Note 195-4 — Chapter V
John J. (John Joseph) Lalor translation
Hufeland, Grundlegung, I, 290 ff.; Schön, Nat-Oek., 87, 112 ff.; Riedel, Nat-Oek., II, 7 ff.; von Thünen, Der isolirte Staat, II, 1 80 ff.; v. Mangoldt, Unternehmergewinn, 34 ff. The latter divides the undertaker's profit (profit de l'entrepreneur) into the following parts:
A. Indemnity for risk. If this be only an indemnity exactly corresponding to the risk, it cannot be looked upon at all as net income, but only as an indemnification for capital. If individual undertakers, favored by fortune, receive a much larger indemnification than is necessary to cover their losses, such indemnification is not income either, but an extraordinary profit not unlike a lottery-gain, unless it be called, perhaps, the reward of extraordinary courage (Eiselen), i. e., wages. If, lastly, the indemnity is uniformly somewhat larger than the risk, in order to compensate for the continual feeling that one is running a risk, it must be remembered that all remuneration for present sacrifice, made directly for the sake of production, is wont to be embraced under the name of wages.
B. Wages and interest for the labor and capital utilized only in one's own production, and which cannot be let. v. Mangoldt himself admits, that, in the long run, only certain qualified labor belongs to this category.
C. Undertaker's rent (Unternekmerrente) depending on the rarity of undertakers (men of enterprise) compared with the demand. This, therefore, is not a third component part, but only one which adds to the other two, Storch, Handbuch, I, 180, and Rau, Lehrbuch, I, § 237 ff., consider the profit of the undertaker as an admixture of wages and interest. Professor J. Miscszewicz has given expression to an interesting thought in opposition to myself: that credit is a fourth factor of production (natural forces, labor and capital being the other three) produced by the three older factors, as capital by the two oldest. The undertaker's profit he then considers the product of this fourth factor, corresponding to rent, interest and wages.