Varieties of Entrepreneurial Function under Totalitarian (dis)Orders

from Ersatz to ideal


  • Fernando D'Andrea Fernando Antonio Monteiro Christoph D´Andrea
  • João Daniel Ruettimann Instituto Mises Brasil, São Paulo, SP, Brasil



Entrepreneurship, entrepreneur, communism, socialism


Communist’s collectivistic approach to social order is based upon the premise that private means of production should be abolished, and instead be managed by a centralized power representing the people as a whole. As such, it defies one of the most inherent characteristics of human condition, the innate, creative, subjective, and perennial search for a better condition in life expressed by the entrepreneurial function. This
paper uses the Austrian School’s praxeology to show how entrepreneurs, as motors of the market system, end up being also the most relevant and widespread challengers to the socialist approach to economics. The real exercise of entrepreneurship defies the unreal socialist economic system in three basic ways: by exercising this latent entrepreneurial function in the most unfavorable conditions creating secondary markets in order to correct an official planned scarcity; by escaping the widespread statist mentality in socialist societies; and by actually exercising economic calculation in spite of the politburo calculus. The paper shows that as much as there are varieties of social order there is a on the kind of entrepreneurial function, which is impossible to eradicate from individuals. Therefore, even when totalitarian regimes take place, entrepreneurship finds ways to exist and emerges albeit of a different lacunar kind, in the shadows, supplying for consumer’s wellbeing under the limits of such societal disorder and, more importantly, bringing to light the intrinsic impossibility of the socialist economic arrangement.


Download data is not yet available.


Metrics Loading ...

Author Biographies

Fernando D'Andrea, Fernando Antonio Monteiro Christoph D´Andrea

Fernando Antonio Monteiro Christoph D’Andrea is an Industrial Engineer, MSc in Management Engineering, and PhD Candidate in Marketing at Universidade Federal do Rio Grande do Sul, Brasil with key interests in Entrepreneurship, marketing, strategic marketing, business strategy

João Daniel Ruettimann, Instituto Mises Brasil, São Paulo, SP, Brasil

B.A in International Relations, masters in international commerce, project management specialist, post-graduate in international commerce, and post-graduate, latu sensu, in Austrian Economics. Specialist member of Instituto Mises Brasil (IMB).


ACEVEDO, R. A.; CIROCCO, L. H,; D’ANDREA, F. A. M. C. Multipoverty in Venezuela. MISES: Interdisciplinary Journal of Philosophy, Law and Economics, v. 6 (Special Issue), 2018. DOI:

ÅSLUND, A. How entrepreneurship could be promoted after the collapse of a socialist economic system. Journal of Asian Economics, v. 23, n. 2, p. 157–167, 2012. DOI:

BARBIERI, F. História do Debate do Cálculo Econômico Socialista (1a Edição). São Paulo: Instituto Ludwig von Mises Brasil, 2013.

BAUMOL, W. J. Entrepreneurship: Productive, Unproductive, and Destructive. Journal of Political Economy, v. 98, n. 5, Part 1 (October), p. 893–921, 1990. DOI:

BAUMOL, W. J. Entrepreneurship: Productive, unproductive, and destructive. Journal of Business Venturing, v. 11, n. 1, p. 3–22, 1996. DOI:

BESANÇON, A. Le Malheur du siècle - sur le communisme , le nazisme et l’unicité de la shoah. Paris: Librairie Arthème Fayard, 1998.

BOETTKE, P. J. Why Perestroika failed: the politics and economics of socialist transformation. London: Routledge, 1993. DOI:

BOETTKE, P. J.; COYNE, C. J.; LEESON, P. T. Institutional Stickiness and the New Development Economics. American Journal of Economics and Sociology, v. 67, n. 2, p. 331–358, 2008. DOI:

BOHM-BAWERK, E. V. Capital And Interest: A Critical History of Economical Theory. London: MacMillan and Co, 1890.

BOSTAPH, S. Driving the market process: “Alertness” versus Innovation and Creative Destruction. Quarterly Journal of Austrian Economics, v. 16, n. 4, p. 421–458, 2013.

BYLUND, P. L. The problem of production: a new theory of the firm. London: Routledge, 2016.

BYLUND, P. L. The Management Problem of Socialism: Cost at the Expense of Value. In: MCCAFFREY, M. (ed.). The Economic Theory of Costs Foundations and New Directions. London: Routledge, 2018.

CACHANOSKY, N. The Cost of Populism in Argentina, 2003-2015. MISES: Interdisciplinary Journal of Philosophy, Law and Economics, v. 6 (Special Issue), 2018. DOI:

CALDEIRA, J. História do Brasil com empreendedores. São Paulo: Mameluco, 2009.

CHAMBERLIN, A.,; MANSIH, G. P. Savings, Private Property and Sound Money. MISES: Interdisciplinary Journal of Philosophy, Law and Economics, v. 6 (Special Issue), 2018. DOI:

COURTOIS, S. et al. The Black Book of Communism: Crimes, Terror, Repression. London: Harvard University Press, 1999.

D’ANDREA, F. A. M. C. Entrepreneurs as source of Innovation: A Strategic Marketing Perspective ((Unpublished Manuscript)), 2019.

D’ANDREA. A. M. C.; RUETTIMANN, J. D. Entrepreneurship under Communism: Economic Calculation, (Black) Markets, & Statist Mentality. Revista Estudios Libertarios, v. 2, n. 1, forthcomming, 2019.

DEELY, J. Purely Objective Reality. Berlin: Walter de Gruyer GmbH & Co, 2009. DOI:

DEL NOCE, A. The Crisis of Modernity. Montreal: McGill-Queen’s University Press, 2015.

DEL NOCE, A. The Age of Secularization. Montreal: McGill-Queen’s University Press, 2017.

DJILAS, M. The New Class – an Analysis of the Communist System. New York: Frederick Prager, 1957.

ELERT, N.; HENREKSON, M. Evasive entrepreneurship. Small Business Economics, v. 47, n. 1, p. 95–113, 2016. DOI:

ELLIOT, J. E. Disintegration of the Soviet politico‐economic system. International Journal of Social Economics, v. 22, n. 3, p. 31–60, 1995. DOI:

ENGELS, F. Principles of Communism. Washington: The FreeCapitalist Project, 1874. Retrieved from: Acessed at: Feb 15 2019

FOSS, N. J.; KLEIN, P. G. Organizing entrepreneurial judgment : a new approach to the firm. Cambridge: Cambridge University Press, 2012. DOI:

FOSS, N. J.; KLEIN, P. G. Entrepreneurial Discovery or Creation? In Search of the Middle Ground. Academy of Management Review, v. 42, n. 4, p. 733–736, 2017. DOI:

HAMILTON, A.; MADISON, J.; JAY, J. The Federalist Papers. New York: Palgrave Macmillan US, 2009. DOI:

HANLEY, R. P. Adam Smith and the Character of Virtue. Cambridge: Cambridge University Press, 2011.

HAVEL, V. Open Letters – Selected Writings 1965-1990. New York: Vintage Books, 1992.

HAYEK, F. A. von. Collectivist Economic Planning Critical Studies on the Possibilities of Socialism. London: Routledge & Kegan Paul LTD, 1935.

HAYEK, F. A. von. Individualism and Economic order. Chicago: The University of Chicago Press, 1948.

HAYEK, F. A. von. The Intellectuals and Socialism. The University of Chicago Law Review, v. 16, n. 3, 1949. DOI:

HAYEK, F. A. von. The Road to Serfdom. London and New York: Routledge, 2001.

HELLMAN, J. S.; JONES, G.; KAUFMANN, D. Seize the state, seize the day: state capture and influence in transition economies. Journal of Comparative Economics, v. 31, n. 4, p. 751–773, 2003. DOI:

HENKEN, T. Entrepreneurship, informality, and the second economy: Cuba’s underground economy in comparative perspective’. Cuba in Transition, 2005. Association for the Study of the Cuban Economy. Retrieved from Acessed at: Jan 10 2019.

HOLCOMBE, R. G. The origins of entrepreneurial opportunities. The Review of Austrian Economics, v. 16, n. 1, p. 25–43, 2003. DOI:

HOPPE, H.-H. Socialism: A property or knowledge problem? The Review of Austrian Economics, v. 9, n. 1, p. 143–149, 1995. DOI:

HOPPE, H.-H. A Theory of Socialism and Capitalism. Norwell: Ludwig von Mises Institute, 2010.

IBRAHIM, G.; GALT, V. Bye-bye central planning, hello market hiccups: institutional transition in Romania. Cambridge Journal of Economics, v. 26, n. 1, p. 105–118, 2002. DOI:

JOHANSSON, Dan; MALM, A. Economics Doctoral Programs Still Elide Entrepreneurship. Econ Journal Watch, v. 14, n. 2, p. 196–217, 2017.

KIRZNER, I. M. Competition and entrepreneurship. University of Chicago Press, 1973.

KIRZNER, I. M. The alert and creative entrepreneur: a clarification. Small Business Economics, v. 32, n. 2, p.145–152, 2009. DOI:

KLEIN, P. G. The Capitalist & The Entrepreneur. Auburn: Ludwig von Mises Institute, 2010.

KLEIN, P. G. An Austrian Perspective on Firms and Markets: My Contributions to Entrepreneurship Theory. In: AUDRETSCH, D. B.; LEHMANN E. E. (eds.). The Routledge Companion to the Makers of Modern Entrepreneurship. New York: Routledge, 2017.

KUCHEROV, S. Property in the Soviet Union. The American Journal of Comparative Law, v. 11, n. 31962. LENIN, V. I. Once Again On the Trade Unions, the Current Situation and the Mistakes of Trotsky and Buhkarin. Lenin’s Collected Works. Moscow: Progress Publishers, 1965.

MARX, K. The Communist Manifesto (World Publ). Project Gutenberg Consortia Center, 1848. Retrieved from Acessed at: Feb 17 2019

MARX, K.; ENGELS, F. The German Ideology. Great Books in Philosophy. Amherst: Prometheus Books, 1988.

MCCLOSKEY, D. N. The Bourgeois Virtues – Ethics for an Age of Commerce. Chicago: University of Chicago Press, 2007. DOI:

MCMILLAN, J.; WOODRUFF, C. The Central Role of Entrepreneurs in Transition Economies. Journal of Economic Perspectives, v. 16, n. 3, p. 153–170, 2002. DOI:

MENGER, C. Principles of Economics. Auburn: Ludwig von Mises Institute, 2007.

MISES, L. von. Socialism An Economic and Sociological Analysis. New Haven: Yale University Press, 1951.

MISES, L. von. The Anti-Capitalistic Mentality. New York: D. van Nostrand Company, Inc, 1956.

MISES, L. von. Planning for Freedom and twelve other essays and addresses (Memorial E). South Holland: Libertarian Press, 1974.

MISES, L. von. Economic Calculation in a Socialist Commonwhealth. Auburn: Mises Institute, 1990.

MISES, L. von. Human action: the scholar’s edition. Auburn: Mises Institute, 1998.

NOVAKOVIĆ, A.,; DOSTANIĆ, D. The anti-capitalist mentality and ill-fated transition. MISES: Interdisciplinary Journal of Philosophy, Law and Economics, v. 6 (Special Issue), 2018. DOI:

PHELAN, S. E. Austrian theories of entrepreneurship: Insights from complexity theory. The Review of Austrian Economics, v. 29, n. 3, p. 277–297, 2016. DOI:

PORTES, A.; BÖRÖCZ, J. The Informal Sector under Capitalism and State Socialism: A Preliminary Comparison. Social Justice. Dynamic of the Informal Economy, v. 15, n. 3-4, p. 17-28, 1988.

REMNICK, D. Lenin’s Tomb: The Last Days of the Soviet Empire (First Vint). New York: Vintage Books, 1994.

RÖËPKE, W. A humane Economy – the social framework of the free Market (3rd.). Wilmington: ISI Books, 1998.

ROTHBARD, M. N. The end of socialism and the calculation debate revisited. The Review of Austrian Economics, v. 5, n. 2, p. 51–76, 1991. DOI:

ROTHBARD, M. N. The ethics of liberty. New York: NYU Press, 2002.

ROTHBARD, M. N. Man, Economy, and State. A Treatise on Economic Principles with Power and Market Government and the Economy (Second). Auburn: Ludwig von Mises Institute, 2004.

SALERNO, J. T. Reply to Leland B. Yeager on Mises and Hayek on Calculation and Knowledge. The Review of Austrian Economics, v. 7, n. 2, p. 111–125, 1994. DOI:

SAMPSON, S. L. The Second Economy of the Soviet Union and Eastern Europe. Annals of the American Academy of Political and Social Science, v. 493, p. 120–136, 1987. DOI:

SATTER, D. Age of Delirium: the decline and fall of the Soviet Union. New Haven: Yale University Press, 2001.

TISMANEANU, V. Do Comunismo: O Destino De Uma Religião Política. Campinas: Vide Editorial, 2015.

UNION OF SOVIET SOCIALIST REPUBLICS. Constitution (Fundamental law) of the Union of Soviet Socialist Republics. Moscow, Russia: Union of Soviet Socialist Republics – USSR, 1936. Retrieved from: Acessed at: Feb 18 2019

VOEGELIN, E. Science, Politics And Gnosticism. Wilmington: ISI Books, 2004.

YEAGER, L. B. Mises and Hayek on calculation and knowledge. The Review of Austrian Economics, v. 7, n. 2, p. 93–109, 1994. DOI:




How to Cite

D’Andrea F, Ruettimann JD. Varieties of Entrepreneurial Function under Totalitarian (dis)Orders: from Ersatz to ideal. MisesJournal [Internet]. 2019 Nov. 7 [cited 2024 Apr. 15];7(3). Available from:



Original Research Articles