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Rev Austrian Econ (2008) 21:99101
DOI 10.1007/s11138-007-0030-4
Eric M. Jackson, The PayPal Wars
World Ahead Publishing, Los Angeles, CA, 2006, 270 pp., includes index, Price $15.95.
Edward P. Stringham
Published online: 5 January 2008 # Springer Science + Business Media, LLC 2007
Economists such as Friedrich Hayek, Israel Kirzner, Ludwig von Mises, Murray Rothbard, and Joseph Schumpeter have made important contributions to economists' theoretical understanding of entrepreneurship. They have discussed how entrepreneurs create new opportunities, invest resources, and are the driving force of economic progress (Boettke and Coyne 2003). To these economists, trying to model these entrepreneurs using mathematical equations misses much of what entrepreneurs do (Rothbard 1985, p. 286). Similarly, statistical studies cannot come close to fully illustrating the unique contributions of entrepreneurs.
Given that most entrepreneurship is distinctive and specific to time and place, would it be possible to illustrate the theories about it using real world phenomena? Although not an academic book, The PayPal Wars provides a clear example of economic theories in practice. The book starts with a discussion of Joseph Schumpeter's (1942) concept of creative destruction, and the next 270 pages go on to describe how it worked in the history of online payments firm PayPal.com. The book is written from the perspective of Eric M. Jackson who worked at the Silicon Valley startup from when it had 2,413 customers in 1999 to after it had more than 40,000,000 customers in 2002.
Much of the book involves personal stories, but The PayPal Wars also illustrates the process and benefits of entrepreneurship in many ways. PayPal's founding entrepreneur was Peter Thiel, the Silicon Valley businessman who founded the company in December 1998 and took it through its initial public offering and October 2002 sale to eBay for $1.5 billion. Perhaps not coincidentally, Peter Thiel is a libertarian who knows about most, if not all, of the Austrian economists listed above. In fact, one of the...