Editing Economic calculation problem (section)

=== Entrepreneurship ===
The third condition for economic calculation is the existence of genuine [[entrepreneurship]] and [[Competition (economics)|market rivalry]].

According to [[Israel Kirzner]] (1973) and [[Don Lavoie]] (1985), entrepreneurs reap profits by supplying unfulfilled needs in all markets. Thus, entrepreneurship brings prices closer to marginal costs. The adjustment of prices in markets towards equilibrium (where supply and demand equal) gives them greater utilitarian significance. The activities of entrepreneurs make prices more accurate in terms of how they represent the marginal utility of consumers. Prices act as guides to the planning of production. Those who plan production use prices to decide which lines of production should be expanded or curtailed.

Entrepreneurs lack the [[profit motive]] to take risks under socialism and so are far less likely to attempt to supply consumer demands. Without the price system to match consumer utility to incentives for production, or even indicate those utilities "without providing incentives", state planners are much less likely to invest in new ideas to satisfy consumers' desires. Entrepreneurs would also lack the ability to economize within the production process, causing repercussions for consumers.<ref name=":1" />