Profit, Loss, and the Entrepreneur | Peter G. Klein

Mises Institute

Causal-realist analysis allows imaginary constructs like the ERE — Evenly Rotating Economy — in order to isolate certain factors like interest. There would be no profit or loss in the ERE, because those can only exist under conditions of uncertainty. Klein explains profit as a category, not a line item. The entrepreneur’s function is to experiment with combinations of factors of production to find those that produce the greatest economic value. The sixth in a series of ten lectures, from Fundamentals of Economic Analysis: A Causal-Realist Approach. Recorded at the Mises Institute in Auburn, Alabama, on June 13, 2007.