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

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

Collection:: Economics Books

THE ENTREPRENEUR AND THE SUPPLY OF CAPITAL 15 | In economic doctrine from Smith to Mill, it was assumed that the capitalist was the owner of the product and that all over the cost of land and labor accrued to him as a capitalist. Profits varied, according to Smith, with the extra labor and unusual hazard involved in the particular commitment. The surplus over the cost of land and labor and the normal rate of profits was conceived as a recompense for the risk and extra labor of man- agement in a particular trade. And always it was the capitalist who took these risks and who paid for the extra labor of man- agement. All capitalists were conceived as profit-takers. Profit was thus a composite return in which the chief element was cap- ital. Such other elements as made up profit were supposed to come to the capitalist as a form of addition naturally accruing. There are here and there references to loan interest as distin- guished from profits, but this distinction assumed no great importance. This conception of the relation of profits to capital was a natural and correct one in a country in which banking was as yet only slightly developed, the corporate form of business slightly used; and in which the typical form of investment was agricul- ture. Unfortunately, we know little of the capitalism of the early nineteenth century, but such glimpses as we get lead to the opinion that an undertaker had to rely almost exclusively on his own resources or take in a partner with capital.’ If a man was to get profits, he must have capital and the amount of profits was proportional to capital. The conception of profits as a composite of interest, payment for risk, earnings of ordinary labor in the employment of capital, and fortuitous gain remained almost unchanged until the late eighties. Perhaps the most important divergence from this con- ception among the masters of the science * was that of Senior, ! The “sleeping” partnership was not indigenous to the English common law. The earlier development in French economics of the idea of the undertaker as a receiver of the earnings of management may have been due to the wide use of the commenda and similar legal forms of enterprise, under which the manager was able to obtain capital. ? My colleague, Professor J. H. Hollander, has called my attention to an early attempt to introduce the French concept of the entrepreneur into English economic theory by George Ramsay in An Essay on the Dis- tribution of Wealth, Edinburgh, 1836. Ramsay, however, held the Ricardian view as to the causes of gross profits, and therefore was able to set aside only a small field for the entrepreneur. The book made no impression on the current of economic thought.

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