Pat Gunning quotes from a translation of Carl Menger:
"In the early stages of civilization and even later in the case of
small manufactures, entrepreneurial activity is usually performed
by the same economizing individual whose technical labor services
also constitute one of the factors in the production process.
With progressive division of labor and an increase in the size of
enterprises, entrepreneurial activity often occupies his full time.
For this reason, entrepreneurial activity is just as necessary a factor
in the production of goods as technical labor services."
Menger, Carl. (1981) Principles of Economics. Translated by James
Dingwall and Bert Hoselitz. New York: New York University Press.
Originally published in German in 1871.
In the translation, the translators refer to "factors in the production
process."
THE PROBLEM here is, we don't have the original German. If it reads
"Faktoren", it looks as though Menger wins the horse-race; otherwise, not.
Meantime, Henry George (1879) seems to have won the race among
Anglophone writers. As Pat says, the idea's more important than the word;
and yet, the word carries and implies an idea (Semantics 101). Adam Smith,
for example, writes about the FLOW of payments and its distribution among
wages of labor, profits of stock, and rent of land, but does not use a GROUP
name (as in "An Exaltation of Larks") for labor, stock, and land together.
George in 1879 makes a big point of this in his section on
Distribution, where he insists that the laws of distribution - the
determination of rent, wages, and interest among land, labor, and capital -
must jibe with one another. Philip Wicksteed, an avowed fan and supporter
of George, borrowed the title of a George chapter, "The correlation and
coordination of these laws (of distribution)" for his more sophisticated
work on distribution among the factors of production. The mathematics is
Wicksteed's and Euler's, but the inspiration came from George - along with
the word, "factor".
I mention this not to win a race, but because the contributions of
George have been overlooked or denigrated over the years. Wicksteed, a
George fan, has been touted as one who replaced the residual concept of rent
with factor symmetry, and thus somehow undercut George. J.B. Clark, who
used Wicksteed's ideas as a club to beat George, tried to give that
impression. That is not what Wicksteed said, though, unless you cherrypick
his words and give them a certain spin he clearly did not intend.
Mason Gaffney
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