represents a union of circumstances which is distinctly rare.  The fortunate few, who do combine them, are thus generally able to extract in the form of profits a high price for their services, a price which covers not only the strict reward of risk-bearing, and the necessary remuneration of their own service, but a handsome payment for the special qualities and advantages which have been indicated.  Profits, moreover, may vary between one industry and another, not only in accordance with the real risk which is entailed, but with the degree to which the supply of special knowledge, etc., is scarce or abundant.

This consideration goes a long way to explain the large fortunes which enterprising business men are often able to amass.  It also throws some much-needed light upon the functions which such men discharge.  They perform to a large extent the work of management; they supply capital on what may be a considerable scale; but it is the taking of business risk which is perhaps their most characteristic function.  It is the union of these functions which distinguishes them as an essentially different type from the salaried manager who has invested his savings in rubber or in oil.  In other languages there is a specific name for the man who combines all these three functions; in French he is called an “entrepreneur,” in German an “Unternehmer.”  It is much to be regretted that in English we have no clear corresponding word.  The word “capitalist” is not uncommonly employed to do duty in this connection, but this is a source of much confusion.  For the word is also used, and more appropriately, to include all investors, whether or not they are active business men.

Sec.6. Risk-taking and Control.  But there is an allied confusion of more importance.  We commonly suppose it to be a leading feature of our present “capitalist system” that the control of industry rests in the hands of those who supply the capital.  Nor, as a general statement, is this untrue.  But it conceals the essential point.  Strictly speaking, it is risk-taking with which control is associated.  The mere lending of money carries with it no title to control.  Governments and municipalities concede no such title to the subscribers to their loans; nor does a company to its debenture holders.  The shareholders’ ultimate control is based upon the fact that they bear the financial risks of the concern.  Nor is this a matter of mere legal form.  It is not uncommon for ordinary shares to carry with them a greater voting power than the preference shares of a corresponding value.  The principle which such arrangements endeavor to express is clear:  control should rest with him who bears the risk.  It is with this principle rather than with a mulish insistence on the rights of property, that advocates of “workers’ control” and the like have got to reckon.  It is upon this ground that (as they may quite conceivably do) they must make good their case.