Knightian Uncertainty in Capitalism and Socialism

By Juan Ramón Rallo, Philipp Bagus, Miguel Ángel Alonso Neira

Drawing on the ideas of economist Frank Knight, this essay shows that within the institutional framework of socialism, economic agents must face an amount of unmitigated pure uncertainty that under capitalism is either completely absent or significantly reduced by profit-seeking entrepreneurs.

Download PDF

Juan Ramón Rallo
is professor of economics at Universidad Francisco Marroquín.
Philipp Bagus
is a professor at Rey Juan Carlos University. He is also a past winner of The Sir John M. Templeton Fellowships Essay Contest.
Miguel Ángel Alonso Neira
is professor in the Department of Applied Economics, History and Economic Institutions and Moral Philosophy at King Juan Carlos University.