Economic essays

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Monograph

Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: The enterpreneur and the supply of capital / George E. Barnett

Collection:: Economics Books

18 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK the result that there is a far more close correspondence between the ability of business men and the size of the businesses which they own than at first sicht would appear probable.? Writing in 1893, Professor Cannan regarded the management theory of profits as firmly established. He said: III FL . The displacement of capital from the triad of productive requisites and its relegation to the same rank as organisation, knowledge, mental and muscular powers would not, perhaps, have been of much impor- tance if it had not been represented as the most active element in the triad. As it is the change is immense. . . . The power of managing industry is attributed not to the mute and inanimate capital, nor even to the owners of capital, but to a particular class of workers— the entrepreneurs—and it is clearly seen that even they can only direct industry into particular channels by virtue of their intelligent anticipation of the orders of the consumers, whose demands they have to satisfy on pain of bankruptcy.? Already, however, Professor John B. Clark, in an article pub- lished first in the Political Science Quarterly and later in The Modern Distributive Process, had formulated the now dominant views that the earnings of management are reducible to wages. Pure profit [he says] is the return of simple ownership. It is free from all admixture of wages and interest. It accrues to him who simply extends the @gis of his civil rights over the elements of a product and then withdraws it in order that the product may pass into other hands. The entrepreneur or assumer is he who takes upon himself the responsibility of ownership.® The subordination of management was, however, only a denial of the correctness of the business management theory. The next step naturally was the assignment of profits to a new factor. Since that time and, even before, the theory of profits has taken increasingly the form of the risk theory of Hawley or the “active capitalist” of Professor Fetter. All of this involves the recogni- tion of the fact that under modern economic organization profits accrue over the larger part of the field not to business manage- ment, but to the capital which owns the product. The great changes in industrial organization and capital markets which forced the business manager to relinquish owner- ship of the product over a great part of the field of business may t Ibid., p. 391. ? Cannan, E., Theories of Production and Distribution, p. 398. ® Clark and Giddings, The Modern Distributive Process, pp. 38-39.

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