hazard of business falls on the capitalist.” “Business repays men not only for their labours, but their
fears.” But this repayment is “not a part of mercantile profit”: it is realised by the capitalist “as
such.” Admitting a real remuneration for risk, while giving a different name to the recipient from
that which others have preferred, Professor Clark is perhaps not committed to the paradox which Mr.
Hawley would affix upon the conception of the entrepreneur with vanishing profits,—our fourth
3 3 _• __ 31
species.
“To eliminate profit, wholly static conditions must be more absolute. ... There must be a
cessation of all variations due to the changeableness of the environment due to fire, lightning, hail.
We must imagine industrial society in the static condition as an automatic machine,... working
without friction in an absolutely unchangeable environment.”32
This idea of perfect tranquillity is certainly inappropriate to the troubled world in which we
live. “Things are always finding their level,” like a fluctuating and, in nautical phrase,” confused”
sea. The oscillating character of the waves is quite consistent with a gradual change of level, as when
the tide is flowing. It is a legitimate conception, familiar in statistics, to regard a phenomenon as
hovering about an average, even though that average is known to be changing. Let the great
tidologist calculate the dynamics of the flow, but let him not convey the impression that but for the
action of this flow there would be the level of the proverbial mill-pond. Very probably, however,
Professor Clark would recognise the continuance of risk not involving secular progress,—due to
unpredictable weather or credit cycles, for example,—but would regard the remuneration for
undergoing such risk as accruing to the “capitalist as such” rather than, with Mangoldt and others,
as a part of the entrepreneur’s gain. With regard to other elements of remuneration it is more
doubtful whether Professor Clark would accept Mangoldt’s statements as to the permanence of the
entrepreneur’s gain,—statements which read with their context, and attention being paid to
Mangoldt’s terminology, deserve much consideration.
We must suppose the existence of undertaker’s gain [ Unternehmergewinn ],—otherwise what
object has the entrepreneur to increase his business? (substance of p. 50).
The undertaker’s gain (Unternehmergewinn) is “not simply something transitory,” but a
“permanent species of income” (p. 51).
“The undertaker’s remuneration [ Unternehmerlohn ] preserves its position, though in a
limited form” (p. 105. Cf. p. 169).
Perhaps Professor Clark would be satisfied with the “limited form” of the remuneration and
the disappearance of certain other elements.
It is always pleasant to believe that one’s differences with high authorities are only verbal.
This satisfaction may now be enjoyed with respect to M. Walras’s doctrine that the entrepreneur
makes neither gain nor loss. Professor Pareto33 has made it clear that, as the object of the
entrepreneur is to procure the greatest amount of satisfaction, so his income is not to be considered
as nil, in the ordinary sense of the term. Rightly interpreted, the doctrine that “the entrepreneur
makes neither gain nor loss,” taken in connection with the “coefficients of production,” appears to
cover all the conditions of equilibrium, both those which are involved in what Cairnes called
31. See the appended note, referring to the observations on Risk in Mr. Keynes’ Probability.
32. Quarterly Journal of Economics. Vol. XV. (1900) p. 91.
33. Cour. d Économie Politique, passages referring to “entrepreneur.”