Entrepreneurship and Two Types of Human Action

The knowledge of Austrian economics will enable a would-be entrepreneur to see available tools for him to achieve his ends. In order to see them, it is important not to make a hasty decision based on emotion and impulses, but on rational assessment of cost and potential incentives.

There are times that in our desire for financial improvement, our minds are clouded due to the influence of emotion or impulses. These factors that cause us not to exercise our reason cautiously are usually excited by big promises of material improvement not founded on reality. People who are overwhelmed by their emotion are difficult to persuade to change their course. They are committed to the path that they thought is right. We sometimes wonder that even a person whom we know that thinks logically may at times fall into such emotional moment. It is as if reason has been suspended for a while to give in to the impulses of the moment. And this is exactly the reason why knowledge of Austrian economics is important for those who are really determined to venture into entrepreneurship. 

And so from the consideration above, we read that two types of human action exist - emotional or impulsive and rational. An emotional action is incapable to see the negative outcome of its choice. The only thing in mind is the achievement of ends regardless of the price. Once the emotional influence cools down, then reality sets in, and the man is now ready to use his reason intelligently. Once the spell of emotion disappears, a person is now ready to arrange his ends and to choose the appropriate means in achieving them. 

Entrepreneurship and Quest for Happiness

A person who succeeds in implementing his entrepreneurial ideas, and as a result is able to increase his income, and buy goods that he desires for his family is generally considered happier than his previous state when he owns no business, has smaller income, and either staying in his parents' home or renting a house. For if these will not make him happier than his previous state, in the first place, he would not risk his time and capital to test the marketability of his ideas. Achieving these ends is legitimate therefore for human action, and there is nothing wrong to commit oneself in achieving them as the quest for happiness is inherent in man. 

Let us clarify first what we mean by "happiness." We are not using the term the way the Bible understands it as an outcome of quest for righteousness or holiness. Our use of "happiness" here is the way people typically understand the term. As such, happiness is subjective and it depends on individuals' valuation. 

There are people who are simply satisfied and happy with their regular jobs or perhaps they may be dissatisfied but after accepting the fact that they are incapable to change their economic condition, they just choose to maintain their existing situation. They accept the fact that the path of entrepreneurship is not for them. Even though without business, with lesser income, and without owning a land and house, they treasure the things that they presently have, and based on their own assessment, they are happy. And so we are not saying that happiness is only attained by achieving the mentioned ends. Each person has to decide that for himself. 

Still other people would make ends for themselves different from the ones identified above. There are those who will make personal development as their goal. Others would set themselves to more "ideal ends" such as national welfare and healing the wounds of humanity. Achieving these ends make them happy. However, as in the case of the first group of people who make "materialistic" goals as measurement of their happiness, similar observation can be said about those who set ideal ends for themselves. They are not in the position to look down those who are determined to achieve economic ends. 

Entrepreneurial Education

Learning Austrian economics though not the whole thing that will determine a successful business, ought to be considered as an important part in business preparation. There are other important matters to consider in preparing for business such as time, capital, and entrepreneurial ideas. 

Time is an important scarce resource that should be alloted wisely. Just recently I read an article from a veteran entrepreneur who has a great idea for business. However, since he is too old for such new project, he decided to share his idea hoping that a prepared mind with a lot of time would pick it up. 

Capital too is not easy to protect these days particularly with the kind of ideas popular in our time among mainstream intellectuals and bureaucrats and the kind of monetary system we have all over the world. The traditional way of saving your income for future prospect to better your life by investing your money to some ventures is facing a serious threat. As some advocates of financial literacy would claim that in today's economy, "savers are losers," and therefore big borrowers are the ones enjoying an unfair advantage. But for those who do not have an access for business capital even for a small home business, saving remains the only way. 

Entrepreneurial ideas are also necessary for those who are not satisfied with their existing salary. For by depending merely on regular salary, there is no way for an employee to protect his family from rising prices resulting from monetary inflation. And so in addition to the discipline of personal saving, a person must also have entrepreneurial ideas in starting either a small or a home business in order to supplement his income to provide for the needs of his family. However, entrepreneurial ideas do not guarantee success, but provide you a realistic assessment of what's going on in the real world. And so an important quality of an entrepreneur is the willingness to risk both his time and capital to achieve a more desirable future. 

Having a realistic assessment of both global economic situation and financial system, an entrepreneur has to educate himself continually in the Austrian school of economics. The body of literature is vast, and so patience is a necessary virtue. Just simply learning one idea at a time will put you in a more advantage situation than those who rush into starting their own businesses or those who have been misled simply because mainstream education did not provide them the necessary tools to see the real world. As a result, both their time and their financial resources will certainly be wasted once the increase in money supply accelerated. 

This blog aims to study Austrian economics one idea at a time, and I hope that increasing number of entrepreneurs will discover the mental tools provided by the Austrian school in the passing of days.