Kirzner

I can imagine it might seem strange to talk about Rabbi Kirzner and an
artillery video game in the same blog. A casual reader might just see it as the kind of eclecticism that's bound to happen on a personal blog (rather than on a topic-specific or an organizational blog).

It's true that there's no real connection between the occasional recipes, comic-strip out-takes, personal ponderings, and the general themes of this blog, but in the case of Israel Kirzner and Pocket Tanks, there's actually a strong connection.

As far as I know, Professor Kirzner doesn't emphasize the ordinality-versus-cardinality dispute between Austrians and the mainstream, but he's famous for his emphasis on imperfect knowledge and entrepreneurship in opposition to the perfect competition nonsense of mainstream textbooks and anti-trust regulators.

Here's a sample of his January, 2000 article in The Freeman, The Law of Supply and Demand:

Israel Kirzner is a professor of economics at New York University and author of The Meaning of Market Process. This is the first in a series of articles laying out some foundational elements of modern Austrian economics.

The theory of supply and demand is recognized almost universally as the first step toward understanding how market prices are determined and the way in which these prices help shape production and consumption decisions-the decisions that make up not only the skeleton, but also the flesh and blood of the economic system. Austrian economics thoroughly agrees with this. However, when we dig just a little below the surface of the "law" of supply and demand, we encounter difficulties that have, directly or indirectly, led Austrians to explain the determination of prices differently from how it is often, at least implicitly, presented. I will try to explain the sense in which Austrians are unhappy with the textbook presentations of supply and demand -- and are yet fully in agreement with the general emphasis on supply and demand as being the key to economic understanding.

The Basic Proposition

The basic insight underlying the law of supply and demand is that at any given moment a price that is "too high" will leave disappointed would-be sellers with unsold goods, while a price that is "too low" will leave disappointed would-be buyers without the goods they wish to buy. There exists a "right" price, at which all those who wish to buy can find sellers willing to sell and all those who wish to sell can find buyers willing to buy. This "right" price is therefore often called the "market-clearing price."

Supply-and-demand theory revolves around the proposition that a free, competitive market does in fact successfully generate a powerful tendency toward the market-clearing price. This proposition is often seen as the most important implication of (and premise for) Adam Smith's famed invisible hand. Without any conscious managing control, a market spontaneously generates a tendency toward the dovetailing of independently made decisions of buyers and sellers to ensure that each of their decisions fits with the decisions made by the other market participants.

[...]

The Role of Knowledge

The mainstream textbook approach to this proposition is, in one way or another, explicitly or implicitly, based on the assumption of perfect knowledge. The Austrian approach does not make the perfect-knowledge assumption the foundation for this proposition; quite the contrary, Austrians base the proposition squarely on the insight that its validity proceeds from market processes set in motion by the inevitable imperfections in knowledge, which characterize human interaction in society.

[...]

[read more]

See also:

2. "Entrepreneurial Discovery and the Law of Supply and Demand" - February 2000
3. "The Irresistible Force of Market Competition" - March 2000
4. "Toward an Austrian Critique of Governmental Economic Policy" - April 2000