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All We Need Is a Paradigm

By Samuel Phineas Upham

Israel Kirzner is Professor Emeritus of Economics at New York University. He is written extensively on Austrian Economics. He also wrote an essay that was published in “All We Need Is a Paradigm,” a collection of essays published in 2009 by the Harvard Review of Philosophy.

Israel Kirzner in his essay “Human Nature and the Character of Economic Science” traces the conception of the wealth-seeking Homo economicus of Adam Smith to the purposeful rationality of Ludwig von Mises’s Homo agens. Kirzner examines how an exploration of the “laws of the human mind” leads to the epistemic uniqueness of economic science and how it has contributed to our understanding of human nature—man as not only an aggregator of wealth but with more complex desires, more broadly defined goals, and fears. For Mises, man acts purposefully to improve his situation with worthwhile but previously unconsidered ends and with always evolving means so that “in any real and living exchange every actor is always an entrepreneur.” For Kirzner human rationality is not an expression of optimal constraint maximization but essentially entails alertness to new opportunities.

The following is a short excerpt from the essay:

“It has long been recognized that economics depends, for the derivation of its theoretical propositions, upon its understanding of human nature. This chapter pursues this insight in order to understand Ludwig von Mises’s position on the epistemological character of the propositions that make up economic theory. Our thesis will be that, in the course of the history of economic analysis from the classical economists to Mises, the manner in which these propositions depend upon our understanding of human nature came itself to be understood in a more profound way—with consequently more sensitive appreciation for the epistemological uniqueness of economic science.”

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