and social coordination6) The entrepreneur as creator of firms. Economic calculation and limitsof business organizations. Small and medium entrepreneur versus businessmagnates: small is beautiful, big is gorgeous. Course with invitee from theForeign Investors Council / Romanian Investors Council7) Profits and losses. The problem of the business cycle

2LECTURE 2: ENTREPRENEURSHIP IN BUSINESS


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LECTURES (II)

8) Entrepreneurship and competition. Factors (of production), (mass)phenomena and football. Projection of a documentary movie and debateupon it: Once in a Lifetime: The Extraordinary Story of the New YorkCosmos (2006)9) Entrepreneurs across cultures: a sincere geography of the history ofsome modern entrepreneurs

10) Entrepreneurs in socialism, entrepreneurs in transition, entrepreneursin kapitalism. Screening the entrepreneurial behaviours in Central andEastern Europe. Course with invitee from ECE business environment11) Knowledge economy, green economy, inclusive economy and theentrepreneur12) Entrepreneurship and sustainable development. Institutions andinstruments of the long run13) Entrepreneurs of Romania. Mass media and political ideologies.Between the divinization and diablization of the business person14) Concluding course. (Recap and preparing for the exam)



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A POINT TO BEGIN WITH

MAN ACTS.ENTREPRENEURS ARE MEN.ENTREPRENEURS ACT.

WHAT IS THE PROPER WAY TO STUDY

HUMAN ACTION?WHAT IS THE PROPER WAY TO STUDY

ENTREPRENEURSHIP?



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ENTREPRENEURSHIP IS NOT a

SCIENCE., but Economics is

ENTREPRENEURSHIP is about ANTICIPATING the FUTURE, INNOVATING so

as to welcome it properly, and taking its specific RISKS.

There is no such thing as a pure SCIENCE OF THE FUTURE available for the

anticipating entrepreneur.

But there are social/economic FUNDAMENTAL LAWS that apply equally in

the past, present of future, in any places, to any persons.

If disregarding them, the ENTREPRENEUR becomes from a rational BETting

MAN to a blind BATMAN.



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ECONOMIC COGNITION AND

HUMAN ACTION

Ludwig von Mises, Human Action. A Treatise on Economics (penultimate

paragraph):

Man'sfreedom to choose and to act is restricted in a threefold way.

There are first the physical laws to whose unfeeling absoluteness man must

adjust his conduct if he wants to live.

There are second the individual's innate constitutional characteristics and

dispositions and the operation of environmental factors; we know that they

influence both the choice of the ends and that of the means, although our

cognizance of the mode of their operation is rather vague.

There is finally the regularity of phenomena with regard to theinterconnectedness of means and ends, viz., the praxeological law as

distinct from the physical and from the physiological law.



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PRELIMINARIES TO THE PRAXEOLOGY

OF THE ENTREPRENEUR

Ludwig von Mises, Human Action. A Treatise on Economics(last paragraph):

The elucidation and the categorial and formal examination of this third

class of laws of the universe is the subject matter of praxeology and its

hitherto best-developed branch, economics. The body of economic

knowledge is an essential element in the structure of human civilization; it is

the foundation upon which modern industrialism and all the moral,

intellectual, technological, and therapeutical achievements of the last

centuries have been built. It rests with men whether they will make the

proper use of the rich treasure with which this knowledge provides them or

whether they will leave it unused. But if they fail to take the best advantageof it and disregard its teachings and warnings, they will not annul economics;

they will stamp out society and the human race.



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THERE ARE three categories of

economic judgments (I)

THEORETICAL JUDGMENTS

HISTORICAL JUDGMENTS

ENTREPRENEURIAL JUDGMENTS



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economic judgments (II)

THEORETICAL JUDGMENTS are the general, or generally valid, ones, whose

validity is independent of places, times and persons.

They capture aspects of realitys consistency, of the order and rational

intelligibility of reality, without which no scientific and knowledge

approach, in general, would make sense.

In economics, this role is played by praxeological judgments.

E.g.: if the price of oil increases, ceteris paribus, the demand (quantity demanded) for it

decreases. Or, counterfactually: if the price of oil increases, the demand (quantity demanded)

for it will be lower than otherwise (than it would have been in the absence of price increase).



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economic judgments (III)

HISTORICAL JUDGMENTS are those that pertain to particular circumstances

of place, time and persons from the past, be it the far or near one.

They are not independent of theory, but systematically rely on it.

They contain, however, an additional element of understanding,

Verstehenwhich concerns those aspects of past events which we are, in

no way, capable to relate, to or explain by, general rules or laws.

These require documentary evidence, one, of course, theoretically and

logically subject to criticism.

E.g.: inthe 2008-2012 period the world price of oil was decisively influenced by the of tools

the U.S. monetary policy used in order to tackle the crisis.



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economic judgments (IV)

ENTREPRENEURIAL JUDGMENTS are those concerning particular

circumstances of place, time and persons, but from the future.

Their main characteristic is that they are in no way scientific,they do not

involve an ex cathedrademonstration, defended with sufficient reasons.

They cannot be delivered simultaneously with the sufficient proof of their

validity.

The only such test for them is the marketand it is an ex post factumtest.

Only as far as the anticipated facts occur, the judgment is considered right.

E.g.: Tomorrow, the oil price will increase by X percent (I should buy cheaper today, to

speculate price spreads).



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THE LESSON

(CONCLUSION)

A realistic approach in economics must never divert from the basic features of

human actions reality. As such, it always has to take into account time,

uncertainty, scarcity, discriminate between the quest for theory and that for

historical account, asses the subjectivity of acting individuals. Thus, the naturalframework of human action requires severe constraintsfor the economist, methodologically;

his analytic audacity needs to be coercedby no more and no less than the mere reality.

Unable to screenproperly the economic realm and to signalproperly the right paths, push

both economics and economies in never-ending turbulences. Along with this, epidemicalrelativism in finding due remedies, by recourse to trial and error experiments, leaves too

much room for undeservingly painful social engineering instead of clear-cut, tough,

but right myth-busting and real curing. The ultimate consequence of this drift is thebureaucratic severance of the link between entrepreneurs and consumers.


Lecture 2 Entrepreneurship in Business

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