Modern-day economics is a complex way of study and is not a good place for all the budding entrepreneurs out there. Does that mean they have to stop following their path of passion? Of course not! The Austrian School Of Economics is the answer where the entrepreneurs can turn so that they can improve their understanding for the better.
About 50 years ago, William Bumol, The famous economist, gave a theory in which the place of entrepreneurs was eliminated. These models also come with the term- “entrepreneur-less”. Economics today is getting worse with every passing date because of the formalized models.
Modern-day economics emphasizes more on the outcomes and equilibrium to bring utmost efficiency. But that is just theoretical perfection and not realistic for all scenarios.
Entrepreneurs, according to economist Joseph Schumpeter, are the lifeblood of a dynamic market economy. They’re in the business of throwing things off balance. “Creative destruction” is what they do.
The new they generate replaces the old and improves our situation. Without entrepreneurship, the market economy would be rigid, lifeless, and monotonous.
So, how can economics help entrepreneurs? There isn’t much. At least, not from the highly mathematical modeling taught in today’s intermediate and graduate classes. Other schools of thinking, on the other hand, appreciate the value of the entrepreneur.
The Austrian School Of Economics
Now you must be wondering what is so different about the Austrian school of economics that every entrepreneur has to go through it? Austrian economics is a specific segment of study which was founded by scholars about 150 years ago. You can trace it back to the University of Vienna and it gives an alternative approach to economic understanding. According to the Austrians, general equilibrium is how the market can be understood at its best.
This is a thought process that increases entrepreneurship and understands that it is the driving medium of the market.
Austrians know that when the topic is entrepreneurship, there is hardly any use of mathematical modeling and statistical analysis. That is because the economy is ever-evolving and dynamic, there is no use of mathematical equations. Instead, it focuses more on the creation of value and how producers are adjusting to meet evolving consumer preferences.
Austrian economics is a theory that is quite realistic and practical rather than the written equilibrium models. It is very helpful for all the entrepreneurs out there.
Entrepreneur Economics
It is still a surprise how few entrepreneurs have learned about Austrian economics. According to most of the experts, there is a lot to learn from experience about how the economy works. Therefore the gut feeling or instinct is also termed as entrepreneurial judgment. There are numerous insights that you can get from Austrian economics that will help you get the success that you have been craving.
Consumer sovereignty
In all sorts of entrepreneurship, the customer is God. Therefore all the production has the main mission to satisfy the consumers with the help of the value addition process. The satisfactory value factor is dependent on the customers and the entrepreneurs have to abide by the same.
Entrepreneurs will be able to provide good service and products so that the customers can stay happy. Sometimes it is also required of you to educate the customer so that they can understand the value of the product or service that you are selling. And the value lies with the complete experience that you can get with the Austrian economics school.
Choice of value determining the price
Always remember that the value of the product and service following the experience is not equivalent to the price that you ask from a customer. That means it is the job of the entrepreneur to figure out an attractive offer so that the product is attractive enough. Remember the value of the product should be higher than the price that you retail for.
Now you have to find out how to produce the same quality at costs lower than the selling price, and for how much duration you should be producing them.
Entrepreneurship should be futuristic
According to Austrian economist Ludwig von Mises, if there is uncertainty in demand and supply, it could cause an impact on the entrepreneurial profit and loss. That is one uncertainty that an entrepreneur has to bear in mind.
You need to be a good monopolist
According to the conventional economic models, competition is about offering the same products and services at nearly the same rate. But if you have to become a good monopolist, you should always figure out how to give the best value at incredible rates. Therefore you can also use the method of creative approach and innovation so that you can bring up your company to the top-notch level.
Final verdict
The conventional way of economics is not practical anymore and most of the models do not incorporate the idea of entrepreneurship at all. But in today’s date, the main characters of economics are the entrepreneurs and they are the builders for a better economic scenario. Therefore every aspiring businessman should think about inclining towards the Austrian school of economics without hesitation. After all, it is going to provide a proper framework for all the entrepreneurs out there.
