Some stuff from Daniel Klein's new book Knowledge and Coordination.
"a number of things associated with entrepreneurship:
- Discovering (and seizing) a betterment opportunity
- Creating new products, methods and improvements
- Bearing uncertainty
- Owning capital
- Creating and/or owning a business enterprise, especially as owner-manager
- Organizing and leading cooperation by engaging in speech, rhetoric and persuation
"Risk resides in settled interpretation, uncertainty in unsettled interpretation. Opportunities based on mere risk will be easy to communicate, to imitate - they will be obvious - and, in a free-entry environment, they will be quickly captured and closed. 'Risk' seems to imply common knowledge, like our odds with a fair coin. But 'epiphany' [entrepreneurial discovery] is typically the seeing of a new and better interpretation of things. Rather than common knowledge, it hinges on asymmetric information. A new, fruitful interpretation will be nonobvious to the extent that uncertainty, as opposed to mere risk, surrounds the circumstances and any opportunity lying therein."
- Beginning in the 1880s, coordination was used to describe the effective arrangement of factors and activities withing a firm. That array of factors and activities is, here, the referent concatenation.
- In the early twentieth century, coordination was extended beyond the firm, to describe the pleasing arrangement of activities within the entire economic system, like Smith's discussion of all that goes in the making of the woolen coat. Here, the referent concatenation would be a much wider skein of factors and activities, even the global economy.
- Beginning around 1960s, with Thomas Schelling and game models, coordination took on another meaning: mutual meshing of actions, one to another. In the ensuring decades, the mutual idea of coordination caught on and became focal.
- Nowadays, the idea of mutual coordination overshadows concatenate coordination. Also, the two are sometimes conflated.
p. 60-2: the explanation of the connection between the two meanings of coordination and the distinction between spontaneous order and emergent conventions. Chapter 6: confusions related to mixing up the two meanings of coordination.
Concatenate coordination (Smith, Hayek, Coase) -> spontaneous order
Mutual coordination (Schelling) -> emergent rules
|An arrangement or concatenation pleasing to beholder or spectator||"Meshing" interaction within a situation of coincidence of interest|
|In some cases, the concatenation and its coordination are only abstract or notional from the interactor's point of view ("invisible hand")||Manifest from the interactor's point of view|
|A broad topic that includes features often out of step with with the rubric of mutual coordination, features such as disjointed knowledge, asymmetric interpretation, discovery, innovation, entrepreneurship, competition, abstention, exit, shunning, and bargaining.||Of a rubric that includes: focal points, coordination equilibrium, coordination games, convention.|
p. 12: "I call respondence our rather automatic responding to new bits of information that simply rain down on us. Respondence is like search, except that you weren't actually searching for the information acquired. Search is active and costly, while respondence is passive."
p. 13: "It is one thing for the entrepreneur to greet fortune when it comes knocking. It is something else to apprehend fortune in its hidden forms and seize it. Here, we have the distinction between responding to the realization of events within a framework of recognized variables and relationships and the discovery of fresh opportunity to embrace a new and better framework or interpretation. This element of epiphany, of finding fortune by interpreting the world differently, is the subtle and vital element in human decision making. Yet it is absent from equilibrium model building. In equilibrium stories, agents never have a 'light bulb' moment."
p. 15: quotes Kirzner (1985): "To Kirzner, the most impressive aspect of the free enterprise system is not its ability to generate efficient allocations within a framework of fully recognized ends and means. Rather, 'the most impressive aspect of the free market system is the tendency for [previously unrecognized ends and means] to be discovered' (30)."
Serendipity: p. 17: quotes Alchian: "The survivors in the market, he explains, 'may appear to be those having adapted to the environment, whereas the truth may well be that the environment has adopted them' (1950: 22)."
|Max U.||switchboard operator||the entrepreneur (the verger)|
|no discovery||small discovery within one's interpretative framework||discovery that alters one's interpretative framework||<- idem|
|more deliberate||less deliberate|