Economic essays

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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

20 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK ML The great changes in industry which embody themselves in the shift from the individual or partnership entrepreneur to the cor- porate form have been gradual. The adherents of the business management theory had to face the facts, since already when Walker and Marshall were formulating the management theory of profits the corporate form was growing in importance. Walker regarded the corporation, apparently, as a development of minor importance and explained the profits of stockholders as sheer exploitation of business ability. In an article in the Quarterly Journal of Economics entitled “The Doctrine of Rent and the Residual Claimant Theory of Wages,” he said: Disguised profits also enter into the dividends of many companies or corporations which have had the good fortune, good sense and good feeling to retain, as managers, men of the highest business ability, born captains of industry who yet, by considerate treatment and high salaries (the force of habit and perhaps pride in the work concurring) are induced to remain long after they have reached the pitch of reputation which would give them command of the situation if they chose to set up as manufacturers for themselves. Marshall also was aware of the fact that in the corporation there existed a formal allocation of profits inconsistent with its inclusion in “earnings of management.” In them, he recognized a new distribution of the various parts of the work of manage- ment, but he entertained grave doubts as to the possibilities of their wide extension.” It was apparently only his skepticism as to the future growth of the corporate form of organization which enabled him to regard the business management theory as an adequate explanation of the facts. IV The history of the theory of profits, if the foregoing is correct, has been determined not by increasing accuracy of economic analysis, but by great industrial and credit changes which from time to time have shifted the ownership of the product. The really important historical question has been: Under a given set of conditions to whom do profits come, not what does the entre- preneur do to get them. When conditions were such that business ability was usually able to secure the profits, a theory that profits are the reward of business ability came into existence; when ' Dewey’s ed. of Walker's Discussions, Vol. 1, p. 427. 2 Principles, p. 382.

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