Knight Frank is considered a classic of modern economics. And this is not surprising - this man has systematized huge amounts of data, on the basis of which all prosperous enterprises now operate (whether they know it or not). He has a fairly large scientific heritage, among which one book occupies a special place. Frank Knight "Risk, Uncertainty and Profit" was created as a work that discusses the basics of entrepreneurship and exit in plus. But first things first.
Who is Frank Knight
This man was born in 1885 to an Irish farmer who lived in the US state of Illinois. He was the first child of eleven children. According to reports, Frank Knight was distinguished by considerable free-thinking and education. In addition, he showed diligent work ethic and considerable intelligence, thanks to which he received good grades. He initially enrolled at Cornell University in 1913 and began studying philosophy. A year later, he switched to economic theory. Already in 1916 he wrote a dissertation. It was called "The Theory of Entrepreneurial Value and Distribution", which made it possible even then to judge the breadth and depth of his knowledge. This is how Frank Knight, the economist, began to take shape. The theses of his "Theory …" with certain changes are presented in the book "Risk, Uncertainty and Profit" published in 1921.
Specific economic theory
Frank Knight turned information into pure abstraction. Due to the fact that he possessed a significant stock of knowledge in the field of social sciences, philosophy and theology, he expressed a number of interesting thoughts that relate to the eternal problems of economic theory. At the same time, a certain dichotomy should be noted. Thus, on the one hand, economic theory was regarded as a pure science. It was believed that she was dealing with conclusions that were derived from a certain system of provisions that were not put beyond doubt. On the other hand, it was viewed from the point of view of customs, institutions and legal norms. These two approaches are not exemplary and organically complementing themselves. With a careful analysis of the works, it is difficult not to notice that the first point of view dominates.
Thanks to her and received the initial fame of Frank Knight. Profit, in his opinion, has a unique nature. Thus, income from capital cannot be considered together with rent, interest and wages. This is due to the fact that profit always has an element of uncertainty. At the same time, special attention was paid to specific features. The first thing to note is the difference between uncertainty and risk. So, the first cannot be expressed by any statistics, since non-repeating events are the basis of uncertainty. In this case, the risk can be expressed in statistics and insured(that is, almost eliminated). Uncertainty concerns, first of all, market conditions and is a fundamental property of the entire economic system. There are interesting nuances here.
Specificity of the theory of uncertainty and profit
If everything was clearly defined, then there would be no need to manage and control in the modern sense of these words. Raw materials, goods and services would simply go to consumers. Therefore, it is necessary to understand that goods are created for the market. The choice is based on forecasts about the needs of consumers. That is, the manufacturer takes responsibility for meeting the needs of the consumer. At the same time, control and management are assigned to a small group - entrepreneurs. Due to the presence of uncertainty, they face questions about what and how to produce. Confident people take risks and offer doubting and timid members of humanity a certain level of income in exchange for a specific result.
Specifics of the book "Risk, Uncertainty and Profit"
It should be noted that not clearly defined concepts cannot be included in a perfect model without errors. Therefore, the author proposes the theory of perfect competition in the second part of the book. This part is deep, clear and concise at the same time. Here it is considered together with imperfect competition, risk and uncertainty. All this happens together with the use of methods to overcome the problematic aspects of the economy. Particular attention is paid herenon/insurable risk. Its nuances and special aspects are considered.
Who can recommend the book written by Knight Frank
Moscow, Rostov, St. Petersburg - perhaps all these cities would have a more decent appearance (in terms of various violations, MAFs and the like) if officials got acquainted with the work "Risk, Uncertainty and Profit". After all, this book is generally useful not only for managers, but also for many others who have to make decisions (like officials). After all, they have to deal with the risks, the topic of which is well covered in this work. It will also be of interest to researchers, students and graduate students who study at universities with an economic orientation. Speaking of positive aspects, it should be noted the extensive proof of the theory, which is additionally confirmed by arguments and facts. Thanks to this, anyone who has at least the slightest idea of \u200b\u200beconomics will be able to understand the materials of the book. The book has twelve chapters, but despite this, its volume is relatively small, so if you wish, you can easily familiarize yourself with the contents by spending a day (or several, if you read thoughtfully). Now we present to your attention a summary.
What is the first part about
The work itself is divided into three parts. We will talk about the first part, which consists of two chapters. The first deals with the place of profit and uncertainty in economic theory. It's happening herecomprehension of hypotheses and theories that were admitted during the development of science, which were developed at the time of the author's life. The second chapter deals with the theory of profit, and also establishes a connection between it and risk.
What is the second part about
We will start from the third chapter. It deals with the theory of choice and exchange. The fourth chapter is devoted to joint production and capitalization. Also here attention is paid to the question of why different people make their choice in favor of a certain form of distribution of goods. The fifth chapter deals with economic changes. In addition to them, it is considered what progress would have been in the absence of uncertainty. The sixth chapter focuses on the secondary preconditions for perfect competition.
What is the third part about
It starts from the seventh chapter. Here the essence of uncertainty and risk is considered. It must be read to understand the eighth chapter. It focuses on mechanisms and ways to overcome uncertainty. The ninth chapter deals with the enterprise and profit. This is perhaps one of the most coveted chapters for many practitioners and those who want to become one. The tenth chapter is a continuation of the ninth, but here special attention is paid to managers who are on a salary. Also here the author concentrates on illusory things in the conduct of his enterprise. The eleventh chapter focuses on uncertainty and social progress. After all, change is both a source of problems andpotential opportunities for opening reserves from enterprises. In the twelfth chapter, attention is paid to the social aspects of uncertainty and profit.
