Quarterly Journal of Austrian Economics

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Profit and Production

  • The Quarterly Journal of Austrian Economics
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Tags History of the Austrian School of Economics

07/30/2014Art Carden

Volume 12, No. 2 (2009)

 

Profits and losses provide powerful incentives. This essay explores the roles of profits and entrepreneurs in a market economy. In a market with secure private property rights, profits are a reliable guide that directs productive activity. Profits reward entrepreneurs for successfully adjusting the structure of production to better suit the wants of consumers. This has implications for Michel de Montaigne’s thesis that one’s profit is another’s loss: while this seems like an attractive (and intuitive) proposition, profits arise when an entrepreneur is able to satisfy consumer wants. This essay applies Ludwig von Mises’s thesis that the source of human action is the desire to remove “felt uneasiness.” For example, in a situation in which an entrepreneur alleviates discomfort, it is the opportunity to alleviate the discomfort that is the source of the profit and not the discomfort itself.

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Cite This Article

Carden, Art. "Profit and Production." The Quarterly Journal of Austrian Economics 12, No. 2 (2009): 13–26.

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