The Rational Impossibility of Entrepreneurship in the Neoclassical Framework

In spite of its use to explain market processes, neoclassical economics still has not integrated entrepreneurship in its analyses. More than mere neglect, this missing variable is the consequence of an analytical impossibility inherent to the neoclassical framework. Entrepreneurship as profit-seeking under uncertainty is an emergent institutional process with a potential to generate increasing returns thanks to the dynamic pluralism and reflexivity characterising it. It is an open-ended market process. Neoclassical economics with its pre-determined assumptions on economic behaviour cannot include dynamic pluralism and reflexivity, for this would imply continuously changing those assumptions to explain the same evolving behaviour. It describes closed-ended processes. Therefore, neoclassical economics amounts at most to the settlement part of a broader and more complex market process. Its use in market analysis is not necessarily incorrect, but limited to the rare cases where dynamic pluralism and reflexivity are absent, thus allowing for a steady state