Per Bylund Quotes

We should want businesses to have good management that streamline production, cut costs, and tweak and improve the goods they produce. But management is what takes place in production after the entrepreneur has been proven right. As Mises put it, the manager is the “junior partner” of the entrepreneur. Simply put, management solves an entirely different problem than entrepreneurship. It is about maximizing the outcome of a production process (typically in terms of profit).

Economist Per Bylund once noted: “The concept of economic value is easy: whatever someone wants has value, regardless of the reason (if any).

the more I interact with, learn about, and understand others, the better I can produce what they value most.

The number and variety of goods available depends on the imaginativeness of entrepreneurs and investors. In other words, the entrepreneur, who imagines, envisions, and aims to create new valued goods, drives the evolution of production in the economy. The consumer is then, after the fact, the judge of which entrepreneurs’ productions are of sufficient value to be bought—and at what prices. The consumer, in other words, is sovereign and, through buying and not buying, determines which entrepreneurs earn profits and which entrepreneurs suffer losses.

The major problem entrepreneurs face is that the value of production effort is not known until it is completed. It is only when the finished good is sold that the entrepreneur learns if the investment was worth-while—if consumers want the good. In contrast, costs are known and incurred long before the good is completed and offered for sale. Note that these costs are not merely the inputs that make the output, such as the flour, yeast, and water that are turned into bread, but also the capital needed: the oven, the bakery, etc. Even in those cases when an entrepreneur takes orders and is paid before producing the actual good, some costs are incurred as part of the not-yet-produced good. Those costs include such things as setting up the business, experimenting with capital, figuring out how to make an oven, developing a recipe or blueprint for production. Investments must be made to produce the good, which can then be sold.

The fact is that consumers, whether or not they can say what goods they want, always choose between the goods offered to them. That’s when consumers exercise their sovereignty: entrepreneurs cannot force consumers to buy anything, they can only produce goods that consumers value and therefore choose.