… is from page 153 of the 1983 Transaction Publishers edition of Redvers Opie’s 1934 translation of Joseph Schumpeter’s 1912 book, The Theory of Economic Development:
Entrepreneurial profit … is the expression of the value of what the entrepreneur contributes to production in exactly the same sense that wages are the value expression of what the worker “produces.” It is not a profit of exploitation any more than are wages.
DBx: Yes. And failure to grasp this point has led many people, not least Karl Marx, to mistakenly conclude that profit is an extraction of value by persons who do not produce that value from persons who do produce it. This mistaken conclusion has fueled a great deal of tyranny.
Successful entrepreneurs in markets, including those pictured here, earn their riches by creatively arranging for resources, including labor, to be used in ways that are more productive than anyone had thought of earlier. Far from extracting their profits from workers, successful entrepreneurs make their workers more productive, and competition obliges these entrepreneurs to share the great bulk of these gains with workers and consumers.
