ABSTRACT
The way in which the capitalist undertaker secures an income from society is an important part of an analysis of that system of enterprise. One explanation—and the simplest—starts by treating “undertaking” as a productive “service” analogous to the services of labour, land and capital. “Undertaking” it generally regards as a service compounded out of the other three, with the addition of uncertainty-bearing. Profit is then analysed as a payment for this compound of services, including a premium for the risk and uncertainty involved. The important parts of the undertaking function in a majority of cases are not separable, but are combined in a few men. There is no reason to assume that the price of the composite function will be equal to the sum of the prices of its separate parts—that profit will equal gross interest plus wages of management. Capital increment becomes as important in a theory of profits as land-value increment is in the theory of rent.
