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    La empresarialidad

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    La empresarialidad

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    101 views12 pages

    Hoselitz The Early History of Entrepreneurial Theory

    Uploaded by

    Holly Klein
    La empresarialidad

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 12
    BERT F. HOSELITZ University of Chieago ‘undertakings. sn the attempt to determine th earliest use ane mee Th itp EY such Hal me encur e S on in ths, the Dictionnare de The Hany i a ects oe al and probably eavliest ne oo am : jue chose.” In other words, i ‘simply ref a History of iS Entrepreneurial Theory Words have thelr history which reflects the history of institutions and custo When a now word appears in a language ot when an old word assumes a honing itis proof that socal development has made this mew mesning ness “ity order (0 finda designation forthe new realty! en. 1478 fom “tense yo by Lema Begs (SAT rd not fea enh century, bat by, al time aut he entepose whee BLE [THE CONCEPT “ENTREPRENEUR” IN FRANGE BEFORE CANTILLON For @ long time economists commonly jas introduced into economic Ii tthe concept “entre- ‘On the authority of Gide anc ‘economists turned to other matters. Although Henry Higes ‘eproted fom Beloraton in Exrerenesial Histo, IK (A son Sg bon Ft uae! Mie H(A 235 234 —_—_——— beer F. Hoseuitz {or the performance of a service, or the supply of goods. The price at which the contract was valued was Sxed and the entrepreneur bore the risks of profit and loss from the bargain. q ‘This meaning of the word is very frequent in French legal and economic literature of the seventeenth and early eighteenth centuries and this is re- flocted in th dictionaries of the ‘uretidze, for example, defines entre- preneur as “celuy qui entreprend. Il se dit premiorement des Architectes {qui entreprennent les batimeas & forfait.” And he adds the following exam- ple: “L’Entreprencur de Ia jonction des mers sy est enrichi. On le dit aussi {dos autres marchez & pris fait, On a traité avec un Entrepreneur pour four- rir Yarmée de vivres, de rmunitions.”® The first edition of the Dictionary of the French Academy defines the word even more narrowly: “Entrepreneur, qui entreprend un bastiment, pour un certain prix.” that is, an entrepreneur 1s a contractor of public works." ‘Turing now from dictionary definitions and literary usage to occur- renoes of the word entrepreneur in the legal and economic literature, we nd the concept used throughout the sixteenth and seventeenth centuries primarily with the connotation of contractor to the government. From the ‘numerous occurrences in the laws of France, T quote only a few instances. Jn the last years of the sixteenth century Henry IV attempted to promote the drainage of land in southwestern France. He invited a Dutch engineer Humphrey Bradley to supervise this work and on April 8, 1599 issued an edict appointing Bradley as mative de digues. The edict provides among things for the partition of the drained land between the proprietors ‘and Bradley and his associates, who are in one place referred to repreneurs. In January, 1607, a new edict for the drainage of the contractor ‘ley le bout des entreprises lesquelles furent destourbées en partic par Ie peu iso conduite des entrepreneurs . . °* The ap- ‘particular interest since the earlier sixteenth century meanin con who paticipates in quasi-werlike exploits and the later meaning of contractor are fused. For the Freach captains who attempted to establish colonial settlements in Florida, were not just co 4quistadors on their own; they lad been commissioned to this task by imiral Coligny, and quite apart from what the true relationship was, Montehrétien regarded them as coatraetors for the King ‘An examination of the changing role of the technical and managerial personnel directing the execution of large scalo public works throws con- Hiderable ight on the development of the new meaning of the term entre- 236 preneur, and also helps to understand why the concept could be adopted by Cantillon and his contemporaries to designate the person who bore the "ks of any enterprise, not merely in the Geld of public construction, but also in farming or manufacturing “The typical entrepreneur in the Schumpeterian sense — of the Middle ‘Ages was the man in charge of the great architectural works: castles and fortifications, public buildings, abbeys, and cathedrals. Most numerous, most important and most extensive in scope were buildings for religious purposes. Up to the end of the twelfth contury, the men in charge of the planning and execution of these works were usually clerics. They were the lnventors and planners of the work, they performed the functions of archi. tect, builder, and manager, and, in adlition, they usually also hired and supervised the laborers, procured the materais and transacted the business necessary for the execution of the construction project. Tt i important to note, however, that they bore no risks, since they did not contract for the fxeeution of a fnished piece of work, but rather carted forward thelr building unt the resources on hand were exhausted. Boginniag with the thirteenth century the monk or abbot as builder tended gradually to become replaced by lay master-buildes. These mates de Toeuore may be regarded as the earliest contractors, but theiz function ‘was not too clearly determined, sine they dimes to have under- s1oup of clerics) performed the ente- Dronourial fonctions (that, over-all planing and supervision ofthe work) Irhile the expert architect submitted his plans and estimates, and was paid 2 feo for this work, Tho architect often ive in anther city and visited the onstruction project at intervals in order to check on the progress of the svork or solve especially thoray problems which had arsen during the bailing ‘With the decline ofthe Middle Ages and the increase of secular power, the importance of clerics as creative entrepreneurs and builders tended to docreas, and finally aliost to dsappesr. The chief constriction works were fo longer cathedrals and abbeys, but forteations, roads, bridges, cxzals, harbors, palaces, and other eecular pubic buildings. Under the impact of nascent capital the procedures employed in the planning and execution Of public works became progresively more rationalized, and entrepreneurial find managerial functions more specialized. Sil, the division of bor was often aot pushed very far. For example, a man like Bradley was a creative entrepreneur who also managed the routine business arising i his drainage projets. The same may be said of many of the builders ofthe extensive Exnal system in otatral and southern France during the seventeenth c=n- tty, for example, Guillaume Boutheroue, the entrepreneur ofthe canal of Briao, and Rique, the fst bulder of the canal of Languedoc. Similar evi- dence comes from England. The drainage of the great fon country in Lin- coinshire, Huntingdonshire, and neighboring counties in the easly sven- feonth century was carried though sometimes by “undertaker” or “adven 237 ~ turer” who often handled the business and tochnical side of the work. with his laborers, suppliers of stone and other materials ~ and incident ‘also his patroness, the duchess of Marlborough —have been admiral described by Mr. Dobrée* ‘But if we have numerous examples from the seventeenth and later cen- turies of many public and quasi-public works for which the artistic, engé neering, and commercial aspects of the enterprise were performed by one tect or engineer (who special contractor (who takes on the commercial aspects of the and in 1676 entrepreneurs, master-masons in the building trade, wore pro- Ihibited from adopting the designation “Archtocte du Fo,” an appellation which was reserved to those men whom the King had chosen to compose his Academy of Architecture, to which only outstanding artists were ad- mitted. With the growing importance of secular public buildings and with the progressive division of labor between the tochnical or artistic creator of ‘a new construction on the one hand and the contractor on the other, the contractor became an entrepreneur who performed a twofold role. He exe- ‘cuted the economic functions in achieving the completion of a work, that i, ‘bringing together the factors, labor, materials, max to complete the physical produc- like the modern entrepreneur in the economic theory of the nineteenth century, who combines the factors of production in the required proportions for the attainment of some output. ‘he does this on his own account, He beers tho risk, he is “The final stage of development of the entrepreneur as government con- ‘tractor can most clearly be seen in the work by Bemard F. de Belidor, La sclence des ingénieurs. ‘This book was first published in 1729, and is thus contemporary in conception with the dictionary of Savary and the Essai of| Cantillon. Bolidor’s book was considered the most authoritative text of its kind in its day, It was found worthy of special epprobation by Vauban, and the author himself became director of the Ecole des Ponts é ‘when it was founded in 1752, Although the bulk of Belidor’s cemed swith the technical aspects of various kinds of public co 238 jevertheless true that a division of labor begins the eatly eighteenth century. cary eg ttpes Ge procedure by which public works (for example, = tao construction ofa fortest) are contracted for. The techn designs 0 i xed at which entrepre- neg public aovertsement and : asl by pe feast ive bids for the execution ‘Fours are to gather in order to extend compet ea ee ne contract is awarded to that entrepreneur “guia faite 29 r This ‘obligates the entrepreneur to meet {ition du Rot la meilleure.” This contract obligates : sreet ving conditions the entoprenenrs mst urns ll material, fund {es wages, vehicles, seafolds, bridges, boards, tools, machines, ropes, To Soneraliy all things necessary to the accomplishment of the Wore, 79) | aeaeae to fini the work within a given time and according fo the esac) oa ii en a Cte i ie oy pate anid id re ee en er cf ee et wc rae Shc i ie ts Ta Sang co. He terete vith 9S ple prot by maining cost iss mad of the magi of tat Bt oe slidor gives raving tated the fonmal legal apes of the matter Belong oe ees ir om his conc in te mater. Ho sax wi, he Se , Estar observe tht overting i me agin ar ee ca all nliaonn ou de a nbligenc ds etal Fd or ols along it of posites of exting comer 239 with the government in which an undertaker found hiunself lost ground snd ‘more weight was placed on the circumstance that an undertaker was in- volved in a risky project from which an uncertain profit may be derived. In this sense the word undertaker was in competition with the word pro- jector. Although there are instances, chiefly from the elghteenth century, showing that a projector was thought of as an innovator, the usual distine- ion made between the undertaker and the projector was that the former ‘was thought to be an honest man engaged in 2 business the outcome which was uncertain, whoreas the other was usually thought of as speculator. This distinction is expressed quite clearly work by 8. Primatt, which first appeared ibility of opening coal mines in various land Countries in England, whose do produce in many places great ‘thers . .. Thore aro as many tion in their Designs, than of any real operation) that do undertake inthe dreining these and other sorts of Mines.” the meaning of whi of the word und the entrepreneur tions and the Lik document of the town council of Nottingham document is a grant of monopoly to a group of Nottingham burghers, headed by “maister Maior” to “sincke a pitt or pitts in the townes woods ‘and wasts.” The document specifies conditions under which persons who want to “adventure a partt or proporcion of monie™ shall participate in the profits and concludes that “this companie (ie, town council] are from tyme to tyme to assist theise Vndertakers as theire shalbe cawse" to ensure the profitability of the enterprise ppasture, into the bargain.”® Here the undertaker is depicted almost in terms reminiscent of Veblen's Captain of Industry. He is really a creative entrepreneur who not only engages in profitable projects but makes the desert bloom. The socially beneficial effect of private interest, the very epl- tome of what Sombart understood by the effect of the spirit of capitalism, ‘cannot be expressed more clearly and concisely. By the time this letter was vzitten, the old meaning of the word under taker, in the sense of government contractor, had almost entirely passed out 242 of use, Nevertheless it still appears occasionally, especially in oficial docu ments. For example, the London Gazette of 9-11 February, 1709, contains is reported that “an Agreement is ‘a despatch from The Hague in wh ing the Magezines on the Frontier ‘concluded with Undertakers for furs with Forage, as they have before done for as much Bread as shall be req- tuisite for the Subsistence of the Troops, and as many Waggons as shall be ‘pow under Deliberation how a sulll- cient Fund, or the necessary Credit, may be settled, for enabling the ‘Undertakers to perform their Contract” Here the emphasis on the under- taker as government contractor is quite plain, but this meaning tends to disappear completely, at any rate in noo: Tanguage, during the next ‘two decades. By the middle of the eighteenth century an undertaker was ‘quite simply a big business man, and more often an ordinary business man. in this senso Adam Smith writes, as if in passing, of the “undertaker of a great manufacture,”* and Postlethwayt, whose Dictionary cont Tation a good part of Cantillon’s Esoal, uses the word “undertaker” as the straight translation of the French word entrepreneur.* But by the time of Postlethwayt and Smith the more general meaning of the word tended to become obsolete and only the special meaning of an arranger of funerals survived. The undertaker in English economies was replaced by the capi- talist who only toward the end of the nineteenth century again gave way to the entrepreneur. TI, ru THmory OF ENTREPRENEURSHIP OF THE PHYSIOGRATS If the word undertaker disappeared from the arseoal of English politcal ‘economy after the middle of the eighteenth century and with it a proper 76 was not true in France. Cantillon’s ‘publish it as a work the fact that Frangois of his own More important than this epis ‘Quesnay seems to have been influenced to some extent by Cantillon. Al- though the claim cannot be made that Quesnay’s views on entrepreneur- ip are direetly derived from Cantillon, there is no doubt that in Quesoay’s cealiest economic writings in the great Encyclopédie, in which the rudi- ‘ments of his views on the social organization underlying a modern economy are outlined, the aspects relating to the norms of agricultural production are st of Cantillon’s discussion of the same topic. For in his article ‘Quesnay cites with approval a passage by Cantillon in which the latter mentions the advantages of large farms. In the samme context Quesnay then continues to describe the operator of a large farm as an entreprencur “who guides and tus to account his enterprise by his intelligence and his wealth. Wo shall seo a litle lator how this tersely expressed idea was developed into a new theory of entrepreneurship by Quesnay’s disciples. 243 ‘But frst we most tum to a somewhat fuller account of Quesnay’s systezn a order to determine more exactly the proper place of the entrepreneur in the socio-economic structure. "The most appropriate designation which can be given to Quesnay' system is thet of agrarian capitalism. The outstanding feature of it is that the pact played by the vatious classes is elated to, and, in fact, determine by the economic function the members of exch full. Analysts of the system of Quesney have commonly been interested in following up his division of ‘erred, above all, in jected the system outright as contradictory time and effort in the attempt to elucidate ‘and concer ourselves only with th relations of th luctive classes, Each of these clases is really composed of tw sons. The first includes the sovereign (and his associates exer ‘ising political power) and the landowners: the second includes the farm fand the farm laborers. Quesnay himself regards the fist class as hom qfeneous and makes the sight of the sovereign for part of the produit net ‘contingent upon his being a landowner, deriving his prerogative to levy tenes upon the historical ole of the monarch, who once “owed” all the ution toward the attainment of a gross product (produit brut). ‘income is justified on the basis that they made the “avonces fonci that is, that they contributed their property to the productive process. This fs the basis on which they derive a title to income and that income is the produit net Rent, in Quesnay’s system is thus the income of landowners, purely as a consequence of the fact that they are owners of the only pro- Guctive agent apart from Iabor. But whereas the net product of labor is zero (in agriculture and industry), because the laborer consumes (in equilibrium) values equal to that produced by his efforts, the net product of land mnay be, and in a “well-regulated kingdom’ ordinarily is positive. ‘The difference between the gross product and the net produet constitutes the income of the farmer and other persons engaged in egricultural produc- 244 THE EARLY HISTORY OF ENTREPRENEURIAL THEORY tion, We now have to anslyze more closely the components of this part of the income of soclety, The outlay of the farmers is composed of two parts, the “acances primitices” and the “aoanoss annuclls” ‘The former are roughly speaking expenditures on the maintenance and replacement of the fixed capital of the farm, the latter are composed of expenditures on raw aaterials used up annually in the production process and wages for agri- cultural Isborers The total national product is thus equal to the som of the fooances onnuelles, avances primitives and produit net (avances for ciéres): ‘Quesnay has represented in bis Tableau économique the picture of a in which no accumulation of eapital occurs and where n0 “The same gross product is produced year after year 10 distributed among the vatious classes. Hence lows that the avances primitioes are equal and certain every year and ‘consequently the income of the tenant farmer, who performs the entre- preneurial vole i also certain and fixed. Tt appears, therefore, that in Quesnay's system the theory of Cantillon, who regarded the bearing of Uncertainty on the entrepreneurial function, has been given up. The eatre- pprencurial theory appears to have become colorless; an entrepreneur is Simply a tenant farmer who rents a property at a fixed rent and produces 4 glven output with given factors at given prices "This view is leat added support by the Fact that Quesnay has novhere provied a defnition of the term entrepreneur or a description of eatre- ‘occurs also in the article “Grains” where Quesnay te businessmen (members of the sterile class) whose lains because others make equivalent expenditures.” ted as a common term which needis no special defini third occurrence is in a letter to tho Intendant of in 1760. Quesnay is here again emphasizing the over small ones and says: “Vous dites encore que ne peuvent pas satisfare au travail de leurs grandes xo doit pas étre le travailleur, Un gros fermier est ‘un habitant notable, un riche entrepreneur qui est continuellement 2 cheval, pour se porter ponctuellement & toutes les parties de son entre- prise “Here again the word is used in a colorless meaning. The entrepreneur is simply the patron who does not participate in the regular Isbor process, ‘but supervises it. Quesnay thus does not use the term entrepreneur in a technical sense, he simply employs it in a connotation which it has gener- ally acquired in the seoond half of the eighteenth century. The Encyclo- péidie defines entrepreneur simply as “il s0 dit en général de celui qui se charge d'un ouvrage: on dit un entrepreneur de manufactures, un entrepre- rneur de batimens” And Ferdinand Brunot who has written the most laborate and erudite history of the French language concludes that in the as Inter eighteenth century the term is applied to anyone at the head of an Cnterpaie in th ost gener ese" “x Sor tn dic did nt employ the tam. rw i fll tory of {PoRained ine pusage fom Quesoay cited aie, but vas more fully Ea syateratialy sated by Bandeau. I have mentioned before that the SComity abner of sucha then inthe wags of Quesnay i Soe p- Bethy So the fat dat tho Tableau économique contains only 0 sate Tnabpie As soon ae this assumplon i relinguihed, the enteprencaria function takes on fll ie bough the prod thas been rgsxded by sme cx of physioe racy 2 spi tis oi oly pavily coc. Tn purely physel lol tip te supls ove the never cost of product Scrurof s money ecouomy, the Plysoeatsactumed ont Untrained in vance of producto. Infact, they fa long eses* Th feat peyments as such a6 posible by ad prac they envnged sytem fa whieh Sued we ay igi con see. ct payments iy Sood and slay To wage rates ave xed (8 eomepond to tho value _ - jut the actual outcome of the harvest ‘weather and other factors which te the price of the crop is uncer. ‘wich antllon as posited, i The entrepreneur is thu expenses are certain whi subject to “risk” This is clearly expressed by Baudeau when he says: “Le Culioateur en chef est celui qui fait & ses depens, & ses risques, périls ot ronduit enfin pour son propre compte tout the agdcltral entrepreneur cre on pro- fod his own accont he mut have the eapacy of conomealy conbining the appropriate goods and se Ip geet prot Tere sguin Bawden gute explc Ie bar des Grandes epllationsprodacves, prem ipa, quadrpler,déeuper sl et possible lol . Tepegaer le wonbro des hommes employés 3 co twava, eles sésant FP Btue aur, mu quae, ou dine

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