Originally posted by sasquatch672
The - what? Have to tell you, this one is baffling.
I think it’s this—
Capitalists are the owners of productive capital (although financial capital may be included, the two are properly distinguishable). The return to that ownership is similar to the return for the usage of owned land: a rent.
An entrepreneur is essentially someone who arbitrages market conditions (bearing risk in the process) in order to make a profit (a “quasi-rent” for risk-taking). An entrepreneur may own capital, may rent capital, may do neither.
There is a distinction in usage between American and British economists (generally and historically). “Profit”, in American usage, is the remainder after costs are subtracted from revenue. This may be the return to the entrepreneur. “Profit” in British (European, generally?) usage, refers to the “rental rate” (or its equivalent) on capital, which is an interest rate. When the Cambridge (England) economists refer to the “rate of profit”, that’s what they mean. We would more likely mean profit (gross, operating, net) divided by sales revenue.
If you buy machinery, say, (capital equipment) for your business, the cost of that equipment factored over time (since capital equipment is used over time) is the cost of capital to your firm, and the return on capital to the capitalist that sold you the equipment (and you can see how this can be “chained”: that capitalist also may have purchased—or rented—physical capital equipment to produce the equipment sold to you). Now you can factor in depreciation, as the capital equipment will be used up over time.
I cannot recall the intimate details; but Keynes developed a formula relating the “marginal efficiency of capital” to the interest rate. Basically, if the return to your investment (rental or purchase) of capital equipment (with a depreciation factor, at least in the case of purchase) is expected to be less than the interest rate available on, say, a bond (risk adjusted)—then buy the bond instead. Of course, the return on your capital investment depends on demand for the product produced therefrom. [And all of this can be recast in terms of “human capital”—ignoring ethical considerations.]
It may be a fine distinction, but your boss could be an entrepreneur without being a capitalist per se, at least in the traditional sense.
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EDIT: Although I've had a bit of gin now, and maybe am not making any sense at all. Time to leave.