Entrepreneurship is not, in this view, a rational risk calculation. It is, as critics of capitalism sometimes charge, a bit like gambling. The few big winners are usually people who shouldn’t have bet their time, money, and ideas. They overestimated their chances of striking it rich. But they beat the odds — to everyone’s benefit. These “lucky fools” create new sources of wealth, new jobs, new industries offering less-risky opportunities, and new technologies that improve life. Society plays the role of the casino, enjoying the spillover benefits from foolish bets.Now, Postrel is not, in fact, a critic of capitalism, and in making this comparison she still, as the passage above makes clear, wants to make the point that a free market economy is greatly beneficial to all -- to spell it out: just as a casino itself is enriched by the gambling of its customers, so capitalist society is enriched by the gambling of its entrepreneurs.
Capitalist societies are indeed rich, and entrepreneurs do indeed take risks, or gambles, but this comparison nevertheless goes astray for the following reasons:
First, casino gambling is rightly looked upon as of dubious value because it's a zero-sum game -- the only way for the casino to make money is for the customer to lose, and vice versa. In fact, from the point of view of the customer alone, the game is negative-sum, or a net loss on average. Capitalist economic activity, on the other hand, is positive-sum -- individuals may sometimes lose, but on average everyone gains, and gains considerably. This is because, unlike casino gambling, capitalism actually creates wealth.
The second important difference has to do with the nature of the entrepreneur's risk itself. Unlike gambling on the fall of dice or a roulette ball, where the odds are known in advance, the entrepreneur is constantly active or engaged to influence the outcome of the gamble, so that the actual odds of success depend heavily on those actions and the planning behind them -- in other words, on the abilities and character of the entrepreneur herself. It's certainly true, as Postrel points out, that most such enterprises ultimately fail, but that statistical fact obscures the real differences between those enterprises and the people behind them -- differences, for example, that venture capitalists try to discern, with varying success -- and it's precisely those differences that determine the real odds of success.
This is why Postrel's title, asserting the entrepreneur's "exuberance" to be irrational, is a kind of misuse of statistics -- no doubt the exuberance is irrational for some, but not for others, and neither she nor econometricians are able to say which is which. But the difference is crucial, since it's that rather than "irrational exuberance" that really drives the whole wealth-creating machine.