I have just finished a paper that will be published next year in a book that no one will read and so this will disappear. And to tell the truth, I cannot even tell how much this is even true, although it looks true enough to me. This is the conclusion to the paper, which seems to me to say all of this. But the point of the paper is that, because English did not originally have a word for “entrepreneur” our economic theories have been not just mis-shapen, but have led to such major distortions in our understanding of how economies work we ended up fostering the economic illiteracies of Marxism. Read the conclusion for yourself and see what you think.

Jean-Baptiste Say is properly recognised as the first economist to separate out the often entwined threads of the entrepreneur on the one hand and the owners of capital on the other. He did have, as John Stuart Mill noted, the advantage of having a separate word in French for this function, which allowed him a degree of conceptual clarity that was not available to those who wrote in English. But as noted, it was not until the fourth edition of his Treatise that even Say was able to see this distinction clearly, and even then placed his discussion within a footnote rather that make it a feature part of his text.

This distinction, as crucial as it is for clear thinking on economic issues, remained buried since the role of the capitalist at the time almost fully overlapped the role of the entrepreneur and therefore the term “capitalist” was used as an exact substitute. Marx in all his own works on economics, focused on the capitalist. There is not a single use by Marx of the term “entrepreneur” in the whole of the translated text of Volume 1 of Capital. But it is not due to any deficiencies on the part of the translator. The term “entrepreneur” does show up in Capital, but only once, in a footnote, and only because of a translation of a passage written originally by Molinari in French. This is the footnote:

“Even the mild, free-trade, vulgar economist, Molinari, says: “Dans les colonies l’esclavage a été aboli sans que le travail forcé se trouvait remplacé par une quantité équivalente de travail libre, on a vu s’opérer la contre-partie du fait qui se réalise tous les jours sous nos yeux. On a vu les simples travailleurs exploiter à leur tour les entrepreneurs d’industrie, exiger d’eux des salaires hors de toute proportion avec la part légitime qui leur revenait dans le produit. Les planteurs, ne pouvant obtenir de leurs sucres un prix suffisant pour couvrir la hausse de salaire, ont été obligés de fournir l’excédant, d’abord sur leurs profits, ensuite sur leurs capitaux mêmes. Une foule de planteurs ont été ruinés de la sorte, d’autres ont fermé leurs ateliers pour échapper à une ruine imminente…. Sans doute, il vaut mieux voir périr des accumulations de capitaux que des générations d’hommes [how generous of Mr. Molinaril]: mais ne vaudrait-il pas mieux que ni les uns ni les autres périssent?” (Molinari l. c. pp. 51, 52.) Mr. Molinari, Mr. Molinari! What then becomes of the ten commandments, of Moses and the prophets, of the law of supply and demand, if in Europe the “entrepreneur” can cut down the labourer’s legitimate part, and in the West Indies, the labourer can cut down the entrepreneur’s? And what, if you please, is this “legitimate part,” which on your own showing the capitalist in Europe daily neglects to pay? Over yonder, in the colonies where the labourers are so “simple” as to “exploit” the capitalist, Mr. Molinari feels a strong itching to set the law of supply and demand, that works elsewhere automatically, on the right road by means of the police.” (Marx [1867] 1906: 844)

In the wake of this tradition, even where the factors of production are discussed, they are usually summarised as land, labour and capital. It is only a rare exception in which there is any mention, let alone discussion, of the fourth possible factor which is the entrepreneur. Yet without the entrepreneur, the other three factors would lack direction and purpose.

There is, that is to say, the return on real capital, which is the return for ownership of various humanly produced tools and structures that are used in productive activity. There is then the return that comes from employing and directing each and every input as part of the production process in just such a way that a positive return over costs is earned. It is this second function that is the role of the entrepreneur. And it is this that is almost totally ignored in the economics of the English-speaking world, and as a result of the major influence of English-language economics on the world, with immense loss to our global understanding of the actual processes of a market economy, and indeed, of any economy beyond the primitive.