Ludwig Von Mises on Profit, Loss, the Entrepreneur, and Consumer Sovereignty

The insights of Ludwig von Mises (1881-1973) into the function of real-world market processes help explain why, in seeking to serve their own interests, market entrepreneurs must abide by the wishes of consumers. Mises's idea of consumer sovereignty clarifies the manner in which markets determine what is produced, and his analysis shows profits and losses to be dynamic, disequilibrium phenomena resulting from entrepreneurs' attempts to adjust economic production to consumer demand. Mises uses his positive economics to refute fallacies concerning profit and loss-including the zero-sum and exploitative views of profit. Mises's ideas were taken in new directions by Israel M. Kirzner, who originated the idea of entrepreneurial alertness and made a case for the necessity of profits as incentives for using entrepreneurial alertness to maximize consumers' economic well-being.

Capitalists, Entrepreneurs, and Capitalist-Entrepreneurs