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This paper argues that commercial entrepreneurial activities have social implications and can provide needed social spaces during the disaster recovery process, and that viewing commercial enterprises as socially valuable has implications for post-disaster public policy.

This paper discusses themes and concepts developed through in-depth interviews conducted in New Orleans, Louisiana, and Houston, Texas, after Hurricane Katrina. Particular case studies of the personal experiences of communities that recovered after Hurricane Katrina are utilized to highlight how commercial entrepreneurship creates and maintains social spaces where community members can share resources and connect during the recovery process.

Entrepreneurs need not have a specific social mission in order to make social contributions, and commercial entrepreneurship should create and maintain social spaces that are important for community recovery after disasters.

The social spaces that commercial entrepreneurs facilitate should be considered when designing and implementing public policy in the post-disaster context. Policies can often hinder recovery, and policymakers should instead establish clear regulatory regimes and allow for greater space for entrepreneurs to act.

This paper highlights the role entrepreneurs play in advancing social goals and purposes after disasters, specifically how commercial entrepreneurs can create and maintain social spaces where community members gather to discuss their challenges and strategies for disaster recovery. It highlights the extra-economic role of commercial entrepreneurs and discusses the implications for public policy based on this broadened conception of entrepreneurship.

The American National Red Cross is in many ways the iconic symbol for disaster response and recovery. The organization, founded in 1881, has a long track record for coming to the aid of those in need in the wake of wars, natural disasters, and other crises. However, in the wake of recent disasters, the Red Cross has been criticized for underperforming. By combining the literature on bureaucracy in Austrian economics and the literature on monocentricity in the work of Vincent Ostrom and Elinor Ostrom, we provide an analysis of the Red Cross that helps explain the organization’s evolution over time and that also yields implications for disaster management more broadly. Specifically, the Red Cross is a bureaucracy that has become increasingly centralized and rigid as it has become further enmeshed with governmental responsibilities.

Austrian insights on the limits of central planning, the pervasiveness of knowledge problems, and the importance of the entrepreneur in coordinating social change have yielded substantive contributions to the literature on how individuals and communities respond to both natural and unnatural, or manmade, disasters. Austrian economists have examined the political economy of natural disasters, disaster relief and recovery efforts, the economic effects of extended wars, post-conflict societal reconstitution, and the effectiveness of humanitarian aid. This literature advances two main findings: (1) that centralized governments are likely to be ineffective at providing the goods and services that are necessary for community recovery and (2) that decentralized efforts are better suited to address the needs of society, to discover the best course of action for producing and distributing these goods and services, and to adapt to changing needs, circumstances, and technology. This paper examines the Austrian theories utilized to examine disasters, provides a summary of the recent research on both natural and unnatural disasters, and proposes areas for future research.