Capitalist Enterprise and Social Progress
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Part 1 of this volume analyses the main issues in the theory of Applied Economics. Part 2 surveys the rise of capitalist enterprise and indicates the importance of certain institutions in the growth and working of the economic system at the start of the twentieth century. The concluding chapters stress the relevance of these considerations to the problems facing politicians and administrators.
increase of output. If we first assume the case where facilities for improvements ill organization do not suffice to produce increasing returns as supply increases, any considerable increase of output is likely to be hampered by technical difficulties, which render the cost of additional supplies increasingly great. Expansion will be limited by the fact that after a pain t, not only marginal, but also average costs increase as the supply gets larger. Where it is marginal costs that rise most
instance, the income from wage-earning. These limitations, however, tend to be of varying importance in different cases and different industries. Second, it follows that profits of undertaking will tend to contain a surplUS in excess of what an undertaker could tt importance of this consideration is measured by the superior ability of an Investment Company to invest profitably as compared with the private investor. PROFITS OF UNDERTAKING 95 have obtained if he had employed his ability and
profits, therefore, may be coincident with economic decline as well as with economic progress. But, as a rule, this will not be the case; for when there is a decline in the net product of industry, the loss will fall in the first place upon undertakers, unless it has been foreseen and forestalled; and the very inelasticity and small facility of supply which benefits them in prosperity will make their burden all the heavier in this instance, since they can only escape it and shift it with
uncertainty-bearing, however, seems to have had a much earlier mention. A manuscript book, written by a bailiff of Blackmoor " in the reign of Queen Elizabeth, mentions the difference between the tin-worker and the farmer or small contracting master as that between two choyses-the one a certaintie and the otller an uncertaintie. The farmer knoweth not how his worke will doe, until tyme that he has proved it, and must needs live in hope all the yere, whicll for the most part deceiveth him (as the
whom he probably classed in much the same category as the serfs of his estate, performing for him a service by customary right. It was very natural, therefore, that in towns subject to some religious or secular lord the very success of the Gild 1 Cf. Gross, Gild M e'Ychant: Not until there was something of importance to protect, not until trade and industry began to predominate over agriculture within the borough . would a protective union like the G.M. come into existence." (p. 4.) The G.M.