In view of the fact that while economists treat the price
mechanism as a co-ordinating instrument, they also admit
the co-ordinating function of the “ entrepreneur,” it is
surely important to enquire why co-ordination is the work
of the price mechanism in one case and of the entrepreneur
in another. The purpose of this paper is to bridge what
appears to he a gap in economic theory between the assumption (made for some purposes) that resources are allocated
by means oi the price mechanism and the assumption
(made for other purposes) that this allocation is dependent
on the entrepreneur-co-ordinator. We have to explain
the basis on which, in practice, this choice between alternatives
is effected.