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For Kirzner discovery and the action which follows hinge on an assumed capacity by entrepreneurs to interpret the current situation and to formulate a view of the future they imagine will entail profits for them. If the actions of entrepreneurs are to be characterized as equilibrating, it must be presumed that they have learned something about the environment that presents a genuine opportunity for arbitrage profits; that is, entrepreneurs have become aware of some existing exploitable configuration in prices. In Kirzner's theory, it is in the course of their market experience that entrepreneurs will have acquired relevant knowledge that enables them to uncover or detect discrepancies in the prevailing market data and which thereupon provides them with the opportunity to earn profits (1973, p. 71). Economic analysis enters the picture at the moment of alertness, and it is the sequence of subsequent actions that such alertness sets into motion that instantiates the Kirznerian market process. Once that process is underway, Kirzner holds that decisions made by market participants will be based on knowledge they will learn in the course of their market activity. In Kirzner's words: "decision-makers' alertness to new possibly worthwhile ends and newly available means" suggests that decisions may be understood as the result of a sequential "learning process generated by the unfolding experience of the decisions themselves" (p. 36). As noted earlier, in the course of the market adjustment process all market participants in Kirzner's theory gradually form more correct estimates of others' plans through the adjustment of prices made possible by the activity of entrepreneurs. Entrepreneurial discovery and the subsequent activity it sustains set in motion a market process that is coordinating: individuals' plans will more closely dovetail because entrepreneurial activity has induced, as a byproduct of its actions, the dissemination of knowledge and the elimination of error (see Kirzner, 1992, pp. 149-151).

Kirzner argues that economics studies only the implications of alertness. At the same time, Kirzner holds that the process is driven by learning - discovery - and by the mechanisms through which those discoveries are dispersed within the market domain. Learning is central to this process because it opens up the possibility for the systematic removal of error and hence legitimating the possibility for the process to be coordinating. Kirzner's theory, with the pivotal role that learning plays, provides a non-Walrasian model of market adjustment based on the capacity of purposeful agents to adapt their behaviors in response to perceived opportunities. If we are to maintain, along with Kirzner, that the process is in some sense non-random, we must suppose that learning is also systematic (or at least sufficiently so) if it is to generate a process that itself is systematic or, in Kirzner's theory, equilibrating.

But what does discovery and learning refer to in a market setting? Even if we are content to postulate the entirely sensible notion that learning occurs, that does not on its own tell us the learning capacities of agents in terms of what (if anything) is being learned and what learning depends upon. Such questions go to the core of subjectivism and its theory of agency and hence carry implications for theories that purport to describe the market process. Boland (1982, Chap. 4) points out that the way agents are modeled implicitly commits those agents to some position concerning how they epistemically cope in their environments. In this view, how a model works and the implications it sustains are not independent of the implicit theory of learning its agents are presumed to follow. We can imagine, for example, models generating results very different from each other depending on assumptions regarding the capacity of agents to learn or the role of knowledge and learning in the very specification of the model. Thus, Keynes's bear speculators are assumed to have little capacity to learn in the sense of revising what they take individually to be the "safe" rate of interest. On the other hand, agents in perfect foresight models face no apparent constraints on what they can learn and consequently such models effectively devolve into models in which knowledge and learning have no role to play, as in standard Walrasian models of static competitive equilibrium.

Complicating matters, Boland also argues that different theories of learning and knowledge are not on scientific grounds equally plausible or correct. Some, he holds, are more correct than others. This suggests that the specific epistemic practices of agents are relevant to how we depict the market process.6 Entrepreneurs who only look to tea-leaves for guidance would presumably generate market sequences different from entrepreneurs following more reliable and grounded approaches. The point here is not directed at subjecting Kirzner's (or anyone else's) implicit epistemics to the pointless exercise of prescriptivist methodology, but, instead, to suggest that what one means by learning matters because different conceptions of learning help to shape our theoretical models of the market process. This is not a question of getting the "right" theory of learning in hand as the more modest aim of simply developing and making more explicit what one means by an agent and its capacities.

In Kirzner's theory, entrepreneurial alertness and learning are confined to the costless discovery of existing price differentials between input and output prices. But if we wish to understand more fully how and why entrepreneurial activity is equilibrating (and the circumstances under which it is likely not to be), we cannot presume the result, viz., some sort of generic learning will inexorably occur, that we are seeking to demonstrate. It would be useful, in other words, to make more explicit what is meant by "alertness" and what it means to claim that entrepreneurs "learn."

This question and its ramifications for Kirznerian entrepreneurship have recently been explored by several Austrian economists. Among the more noteworthy are those by David Harper (1996) and Young Bach Choi (1993). Harper's approach, which presents a "cognitive-logical perspective on the rationality of the entrepreneur, on entrepreneurial learning and on the character of the market process" (p. 31), uses a Popperian-inspired application of conjectures and refutations to model entrepreneurial activity. Entrepreneurs formulate and put into motion plans based on theories - conjectures - they expect will result in profits. Their actions can be understood as guided by various methodological principles that they choose to deploy depending on their problem situation and that allow them to learn from their market experiences in order to correct and modify plans and to generate new conjectures. In Harper's treatment, entrepreneurial learning is thus endogenized. Within this "growth of knowledge" framework, entrepreneurial activity constitutes the principal mechanism for falsifying theories about entrepreneurs' "structural knowledge" pertaining to ends and means and eliminating those that do not survive market tests. Harper's treatment provides a rational reconstruction of the methodological procedures guiding the actions of entrepreneurs and the implications of those procedures concerning entrepreneurial learning. Appropriately, Harper refers to the market process as a "learning mechanism" (p. 290).

Choi's central concern is the relationship between perceptions (and their acquisition) and decision making and action under uncertainty. His principal claim is that individuals cope with uncertainty by searching for and adopting "paradigms" or models that provide an understanding (or perception) of their surroundings and the necessary confidence to pursue various actions. Interactions among paradigm-seeking individuals at the social level tend to generate regimes of conventions that guide behavior. At the same time, however, the very stability of conventions promotes endogenous change in the form of opportunities for profit which go unnoticed and remain unexploited by convention-following individuals. This provides a window of discovery and for action by entrepreneurs with new or different paradigms which allow them to see the situation differently from others. Entrepreneurial learning, "the process by which we come to acquire paradigms," provides the impetus for innovation and its acceptance as "commonplace knowledge in society" (Choi, 1999, p. 72). In this way, entrepreneurial discovery of profitable opportunities promotes a process of social learning by which innovations become installed, at least temporarily, as new conventions.

Other work by Butos and Koppl (1999) looks at Kirzner's entrepreneurial theory from a perspective based on a Hayekian theory of expectations. They principally use Hayek's The Sensory Order to examine the meaning of subjectivism from an epistemological and methodological standpoint and, in so doing, provide an account of how market participants learn in the course of their market activities.7 This forms the basis for a theory of "Hayekian expectations" that they deploy to give to an account of how market participants come to know relevant aspects (or what Harper calls "structural knowledge") of the field of action.

These approaches constitute, however, only a partial rendering of the implications that a theory of learning (Hayekian or otherwise) holds for Kirzner's theory of entrepreneurship. The second part of the story involves the recognition that any genuine theory of learning must treat not only the discovery of existing knowledge, but also the generation of knowledge. The theories and conjectures agents formulate in pursuing their objectives may be described as deriving from internal models that process and transform signals into expectations (and behavioral response modes) via complex cognitive processes and multi-layered adaptive feedback mechanisms. These models serve as "production systems" by which agents generate interpretations - knowledge - of their environment. This was only hinted at in Butos and Koppl (1999, pp. 262-263, note 19). There, learning was identified with the mechanisms that result in the individual's forming an interpretation of external reality. On Hayekian "sensory order" grounds, if what we know about external reality is actually an interpretation, then our subjective knowledge of reality has somehow been constructed by the brain.

Hayek's cognitive theory provides an explanation of how this happens.8 In Hayek's terminology, the brain produces a classification (interpretation) of external reality along any number of dimensions according to the perceived attributes the mind has constructed. In effect, Hayek's cognitive theory directs our attention toward a conception of learning in which knowledge is generated. Aside from the question of how cognitive activity works, a matter better left to cognitive specialists, what matters is that such activity produces an output that we call knowledge. It is this point that forms the principal motif of the discussion here. That is, our interest is not in the psychology of cognitive activity, but in the implications of such activity. While we often and correctly associate learning with mechanisms by which existing knowledge is acquired or grasped, as is the case for Kirznerian entrepreneurs, a Hayekian perspective reminds us that learning also includes the transformation of existing knowledge and the generation of new knowledge. This suggests that Kirznerian alertness should encompass the capacity of entrepreneurs to discover knowledge and to generate new knowledge. In this "sensory order" sense of what learning means, we can move beyond a conception of entrepreneurial activity based on discovery of existing knowledge to a more inclusive one that also highlights the generation of knowledge. What is important here is not the particular explanation that Hayek offers to account for learning, but simply the recognition that in looking at learning in this way, our attention is directed toward additional considerations that may further our understanding of the market process.9

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