As an economist, Israel Kirzner is best known for his contributions to the theory of entrepreneurship. His renown in this area extends into the literature on management studies where recently his insights have become the focus of spirited discussions about the discovery of entrepreneurial opportunities. Ranging from his view of the entrepreneur as essentially a complex intertemporal arbitrageur (1973) to the ethics of entrepreneurship as value-creation analogous to the “finders-keepers” doctrine (1989), this body of work constitutes a professional lifetime of impressive and influential achievements.
Three early full-length works of his deal with other subjects. The first, based on his doctoral dissertation under Ludwig von Mises, The Economic Point of View (1960), is something of an Austrian Economics classic—an in-depth methodological examination of the means-ends framework of human action in a dynamic, open-ended social world. The second is a work on the principles of microeconomics from an Austrian perspective, Market Theory and the Price System (1963) accessible to economists ignorant of the Austrian School. It is a work that is deserving of more attention, even today. The third is this book, An Essay on Capital, originally published in 1966.
It is a rather unusual work, a work at once embedded in the controversies of the past yet transcending its temporal context. Capital theory is arguably the most esoteric and complex topic in pure economic theory, made more so by the notorious controversies that surround it. Yet, the Austrian Theory of Capital, from Menger to Böhm-Bawerk to Hayek to Lachmann, is also the most well-known contribution of the Austrian School. At the time this book was written, however, capital theory had moved far out of the spotlight that it had occupied at various times in the preceding decades. The Austrian revival of 1974 had not yet begun. Ludwig Lachmann’s Capital and its Structure had been published in 1956 and had received little attention. So it was, for these reasons, an ambitious work, received nevertheless, with the praise it deserved as a scholarly tour de force.
Time is of the essence in capital.
Its republication now is timely. Once again, if not within the pages of mainstream economics, certainly within those of mainline economics (in the political-economic tradition from Adam Smith to Friedrich Hayek), the nature and role of capital is under investigation. As a result of the Austrian revival, new generations of Austrian scholars are eagerly exploring this legacy. Kirzner’s Essay on Capital will reward their curiosity handsomely.
