Category Archives: Austrian School of Economics

Austrian School of Economics

True Entrepeneurship Happens in Free Market Economies

Address by Herman Mashaba* at the Inaugural Herman Mashaba Lecture on Entrepreneurship at Central University of Technology, Bloemfontein (South Africa) in November 2014.

Just over two years ago I received a surprise call from this university with the notice to award me with an Honorary Doctorate in Business Administration by the Faculty of Management Sciences. Now two years later, another total surprise to start an annual Herman Mashaba Lecture on Entrepreneurship. I feel particularly honoured and humbled by this recognition. This annual lecture dedicated to the promotion and development of entrepreneurship could not have come at the better time in the short history of our new country. Entrepreneurship, in particular the promotion of small business development, is something I have dedicated the latter part of my life to. Something I hope my country South Africa will accept and embrace, is the fact that true entrepreneurship happens in free market economies. These true entrepreneurs are the potential engines to propel and steer our economy to arrest the three major challenges of high unemployment, poverty and inequality being faced by our country.

Entrepreneurs are innovators and they cannot function in a constricted, highly regulated environment. They need the freedom to try new things, to experiment, and to challenge entrenched methods of doing business. In order to function properly, they need a free market economy. Personal choice is one of the most important characteristics of a free market economy. To anyone living in a free economy, choice is taken for granted. Under an authoritarian regime, such as apartheid, choice is one of the main casualties. Such important matters as where to work, what school to attend, what work to do, who to socialise with, who to marry, who to employ, were all taken away! The limitations on choice were endless. The increase in choices since the transition to democracy are also endless. We must protect those choices, not only for ourselves but for all South Africans. We must not allow bureaucracy and unnecessary laws and regulations to chip away at our freedom of choice.

Voluntary exchanges with others are a vital aspect of a free market economy. Buying, selling, exchanging in many different ways. There again our exchanges were limited under apartheid. Some had more exchange rights than others but if everyone is not free to exchange, then none are really free to exchange. Our exchanges can be with local or foreign parties, in respect of goods, services, labour and an infinite variety of other interactions. In every case we must protect our rights to freely exchange with others. Freedom to enter and compete in markets is an important factor in a free market economy. When I started my business career as a door to door salesman in the 1980’s, I was restricted by apartheid legislation, in particular the pass laws and group areas acts, where I could sell. These limitations were severe. I was fortunate that I found my way around these limitations, but it taught me that such rules impact severely on the people, and are not part of a free economy. Whatever the nature of the market, whether local or foreign, there must be freedom of entry.

Protection of people and their property from aggression by others is a crucial aspect of a free market economy. This means a well-trained and dedicated police force that carries out its functions efficiently and correctly. It also means that there must be efficient and well-functioning law courts to dispense justice and adjudicate on disputes. The rule of law must be applied, which means that the law must be applied equally to everyone, including government. You will realise that what I am describing as a free market economy is a well-structured environment in which individuals can function fully and freely, enjoy maximum personal choice, without unnecessary imitations, as long as they respect the right of others to enjoy the same rights …  continue reading ->  PDF

* Herman Mashaba is Herman Samtseu Philip Mashaba is Director of Liberty Lane Trading at Assessment College of South Africa (Pty) Ltd. He also serves as Chairman, CEO and Director of several other enterprises. In 1985 he founded the Cosmetics Company “Black Like Me”.

Die Schulden im 21. Jahrhundert

Daniel Stelter, Die Staatsschulden im 21. Jahrhundert
Daniel Stelter, Die Staatsschulden im 21. Jahrhundert

ECAEF-Buchempfehlung (Austrian School of Economics applied!) – Daniel Stelter* “Die Schulden im 21. Jahrhundert – Was ist drin, was ist dran und was fehlt” feierte kürzlich Buchpremiere.  Die gute Nachricht für Befürworter der Österreichischen Schule der Ökonomie: Daniel Stelter widerlegt mit seiner Schrift Thomas Piketty. Stelters Buch von nur 160 Seiten ist ein knalliger Gegensatz zu Piketty’s 800 Seiten starkem „Das Kapital im 21. Jahrhundert“. Und um noch eins draufzusetzen, nennt Stelter sein Büchlein „Die Schulden im 21. Jahrhundert“.
Stelter zeigt eindrucksvoll, dass Piketty die Bedeutung der Schulden völlig unterschätzt. Nur wer die Dynamik von Verschuldung und Entschuldung verstehe, könne aber Vermögensverteilung und Wirtschaftskrisen verstehen und Lösungen erarbeiten. Die diesbezüglichen Argumente des Autors sind schlüssig und überzeugend.
Aber es gibt auch eine schlechte Nachricht: Selbst Stelter weiss keinen schmerzlosen Ausweg aus der expliziten und impliziten Schuldenkrise. Die Aussicht auf höheres Wirtschaftswachstum stösst schon aus Gründen der Demografie an Grenzen; — die Bevölkerung wird immer älter und schrumpft, die Gesamtproduktivität nimmt deshalb eher ab als zu. Eine moderate Inflation will und will sich nicht einstellen. Wenn das ‘Gelddrucken’ so weitergeht, sei eher eine Hyperinflation wahrscheinlich – eine Katastrophe ohnegleichen! So bleibt als einzige Lösung die Sanierung der Finanzen durch einen Schuldenschnitt. Für Piketty ist der Schuldenschnitt eine Frage der sozialen Gerechtigkeit, für Stelter ein solcher Schritt  nur ökonomische Logik.

*) Daniel Stelter ist Gründer des Forums Beyond the Obvious und davor Senior Partner und Managing Director bei The Boston Consulting Group – BCG.