Does profit equal "social improvement"?

Back to Kirzner, after knocking off two other reviews and an essay.

He writes:

"Since individuals obviously differ in their entrepreneurial alertness, it is clear that opportunities for social improvement will tend to be exploited most fruitfully if institutional arrangements can be patterned so as to translate such opportunities into opportunities that will be encountered by those whose entrepreneurial alertness is the most acute, the most sensitive, and the most accurate." ("Knowing about Knowledge," Competition, Economic Planning, and the Knowledge Problem, p. 216)

But what entrepreneurial alertness is alert to, per Kirzner, is profit opportunities, not "opportunities for social improvement." Now, one could protest that those opportunities are the same thing, but then what about an entrepreneur who is alert to the fact that the Internet offers a "better" way to deliver rape-fantasy videos to those who are titillated by the idea of raping women, or alert to the possibility of creating a new, far more addictive form of opiate that will yield huge profits to its creator? A hedonist utilitarian might be able to make a case that these are "social improvements": if these innovations are desired by those who consume them, then all is well! However, Kirzner is an orthodox rabbi, and it is hard for me to believe that he would really see them as such. But if he would not, then what happens to his case for maximally releasing entrepreneurial alertness, given that profit opportunities are not equal to opportunities for social improvement?



Comments

  1. Two standard answers. 1 Errors will be Gaussian 2 A self correcting approximate gradient descent will exploit new information more reliably than mechanisms with no such self correction.


    These are both sensible but they only work if you have a lot of smallish changes going on in an economy. If you have a small number of huge changes then the arguments fail.

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