“If on the market there is only one entrepreneur, Titius, and if he does not monopolize the
product, that is, if he in the management of his business arranges [fa in modo di] to obtain not indeed
the greatest monopoly profit, but the greatest profit Obtainable in a regime of free competition,... his
profit will be [a surplus indicated by a figure which is not here reproduced]. But, if there is an
entrepreneur Caius capable of entering into competition with the preceding,... the profit of Titius will
be reduced below what he had when he was alone on the market. And, if there is a third employer
also capable of entering into competition with the first two, the profit of Titius will be reduced still
more. The more the number of employers increases, the more there is a necessary tendency to a
limiting state in which all the employers who continue to produce have a remuneration which, like
that of any other labour, satisfies the condition that the marginal disutility [penosita ] of the same
labour [ medesimo ] shall be equal to the marginal utility of the returns which that labour procures,
and not more than this. And, since it is this equality which characterizes the return to labour, it
follows (ne viene) as a legitimate consequence that in this limiting state the remuneration of the
entrepreneur may be treated like the remuneration of any other species of labour.”
The fact that wages are usually paid in advance is not to the point, as Professor Barone very
properly observes. He proceeds:—
“These considerations seem to me to prove to demonstration how profound and correct is
Walras's conception of an entrepreneur who under the conditions postulated makes neither gain nor
loss after having paid himself (or others, it is indifferent which) the remuneration of the labour of
direction and conduct of production. And, if it is no wonder that this conception should not be
comprehended by economists who have really very vague ideas of quantity, it is absolutely
astounding that the conception should have been also made the subject of criticism by other
economists to whom the notions of quantity are quite familiar.... I frankly must confess myself
absolutely incapable of understanding how any difficulty whatever can arise as to the validity
[literally, the affirmation] of this conception, which is indeed most simple.”
Having called once more attention to the abstract character of the conditions, Professor
Barone reiterates.—
“In such conditions the law of marginal productivity extends to the remuneration of the
entrepreneur; and, after having remunerated all the factors (the work of the entrepreneur included)
in proportion to their marginal productivity [with a discount corresponding to the time elapsing
between the service and the product], there remains no undistributed residue.”
If there could be any about the meaning of this thesis, it would be removed by the
unequivocal language of symbols employed in the Appendix,37 where, by way of illustration, the
labour of the entrepreneur is expressed by the total number of hours of work that he devotes to the
business.
Upon this it may be remarked that the last state of Titius, After Caius and the rest have
entered as competitors, seems identical with the case of “extinct” monopoly which was above
adduced, in order to exhibit the motives of the entrepreneur. As there appears, both before and after
the competitors have entered the remuneration of the entrepreneurs, in Professor Barone's phrase,
“satisfies the condition that the marginal disutility of the labour shall be equal to the marginal utility
of the return which that labour procures.” But neither before nor after the competitors have entered
is there any reason for regarding the remuneration of the entrepreneur as the product of the number
of doses (e. g., hours worked) and the marginal productivity of a dose (multiplied by a coefficient
37. Loc. cit.