Pat:

We may be splitting straws here, but let me try to narrow our discussion
down somewhat and see if we can agree:

You say:
Knight's statement that profit is "unimputable by the mechanism of
competition" is, in my view, quite some distance from the statement that
profit is due to luck, particularly in light of Knight's other statement
that "uncertainty in this sense...explains profit in the proper use of the
term..." Profit, as I understand Knight, is a residual that can be
attributed to a businessperson's (or producing entrepreneur's) dealing with
uncertainty. And uncertainty, as he defines it, is not in the same category
as luck. Both uncertainty and residual income are absent from perfect
competition, of course.

My response:
1) I agree that profit arises from the condition of uncertainty, and, hence,
cannot be imputed to any mechanism of competition.
2) Under uncertainty: when profit arises, the entrepreneur is likely to
attribute the profit to the entrepreneur's wise judgment.
3) Under uncertainty: when profit arises, an observer of the entrepreneur's
action may either agree with the entrepreneur, or chalk the profit up to
sheer luck.
4) When the entrepreneurial profit arises from a one-time event, we have no
independent way of knowing whether it arose from entrepreneurial judgment or
from luck.
5) Under uncertainty: ongoing entrepreneurial success may turn the
entrepreneur into a wage-earner (internalizing into an existing organization
the wise judgment of the entrepreneur).
6) Given 1 - 5, not all profit is attributable to luck. But when profit
cannot be converted into a cost (see 5), I'm as likely to attribute it to
luck as to judgment. Of course, the entrepreneur in question won't agree with
me, and Knight may not as well.

In my response, uncertainty and luck are not "in the same category," but
luck may play a role in an entrepreneur's profit.

Ross Emmett