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In this typical case I cannot see that «lorsqu’il y a concurrence entre les entreprises celles-ci doivent se tenir sur les transformations complètes; elles n’ont donc ni profit ni perte». There is probably more than I have been able to apprehend in Professor Pareto’s doctrine concerning the «complete transformation» of the factors of production by the entrepreneur1 in a regime of competition. But I cannot see how it is inconsistent with the theory that the wheat produced flows partly into the hands of the entrepreneur, partly into the barns of the landlord, in a proportion determined by the play of demand and supply; with no presumption that, in general, the proportion is extremely unequal, and tends to be unity to zero (or the reverse).
The conception of a set of cultivator entrepreneurs dealing with a set of landlords has been employed by me in criticising another paradoxical doctrine about the function of the entrepreneur, propounded by other eminent writers, on another continent. These writers do not regard the remuneration of the entrepreneur as null, but as precisely equivalent to the loss which would be occasioned to the community by the subtraction of an entrepreneur. The proposed equation would, as it happens, be verified by the particular case above instanced; but not, I have maintained, in the general case when instead of, or in additition to landlords, we have the owners of other factors of production, in particular hired labour2.
It will be understood that it is only the exact mathematical analogy between the marginal productivity of the entrepreneur and that of an operative in a large establishment which I dispute; I do not deny, I all along imply, that there is a general resemblance between the motives and winnings of the employer and employed, sufficient to justify Dr. Marshall’s doctrine, that there is a supply price for business power3.
Nor do I dispute that part of Professor Pareto’s exposition, which is in accordance with Dr. Marshall’s doctrine, that the net advantages of a business are balanced against
- S. 150 et passim. ,
- «Economic Journal», vol. XVII, p. 531.
- Principles of Economics under the head of «Business Management»