The Role of Entrepreneurs and the Source of Profit: Debates in the American Economics of the Progressive Era

Abstract

American economics of the Progressive Era sought to find a golden mean between laissez-faire capitalism and totalitarian solutions. Contemporary economics has much to learn from the debates of this period, as it faces similar questions as the neoliberal approach weakens. The aim of this paper is to present the debates in late nineteenth-century American economics about the source of profit and the role of the entrepreneur in order to provide new perspectives for post-neoliberal entrepreneurship theory. The paper analyses the works of Francis A. Walker, Richard T. Ely, Frederick B. Hawley and John Bates Clark on the source of profit and the role of the entrepreneur. The paper shows that these works laid the foundations for the revolution in the theory of entrepreneurship that we now associate with Joseph A. Schumpeter. The paper describes how these analyses rejected laissez-faire economics, which regarded profit in all its forms as legitimate, while at the same time rejecting the Marxist theory of exploitation. From the works reviewed, a theory of entrepreneurship is outlined that has 'enabling' at its core, where the source of profit plays an important role and where an active competition policy by the state can contribute to improving the quality of management and organisation of firms.