Episode description

Causal-realist analysis allows imaginary constructs like the ERE — Evenly Rotating Economy — in order to isolate certain factors like interest.  There would be no profit or loss in the ERE, because those can only exist under conditions of uncertainty.

Klein explains profit as a category, not a line item. The entrepreneur’s function is to experiment with combinations of factors of production to find those that produce the greatest economic value.

The sixth in a series of ten lectures, from Fundamentals of Economic Analysis: A Causal-Realist Approach.

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