The name is absent

“industrial competition” and those which would be satisfied even if we made abstraction of the
tendency to equal advantages in different occupations. But, while we accept the ideas, we are not
bound to adhere to the words of a master; and the expression in question may be objected to on
several grounds which will repay examination. It is violently contrary to usage; it lends itself to a
dangerous equivoque; and it has led distinguished economists to paradoxical conclusions.

No amount of authority and explanation can make it other than a strange use of language to
describe a man who is making a large income, and striving to make it larger, as “making neither gain
nor loss.” There is an oddity about the phrase which recalls the use of “gratis” by Sir Murtagh’s lady
in Castle Rackrent : “My lady was very charitable in her own way. She had a charity school for poor
children where they were taught to read and write gratis, and where they were kept well to spinning
gratis for my lady in return.”

A more serious objection is that the term “making neither gain nor loss” has to be used in two
different senses almost in the same breath. It is a sufficiently difficult lesson for the plain man to
learn that the maximum of income which the entrepreneur aims at realising is zero. But the difficulty
is doubled when he comes to learn—as he must in dealing with a maximum problem—that the
increment to that income due to the last increment of any factor of production is also zero. There is
apt to arise a confusion between conditions belonging to the total and to the marginal quantity,—an
ambiguity of a kind which has before now proved detrimental in economics.³⁴ A hasty reader of
Professor Walras might suppose that it was intended to affirm that the entrepreneur made neither
gain nor loss at the margin : whereas the meaning is, rather, that nothing remains to be
distributed—on an average and apart from oscillations—after that the entrepreneur has paid a normal
salary to himself.³⁵

The implication that the remuneration of entrepreneur labour may be treated like that of any
other labour presents some difficulty. It is the one obscure topic in Professor Barone's brilliant
studies on Distribution.³⁶ His observations deserve to be quoted at some length. He first (in a note
on p. 132) announces as true in a particular case, what is here regarded as true in general, that “ there
must be left to the entrepreneur's profit (profitto dell’ impresa) the differentiating character of
‘residual claimant’; and nothing else can be said but that profit is formed by the difference between
the entire product and the remunerations of the various factors corresponding to ( ragguagliate ) their
respective marginal productivities.” But Professor Barone regards this enunciation as only
provisional. He promises to show in a later section that “with the increase in the number of the
competing entrepreneurs the profit of the undertaking tends to lose more and more the character of
residual claimant, and tends to conform to that of the law of marginal productivity.”

In the later section he says:—

34. Mill's hesitation between equal sacrifice and least sacrifice as the criteria of taxation may seem
due to a confusion of this kind, is pointed out by the present writer in the Economic Journal, 1897.
(Cp. Mathematical Psychics, p. 118.) Mill's ambiguity had already been noticed by Professor Carver
in his article on “The Ethical Basis of Distribution” in the Annals of the American Academy for 1895,
p. 95.

35. Cp. Pareto, Cours, Art. 87, “his salary as director of the enterprise being comprised in the
expenses of production”; and the similar expressions of Professor Barone, quoted below.

36. Giornale degli Economisti, February, 1896.

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