Radical subjectivism theory of entrepreneurship
What is the Radical Subjectivist Theory of Entrepreneurship? German Economist Ludwig M. Lachmann proposed the Radical Subjectivist Theory as an alternative to existing Austrian School frameworks, such as: Kirzner's Alertness Theory Knight's Uncertainty-Bearing Theory Schumpeter's Creative Destruction Core Concepts of the Theory According to Lachmann, entrepreneurs develop plans based entirely on their subjective knowledge and expectations . Because the future is unknown, these expectations are formed by the entrepreneur's creative imagination, which envisions multiple competing futures. Key elements of Lachmann's view include: Capital Regrouping: Capital is not static. It is continually recombining. As investments are made sub-optimally, errors occur, leading to new stocks of capital that must be redeployed toward new purposes. Continuous Revision: Entrepreneurs continually revise their plans as they encounter ...
